DHS shuts down Mt Gox's Dwolla account, issues "seizure warrant"

[amy31416]

http://betabeat.com/2013/05/department-of-homeland-security-shuts-down-dwolla-payments-to-and-from-mt-gox/


The Department of Homeland Security appears to have shut down the ability to use Dwolla, a mobile payment service, to withdraw and deposit money into Mt. Gox, a Bitcoin trading platform. A Dwolla representative confirmed the move to Betabeat. Chris Coyne, cofounder of OKCupid, posted a screenshot of an email he received from Dwolla, stating that due to recent orders from the Department of Homeland Security, Dwolla cannot complete the bank transfer to Mt. Gox.

A representative for Dwolla told Betabeat that the company is “not party” to this matter and encourages those with questions to reach out to Mt. Gox or the DHS.

“The Department of Homeland Security and U.S. District Court for the District of Maryland issued a ‘Seizure Warrant’ for the funds associated with Mutum Sigillium’s Dwolla account (a.k.a. Mt. Gox),” he said. “In light of the court order, procured by the Department of Homeland Security, Dwolla has ceased all account activities associated with Dwolla services for Mutum Sigillum while Dwolla’s holding partner transferred Mutum Sigillium’s balance, per the warrant.”

“Dwolla requires a court order before honoring requests such as seizing funds or revoking access to an account,” he added.

More details at link above.

ETA: I know it's shutting down Dwolla payments to and from, but had to simplify the title to fit.

[angelatc]

https://pbs.twimg.com/media/BKQC_VMCcAAnDkY.png:large

This is the screencap of the email Coyne posted.

[amy31416]

Thanks for posting that, my connection wouldn't let me see it.

[angelatc]

ETA: I know it's shutting down Dwolla payments to and from, but had to simplify the title to fit.

Also seizing their Dwolla account. I think it's safe to assume that any other accounts they had with other money in them are also being seized.


Thank you Big Brother for keeping us safe!

[amy31416]

Also seizing their Dwolla account. I think it's safe to assume that any other accounts they had with other money in them are also being seized.


Thank you Big Brother for keeping us safe!

It's looking like this will make buying/selling BTC much more difficult in the US. Not to mention it could perhaps make other BTC businesses less likely to do business with anything US based. Have to see how this unravels.

[brandon]

I knew it would happen eventually but this is a lot sooner than I imagined. It kind of had the same vibe as online poker did for a while. We all know it's operating in a legal grey zone and it's only a matter of time.

[amy31416]

I knew it would happen eventually but this is a lot sooner than I imagined. It kind of had the same vibe as online poker did for a while. We all know it's operating in a legal grey zone and it's only a matter of time.

Yeah. I've been expecting things like this, except I hadn't expected it to go on this long without the feds taking serious action. I'm interested to see what the BTC community does to counter it.

[Aahz]

It's looking like this will make buying/selling BTC much more difficult in the US.

Not really. Very few of the people I know into bitcoin buy directly through MtGox. Accounts have been a hassle to set up there for quite some time. Most buy through some other intermediary (friend, local contact, Coinbase, etc). While those larger intermediaries are likely trading on MtGox, they most likely are not doing so through Dwolla.

The real question, atm, is wether this is an isolated incident or a first step.

-Aahz

[Petar]

Title is spreading disinfo.

How about:

BREAKING: DHS shuts down Mt Gox transfers through Dwolla accounts.

[ninepointfive]

saw this coming.

provocation upon provocation.

[Petar]

I'd really like to know what premise was used to do this.

[ninepointfive]

I'd really like to know what premise was used to do this.

security of the homeland.

[Aahz]

I'd really like to know what premise was used to do this.
Agreed 100%

Sloppy reporting all around since the ruling surely gives SOME reason, yet no one has mentioned it.

-Aahz

[CyberTootie]

"Money laundering" I'd imagine.

[amy31416]

Title is spreading disinfo.

How about:

BREAKING: DHS shuts down Mt Gox transfers through Dwolla accounts.

Shaddap Petar.

[Petar]

Shaddap Petar.

Heh, I can do that.

[amy31416]

Heh, I can do that.

:D !!!

+rep

[green73]

Shaddap Petar.

You must spread some Reputation around before giving it to amy31416 again.

[Petar]

You must spread some Reputation around before giving it to amy31416 again.

http://www.ronpaulforums.com/showthread.php?414415-Rep-Orgy-Thread&p=5024378#post5024378

[ronpaulfollower999]

I never did like Dwolla. So this leaves Bitinstant as the only way to add USD to your MtGox account?

[ronpaulfollower999]

I was using Bitfloor, but their European bank account got shut down. I fortunately was able to convert all my USD to BTC literally SECONDS before trading halted on that exchange, and transfered the coins to another exchange.

