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Bitcoin The Almighty Buck

Bitfloor Indefinitely Suspends Bitcoin Trading 291

Posted by timothy
from the fun-while-it-lasted dept.
PerformanceDude writes "Bitfloor (a New York-based online exchange for Bitcoin) yesterday made the following announcement on their website: I am sorry to announce that due to circumstances outside of our control BitFloor must cease all trading operations indefinitely. Unfortunately, our US bank account is scheduled to be closed and we can no longer provide the same level of USD deposits and withdrawals as we have in the past. As such, I have made the decision to halt operations and return all funds. Over the next days we will be working with all clients to ensure that everyone receives their funds. Please be patient as we process your request. Roman — bitfloor.com" According to the company's Twitter account, money should be returned to users' bank accounts shortly.
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Bitfloor Indefinitely Suspends Bitcoin Trading

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  • A likely story (Score:3, Insightful)

    by Anonymous Coward on Thursday April 18, 2013 @09:06AM (#43481595)

    Sounds like the govenrment finally decided they didn't like money outside their control.

    • Re:A likely story (Score:5, Insightful)

      by travdaddy (527149) <travo@@@linuxmail...org> on Thursday April 18, 2013 @09:25AM (#43481753)
      Sounds like the govenrment finally decided they didn't like money outside their control.

      Sounds to me like they were a US company not following already existing US Anti-Money Laundering regulations.
    • Re:A likely story (Score:5, Interesting)

      by localman57 (1340533) on Thursday April 18, 2013 @09:31AM (#43481851)

      Sounds like the govenrment finally decided they didn't like money outside their control.

      Maybe. Or maybe their bank just wasn't comfortable with them. Where I work we sometimes will pass on working with potential customers just because we get a bad business feel for them. Whatever bank they're dealing with may not want to risk being negatively associated in the press with any of a variety of bad things that could potentially happen with this bitcoin exchange if they aren't an important enough customer to justify that risk.

      The other thing I think is interesting is the degree to which this matters. The whole point of bitcoin is that it is supposed to be some independent currency. But it seems to rise and fall an awful lot depending on the degree to which you can exchange it for dollars. Which would tend to indicate that it does require backing at some level from dollars.

      • by tompaulco (629533)
        But it seems to rise and fall an awful lot depending on the degree to which you can exchange it for dollars. Which would tend to indicate that it does require backing at some level from dollars.
        It seems to be trading at about $92 USD, which is approximately where it was before bitfloor's announcement.
        • by oreaq (817314)

          It seems to be trading at about $92 USD, which is approximately where it was before bitfloor's announcement.

          6 months ago a bitcoin was $5, 6 months before that it was $35. The fluctuation is massive.

    • by DrXym (126579)
      Well clearly it is in their control if they're shutting the account down. Though of course it could be the bank shutting them down. For example they may have decided that the account could be used for the purposes of laundering money and decided to act unilaterally to protect themselves.
    • by sl4shd0rk (755837)

      Sounds like the govenrment finally decided they didn't like money outside their control.

      lol.. money is the least of it. 'patents', 'power', 'drugs', and 'judicial/legislative/executive' systems also fit that sentence.

      • Completely offtopic, but I thought I'd mention that I take issue with your sig (Ignorance is a choice). Ignorance is a not choice, but I do define stupidity as willful ignorance. There is a distinct difference.

        • by lgw (121541)

          I have to take sl4shd0rk's side: ignorance means willful lack of knowledge, not merely absence of knowledge. You become ignorant by ignoring; ignorance is the state of ignoring; it's just a form of the word "ignore".

    • Re:A likely story (Score:4, Interesting)

      by Begemot (38841) on Thursday April 18, 2013 @10:34AM (#43482515) Homepage

      Same happened in Israel 2 weeks ago - all accounts of bitcoin exchange companies were closed until further notice. They didn't even give them a chance to return funds to their customers.

