A Company Innovating The Way We Pay For Stuff Ditched Bitcoin And Concentrated O

[Bitcoin]

A Company Innovating The Way We Pay For Stuff Ditched Bitcoin And Concentrated On The Dollar Instead.
Dwolla And Bitcoin - Business Insider.
There's still value in making it easy to move US dollars.
"What about Bitcoin?" becomes the obvious question.
"We had merchants operating in the system that exchanged the currency, but we never packaged, sold, converted or distributed the virtual currency," Dwolla's Jordan Lampe told Business Insider.
Dwolla's relationship with Bitcoin ended poorly when the federal government seized $2.9 million worth of Bitcoin from Dwolla as part of its investigation into the Mt. Gox Bitcoin exchange.
As Dwolla was merely the payments processor, the money actually belonged to Mutum Sigillum LLC, a U.S. subsidiary of Mt. Gox. This incident saw Dwolla prohibit Bitcoin-related merchant activity last Fall.
Bitcoin's only become more mainstream in the months since then, so what are Dwolla's current feelings toward the currency? Lampe elaborated:
Dwolla's made the decision to focus its efforts on moving the US Dollar . We look forward to reevaluating Bitcoin's status as a commodity or currency . Whereas we work inside and with the constraints, regulations, and stakeholders of the existing US payment systems, Bitcoin is tackling the problem outside . There's a powerful potential partnership here that I'm personally really excited about. Things just need to fall into place. We hope they do.

[Bitcoin]

MtGox's Dwolla Account Seized For Unlicensed Money Transmission.
Read Next.
Bitcoin 2013: Day 1.
The world's largest Bitcoin exchange, MtGox, had its account with Dwolla closed down by the order of the Department of Homeland Security. The fact was first discovered on Monday when OKCupid cofounder Chris Coyne posted a screenshot of an email from Dwolla saying that his deposit to MtGox could not be processed because of "recent court orders by the Department of Homeland Security and US District Court for the District of Maryland seizing the account of Mutum Sigillum LLC (Mt. Gox)" The next day, DHS officials provided the warrant used to shut down the account, exposing the reason why the shutdown was made: MtGox was operating an "unlicensed money transmitting business."
Government attention on Bitcoin exchanges has picked up after the US government's financial regulator FINCEN released a guidance report expressing its position on digital currencies: in summary, people and organizations that use Bitcoin to buy and sell goods and services are in the clear, but Bitcoin exchanges are regulated as money transmitters. However, the underlying law is more complex than this. Money transmitters are regulated under federal law (specifically 31 USC 5330), which requires them to get a money services business (MSB) license, as well as additional state laws in 48 states, which require a separate money transmitter (MT) license in each state. The state-level regulations are much more onerous; it is estimated that getting all 48 licenses requires millions of dollars in surety bonds. The FINCEN guidance was federal, and so directly affects the state of federal law only; for state governments it is merely a suggestion, and so it is up to individual states to determine exactly how their local money transmitter laws will apply to Bitcoin exchanges. But there is also another federal law prohibiting a money transmitting business from operating without a license, 18 USC 1960, which piggybacks off of both 31 USC 5330 and state law for its definition of money transmission. 18 USD 1960 b1 reads:
the term "unlicensed money transmitting business" means a money transmitting business which affects interstate or foreign commerce in any manner or degree and-- (A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law ... (B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code ...
However, it appears that in this case state law did not enter the picture at all. "According to FinCEN records on May 6, 2013," the warrant reads, "neither Mt. Gox nor the subsidiary, Mutum Sigillum LLC, is registered as a Money Service Business." Thus, it is under federal law that this seizure warrant is making its case. The warrant also states:
As part of the account opening process, Wells Fargo required Karpeles and Mutum Sigillum LLC to complete a "Money Services Business (MSB) Accounts, Identification of an MSB Customer" form. That document was completed on May 20, 2011 and identified Mutum Sigillum LLC as a business not engaged in money services. The application asks several questions; to include, "Do you deal in or exchange currency for your customer?" and "Does your business accept funds from customers and send the funds based on customers' instructions (Money Transmitter)?" Karpeles answered these questions "no," indicating that Mutum Sigillum LLC does not deal in or exchange money, and that it does not send funds based on customer instructions.
The document then proceeds to argue that MtGox's activity of processing Dwolla withdrawals constitutes "accept[ing] funds from customers and send the funds based on customers' instructions", and so MtGox (or rather its subsidiary) is in fact a money transmitter,. At this point, we do not know what Karpeles was thinking when he put those answers on the form; perhaps this was simply an attempt to fly "under the radar", or perhaps MtGox will have a legal argument up their sleeve as to why the warrant's claim is incorrect.
The fact that state law did not enter the picture is a very positive sign; other Bitcoin exchanges and intermediaries in the United States, such as Coinbase, Tradehill/Prime and BitInstant, all have MSB licenses, and so are not likely to be immediately targeted by the federal government after this. Until these exchanges come up with the required millions of dollars in capital to get money transmitter licenses in 48 states, or the exact situation of state money transmitter laws with regard to Bitcoin is clarified, no one is entirely free and clear, but with a combination of luck, prudence and willingness to proceed toward resolving the remaining legal issues as quickly as possible the major exchanges may still avoid regulatory trouble entirely. If state regulators do start coming down hard on Bitcoin exchanges very soon, the other option is to do what Justin Oh's Bitcoin ATM is considering doing and what Bitcoin Central did already: partnering with established institutions that already have the required licenses.
As for MtGox itself, this incident means the loss of one of MtGox's major funding methods, making the exchange more difficult to buy and sell bitcoins with. BitStamp and BTC-E, the second and third largest exchanges, both do not work with Dwolla, so this removes one of MtGox's advantages over these platforms. This is in fact the fourth item in a series of bad news for the exchange in the past month; the mishaps during the price crash of April 10-12, MtGox's recent removal of the ability to place orders without immediately having the funds to fill them on April 17 and the Coinlab lawsuit on May 2 have all struck the exchange's usefulness and reputation. However, altogether these misfortunes appear to be only further proving MtGox's resilience; the exchange has been responsible for about 75 of all exchange volume over the past thirty days. Only time will tell whether MtGox will be able to recover its legal situation in the United States (perhaps by resolving its differences with Coinlab and finally executing their customer transfer agreement) and bring Dwolla transfers back up.