BTC-E is too difficult to get USD on.

Bitstamp looked pretty good. I haven't really tried to get USD on there, but the process looks simple enough. Unfortunately, I believe it's cash deposit at a bank.

[ronpaulfollower999]

It also appears that Coinbase has fixed the supply issues with buying Bitcoins. But unfortunately, it is a directly link to your bank account.

[Peace&Freedom]

So, use a secondary or throwaway bank account.

[muh_roads]

So, use a secondary or throwaway bank account.

How does this hide personal information?

[muh_roads]

I was using Bitfloor, but their European bank account got shut down. I fortunately was able to convert all my USD to BTC literally SECONDS before trading halted on that exchange, and transfered the coins to another exchange.

BTC-E is too difficult to get USD on.

Bitstamp looked pretty good. I haven't really tried to get USD on there, but the process looks simple enough. Unfortunately, I believe it's cash deposit at a bank.

If you are trying to avoid direct wire transfers to an exchange...

You can use Ripple like Dwolla and from there get to BitStamp. https://ripple.com/

Or you can still use Dwolla to fund Gox through BitInstant. https://www.bitinstant.com/
(https://www.bitinstant.com/)

[kpitcher]

This isn't the first problem dwolla has had with funding bitcoins. They had issues with Tradehill a few years ago (Which used to be the 2nd largest exchange before they closed). Dwolla got a big bump with their dwolla <-> tradehill clients and took a hit when that broke down. Buying semi-anonymous coins with a linked ACH account seems silly anyways.

I also don't agree with the topic title.

[Bruno]

Interesting. Dwolla founders from here.

[bolil]

Woah, wait, are you saying that tyrants are being tyrants.
Clever people only go so far.

[dancjm]

I'd really like to know what premise was used to do this.

Competition.

http://lishacauthen.files.wordpress.com/2013/04/babu-finger-wag1-1.gif

[idiom]

Structuring transfers with throwaway accounts is illegal in the U.S.

If DHS ever does take down mt Gox or even just borrows their servers for a while the will probably have enough data to tag and identify the chain of custody of all buttcoins currently in circulation.

[Petar]

If DHS ever does take down mt Gox or even just borrows their servers for a while the will probably have enough data to tag and identify the chain of custody of all buttcoins currently in circulation.

Is this an educated opinion based on knowledge of cryptography, or are you just speaking out of your own personal "buttcoin"?

[idiom]

My knowledge of cryptography is fast and loose. The best attack vector for bitcoins would be a massive trove of transfers. Then you dont need to crack anything just correlate known data points.

With a few warrant free requests to btc accepting retailers and a serious hectare sized computer you know where all the money is going.

It would be worth it for the NSA just for training.

The dataset is still pretty small.

[Petar]

My knowledge of cryptography is fast and loose. The best attack vector for bitcoins would be a massive trove of transfers. Then you dont need to crack anything just correlate known data points.

With a few warrant free requests to btc accepting retailers and a serious hectare sized computer you know where all the money is going.

It would be worth it for the NSA just for training.

The dataset is still pretty small.

I still think you are speaking out of your personal "buttcoin".

[Crystallas]

My knowledge of cryptography is fast and loose. The best attack vector for bitcoins would be a massive trove of transfers. Then you dont need to crack anything just correlate known data points.

With a few warrant free requests to btc accepting retailers and a serious hectare sized computer you know where all the money is going.

It would be worth it for the NSA just for training.

The dataset is still pretty small.


The bitcoin network surpassed the computational ability of the NSA 100 fold earlier in the year at algorithmic hashing. The fact of the matter is, with every NSA system, they would (in best estimates for them) only consume about 9-7% of the network in theory. Yes, that is how big the bitcoin network has grown worldwide. Some reports have even claimed with some sketchy(but not far off) math that the BTC network's power is also greater than the top 300-500 supercomputers in the world, combined. (http://www.extremetech.com/extreme/155636-the-bitcoin-network-outperforms-the-top-500-supercomputers-combined)

[idiom]

The bitcoin network surpassed the computational ability of the NSA 100 fold earlier in the year at algorithmic hashing. The fact of the matter is, with every NSA system, they would (in best estimates for them) only consume about 9-7% of the network in theory. Yes, that is how big the bitcoin network has grown worldwide. Some reports have even claimed with some sketchy(but not far off) math that the BTC network's power is also greater than the top 300-500 supercomputers in the world, combined. (http://www.extremetech.com/extreme/155636-the-bitcoin-network-outperforms-the-top-500-supercomputers-combined)

They don't have to crack anything. Just correlate open datasets. Its an accounting forensics problem not a cryptographic one.