    • Re:A likely story (Score:4, Interesting)

      by Richard_at_work (517087) <richardprice@nOSPam.gmail.com> on Thursday April 18, 2013 @10:34AM (#43482521)

      It would be interesting to see how many people don't want bitcoin to be "controlled" by governments through legal avenues, but at the same time would want the law enforcement agencies to investigate any cases where bitcoin exchanges disappear overnight with their clients "funds"...

  • by Anne_Nonymous (313852) on Thursday April 18, 2013 @09:06AM (#43481603) Homepage Journal

    >> US bank account is scheduled to be closed

    Clearly this is the work of the Illuminati Lizard People.

  • by h4rr4r (612664) on Thursday April 18, 2013 @09:16AM (#43481687)

    Bitcoin is already down to $90, where is that $1000 bitcoin troll at now?

    Money has to at least be a short term store of value. If bread costs twice as much in the evening as it does in the morning no one will want your currency. Bitcoin is not doing well on that front. I am sure all the early folks are cashing out now and laughing all the way to the bank though.

    • by eldavojohn (898314) * <eldavojohn@nOspAM.gmail.com> on Thursday April 18, 2013 @09:26AM (#43481767) Journal

      Bitcoin is already down to $90, where is that $1000 bitcoin troll at now? ... [all the early folks are] cashing out now and laughing all the way to the bank though.

      Sounds like you just answered your own question.

    • by ultranova (717540)

      Bitcoin is already down to $90, where is that $1000 bitcoin troll at now?

      You do realize that $90/BTC is still over twice what it was before the bubble, right?

      I am sure all the early folks are cashing out now and laughing all the way to the bank though.

      As are those who bought in the after-bubble crash, before the price rebounced to the current level.

    • by alexgieg (948359) <alexgieg@gmail.com> on Thursday April 18, 2013 @10:28AM (#43482445) Homepage

      Bitcoin is already down to $90, where is that $1000 bitcoin troll at now?

      $1000? If the Bitcoin theory becomes true some day in the future (a huge if) and it were to replace national currencies for the entire world (an even huger if), it might end up valued at more than $3.4 million each (at 2013 valuation). The math is simple. Current global GDP is about $72 trillion, BTCs are capped at about 21 million, hence $72 trillion / 21 million BTC ~= $3.4 million per BTC at cap time. If this were today then people would use it at 6 decimal places (microBTCs) as the day to day currency, equivalent to about $3.40, and the maximum divisibility of 8 places, equivalent to about ~$0.034, as the corresponding "cents", said valuations adjusting upwards (in terms of purchasing power) at roughly 4% per year accompanying the increase in global GDP.

      I doubt any of that'll happen though. For one, governments don't want monetary power outside their hands. For another, most economists around are convinced ("convinced" as in "I believe in it from the bottom of my heart!" and "My preferred theorist said so and his equations are so pretty and I have tons of faith in him!") that deflation is evil. And third, drugs, porn, drugs, weapons, drugs, tax, drugs, pedophilia, and won't anyone please think of the children!?

      • The money supply does not have a direct relationship to GDP. A high-velocity currency (one that trades hands frequently instead of being stored) will have a low value in relation to GDP. A low-velocity currency would behave the opposite.

        When reporting the size of the money supply, you will see references to M0, M1, MB, and M2. They are different ways of measuring the supply and are used for different purposes.

      • by dkleinsc (563838) on Thursday April 18, 2013 @12:23PM (#43483679) Homepage

        For another, most economists around are convinced ... that deflation is evil.

        Those egghead economists have several good reasons to think that deflation is a problem:
        1. It strongly encourages everyone to stuff their money in the mattress rather than spend it. This may seem like a great idea, but without people buying stuff, nobody is needed to make stuff, which means people lose their jobs, so they buy even less, and so on.

        2. It means that anyone who is saving is more likely to stuff the money in the mattress than they are to invest it. For example, if cash is gaining value at 1.5% a year, you're less likely to take the risk on an investment with 4% return than you will if cash is losing value at 1.5% a year. Which again causes people to lose their jobs, so they buy less, so others lose their jobs, so they buy less, and so on.