[Peace&Freedom]

How does this hide personal information?

Depending on the type of throwaway "bank account," you can put pseudonym info on it. A couple of reloadable debit cards (Rush card, ACE Elite, etc) include a 'bank account' for direct deposit operations, but don't have a tight verification process on the online application. You could (if you were determined) get a card using pseudonym name/address/SSN info on it, and use that account to connect to the Bitcoin exchange account. Or, you could just get your cash converted into a Liberty Reserve account, and buy Bitcoin through Liberty Reserve.

[brooks009]

Whats wrong with buying bitcoins with a legitimate bank account?

[ronpaulfollower999]

Whats wrong with buying bitcoins with a legitimate bank account?

Nothing, if you want the government to know you own Bitcoins.

[LibertyRevolution]

Whats wrong with buying bitcoins with a legitimate bank account?

People who use bitcoins want to be anonymous...

The entire idea behind bitcoin is that it is a way to transfer money untraceable.
Bitcoins are used for tax evasion, money laundering, funding terrorism, or drug trafficking.
Which is why a bunch of us think it is going to be shut down by the feds, and why we won't touch it with a 10 foot pole..

[FSP-Rebel]

People who use bitcoins want to be anonymous...

The entire idea behind bitcoin is that it is a way to transfer money untraceable.
Bitcoins are used for tax evasion, money laundering, funding terrorism, or drug trafficking.
Which is why a bunch of us think it is going to be shut down by the feds, and why we won't touch it with a 10 foot pole..
Not every BTC holder wants to be anonymous. Many of us just want out of USD and the bankers stranglehold over it and other currencies. I never used Dwolla and had heard negative things about the experience using it, bitinstant still is the simplest and fastest way to convert. The first USA BTC forum is this weekend in San Jose and I'm sure this issue will be addressed.

[osan]

Wow... this is not trivial.

[amonasro]

They don't have to crack anything. Just correlate open datasets. Its an accounting forensics problem not a cryptographic one.

I'd also like to know how they plan to do this, given that transactions are often split into multiple receiving addresses, many of which are created for that single transaction. They might be able to correlate a few transactions to identities, but the trail would run dry pretty quickly. Those that use Dwolla account for a small percentage of US users, giving them only a tiny piece of the puzzle. Even so, none of my personal addresses were ever associated with my Dwolla account.

This freeze of Gox's US Dwolla account more likely has to do with internet gambling, or busting some online criminal. I don't like putting on the conspiracy hat without more evidence.

Personally, I made a Dwolla deposit to Gox hours before that email went out, and just about had a coronary. They ended up funding my account anyway to my great relief.

[kpitcher]

Forensic accounting is only good if you have a good chunk of the info. The blockchain is only part of the story. As bitcoin is worldwide and is not centralized, unless every coin is purchased with a bank draft or is used with a physical shipping address that is in a database it's not going to reveal much.

If anyone is paranoid enough there are many bitcoin laundries. The most common is to send it to any exchange that uses common pools and then withdraw to a different address. This breaks the chain. Blockchain.info even has a taint detection between addresses. That's the most common but there are many other ways. True it's not by default but if someone wants to have even more anonymous coins it is doable. Realistically I could bounce coins through a variety of laundries around the world from an existing address to a brand new, never before used or associated, address without any real hassle.

[idiom]

People who use bitcoins want to be anonymous...

The entire idea behind bitcoin is that it is a way to transfer money untraceable.
Bitcoins are used for tax evasion, money laundering, funding terrorism, or drug trafficking.
Which is why a bunch of us think it is going to be shut down by the feds, and why we won't touch it with a 10 foot pole..

People who want to be anonymous use cash.

Bitcoins could be a really handy digital currency, on the basis that they are not anonymous.

Truly anonymous digital currency would be worthless. How do you prove its not counterfeit or the only copy?

[jj-]

I was expecting this news to lower the price of bitcoins. But it's been a few days, and now it's higher!

[kpitcher]

I was expecting this news to lower the price of bitcoins. But it's been a few days, and now it's higher!

I'm surprised also. I saw it in lots of press and made it on NPR's marketwatch on Friday (A show worth listening to just for the huge balls on the reporter for grilling Rumsfeld about his new book. It was spectacular)

[Crystallas]

I was expecting this news to lower the price of bitcoins. But it's been a few days, and now it's higher!

The media tried to spin, spin, spin(well, any bitcoin hater did), and it didn't stick. Bitcoin users, for the most part, are well informed and saw right through it. :)

Plus, a lot of people lost a bit of credibility by claiming DHS went after MtGox, when in fact, it was just a middle-man in Iowa that had a transfer service that used Dwolla's services as the registered bank.

[amy31416]

Thanks to the mod who fixed the title!