        3. Bank lending would grind to a halt, for two reasons: First, banks have to add the deflation into the interest rates of any loans, to account for their opportunity cost compared to just keeping onto the money. Second, borrowers know that they have to repay the loan using progressively more and more valuable dollars, and are rightly concerned that this is a really bad idea.

        4. Behavioral research suggests that wages and prices do not deflate as they should - workers have a strong resistance to taking what appears to be wage cuts every year, and businesses have a strong resistance to showing what appears to be lower profits on the same product.

        5. People, businesses, and governments who are currently borrowing money get crushed, because their debt becomes progressively more pricey to pay off. That's exactly the problem that was motivating the bimetalism movement back in the 1890's, after the dollar was in deflation for about 2 decades.

        It's not just equations: There are several historical examples of deflation, and many of the theorized problems with deflation have in fact turned up.

        • by alexgieg (948359)

          Those egghead economists have several good reasons to think that deflation is a problem:

          All of these reasons are based on an assumption that simply isn't true: that deflation continues when production stops. It doesn't. Without minimal production, only enough to counterbalance consumption of perishable goods, the amount of goods in the economy represented by the fixed amount of currency doesn't increase, meaning a certain amount of money isn't able to purchase any more tomorrow than it purchased yesterday, hence neither deflation nor inflation. With no production and perishable goods all being

  • by 1s44c (552956)

    Why was their bank account closed? Did they break some law or did the bank just take offense to them?

    What's is the story here?

    • Re:Why? (Score:5, Funny)

      by Black Parrot (19622) on Thursday April 18, 2013 @09:33AM (#43481873)

      What's is the story here?

      This is Slashdot: The story is "bitcoin something something".

    • Re:Why? (Score:4, Funny)

      by squiggleslash (241428) on Thursday April 18, 2013 @10:34AM (#43482511) Homepage Journal

      I'm not in a position to judge. So let me speculate based upon my own prejudices and stupidity.

      What this obviously proves is that THE MAN hates freedom and is hating Bitcoins so has leaned on the bank (though didn't need to be because the bank IS THE MAN too) to close down Bitcoins which are totally a legitimate currency because you can exchange CPU cycles for Bitcoins which is much better than the dollar because the dollar can be made to hyperinflate by printing more although it doesn't whereas Bitcoins never have inflation because they're based on CPU cycles and its just its success that means it keeps oscillating between $50 and $200 every few months. This is simply another case where the MAFIAA are trying to shut us down because we threaten their business model by selling things that have value because they're products of really big prime numbers which everyone knows are totally worth thousands of dollars.

      (c) 50% of Slashdot posters.

    • Why was their bank account closed? Did they break some law or did the bank just take offense to them?

      It might be worth noting that this happened not long after the US government announced that people exchanging real currency for virtual currencies like bitcoins are within the scope of existing reporting and other regulations designed to prevent and identify money laundering, in many of the the same ways that other entities moving and exchanging real currency are.

  • by CuteSteveJobs (1343851) on Thursday April 18, 2013 @09:19AM (#43481713)
    > Unfortunately, our US bank account is scheduled to be closed and we can no longer provide the same level of USD deposits and withdrawals as we have in the past.

    Is it me or is that the most understated sentence ever written?
    • by Anonymous Coward on Thursday April 18, 2013 @09:30AM (#43481835)

      Well in fairness to them, it sounds a lot better than "we decided to hop on the bitcoin-ponzi-scheme bandwagon and it bit us in the ass."

      • by JBMcB (73720)

        In what way is it a Ponzi scheme? The end game of a Ponzi scheme is new investors get nothing. BC still has value.

        • The end game of a Ponzi scheme is that the last investors to pull money out get nothing. Bitcoin hasn't been shut down yet.

          • Just because an investor ends up losing money, that doesn't mean it's a Ponzi scheme. A Ponzi scheme requires fraud where the money coming in is being used to pay out older investors rather than being used to purchase claimed assets. If the assets are purchased but become worthless that's not a Ponzi scheme. People who invested money in Hostess lost it when they went bankrupt. That doesn't mean Twinkies were a Ponzi scheme.

  • by Black Parrot (19622) on Thursday April 18, 2013 @09:31AM (#43481853)

    going to indefinitely suspend its bitcoin stories?

  • This is exactly what happened to the other major exchange based in California about 2 years ago. Their bank accounts were closed due to banking secrecy act violations when they just barely reached the volume limit that the US gov set for that law. Obviously the feds were waiting for that to happen and gave them zero warning.
  • In this sense it's like Gold, except:

    * probably more vendors take BitCoin than gold as payment (i.e. both gold and BitCoin have some value as a currency/barter, and BitCoin may actually have more, but neither is primarily a currency)
    * You can't make jewelry, do dental work, or make Monster Cables with BitCoin (i.e. unlike the shiny metal, it has no inherent value)

  • USD = fiduciary money. Bitcoin = non-fiduciary, just like gold. Und just like with gold, bankers hate it when you deal in non-fiduciary currency. The influence of banks upon national governments being so scandalously high these days, this news is not so surprising: banks thrive on fiduciary currency only. Or, to quote Jefferson:

    "I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their curren

    • Banks don't hate BitCoins (or gold) because it's non-fiduciary... it's because it's a Pain In The Ass to deal with. Banks are more than happy to let an independent entity (as in, not them) deal with BitCoin transfers and storage if they so choose. Agreeing to accept deposits in BitCoins (which due to their volatility are currently utterly incompatible with fractional reserve banking) is a task that would earn them only tiny transaction fees... it's simply not worth the bother.

  • by sirwired (27582) on Thursday April 18, 2013 @12:02PM (#43483473)

    I suspect it was Transaction Reporting requirements, along with Know Your Customer regulations that did them in. The government doesn't care if you are shoveling Benjamins, BitCoins, Euros, Pesos, or British Pounds, across the counter or over the wire... if you want to trade in heavy quantities of Cash or Cash Equivalents, you have to comply with money laundering laws. If their bank felt they could not keep the account open and still comply with those laws... ker-chop!

    Did the fact that BitCoins were being traded have something to do with it? You bet. But they would have been equally eager to shut down an operation dealing with physical currency and numbered accounts... they don't like anonymiity combined with large volumes of untracable cash.

  • Maybe they just decided they can't make money on this?
    Despite their recent problems, it looks like Mt.Gox is back online...they claim to handle over 80% of BC trade...

  • by Zontar_Thing_From_Ve (949321) on Thursday April 18, 2013 @01:56PM (#43484827)
    It seems obvious to me exactly what is going to happen. If I'm wrong, well, good for all those who got into bitcoins.

    Sometime within about 1 year from now, someone is going to hack bitcoin. Either
    a) The goal will be simply to destroy it and render it worthless.
    or
    b) The hackers will make a lot of money before bitcoin in rendered worthless. Before anyone realizes what is going on and can stop the hackers, bitcoin will have been ruined.
    The end result in both is that bitcoin will be rendered worthless. This attack or hack will be in a way that nobody saw coming, but after the fact everyone will slap themselves in the head and think "How did we not realize that this was possible?" I am not claiming to have any idea how this will all happen. I simply predict it will happen.

    When this happens, people like me, Steve Forbes and others will say "Told you". The "true believers" (the anti-government nut jobs) will erroneously conclude that the entire idea was perfect and if they only fix the specific nature of the attack that destroyed bitcoin, then bitcoin2 will be able to start up and it will never, ever be compromised. Right.
    • Bitcoin's most obvious vulnerability is the 51% attack - where the attacker controls over 50% of the computing power of the Bitcoin network. Although there is not that much relative profit in doing such an attack, if it was ever to take place, it would certainly destroy confidence in Bitcoin and would probably render it useless.

      There are two possible candidates for such an attack:-

      1. A rouge mining pool or collection of pools decide to implement a 51% attack. The most popular Bitcoin pool (BTCGuild) curre

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