Bitcoin Exchange Mt. Gox Halts USD Withdrawals 173
hypnosec writes "World's largest Bitcoin exchange, Mt. Gox, has halted U.S. dollar withdrawals of customer funds in the U.S., citing a need for system improvements. According to Mt. Gox, the exchange has experienced a huge number of requests for deposits as well as withdrawals from both established markets and new markets, following which its bank hasn't been able to process transactions on time. This led to difficulties for its overseas clients, especially those in the U.S. The exchange said that the deposits in USD, transfers to Mt. Gox, and deposits and withdrawals in other currencies will remain unaffected during this period. Mt. Gox will be resuming the USD withdrawals for its U.S. clients once the improvement of its systems is complete."
Wired suggests the slowness may be due in part to reluctance from banks to get entwined with Bitcoin for a number of reasons. "The problem is that U.S. banks are afraid that doing business with Bitcoin companies might draw the attention of U.S. or state regulators ... This reluctance may be fed by the sense that Bitcoin poses a threat to the banking industry. Anyone can transfer Bitcoins anywhere for free and that could put a dent in some banking transaction processing fees."
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Comment removed (Score:4, Interesting)
Uh oh. Maybe the money isn't there. (Score:5, Interesting)
That's a typical Mt. Gox excuse. "We're going to hold onto your money for some vague amount of time for some vague reason." Note that they're only stopping withdrawals from Mt. Gox, not inbound transfers. That's very suspicious. If they'd lost their banking relationship for wire transfers, they couldn't do inbound transfers either.
I've mentioned before that Mt. Gox's withdrawal limits are suspicious. They should be able to pay out 100% of funds they hold on short notice. They're not a bank, and are required by the Payment Services Act of Japan [amt-law.com] to have 100% of the assets entrusted to them. Even more suspicious is that as Bitcoin has grown, Mt. Gox withdrawal limits [mtgox.com] have become smaller.
If you have assets in Mt. Gox, get them out now. There are too many red flags about that business.
Re:"That's what you get for money laundering". (Score:2, Interesting)
How do you get that? The entire body of his post is about unreasonable regulations and the costs involved with satisfying regulation requirements. Regulations that are keeping a Ponzi scheme out of the US marketplace.
Re:thats what you get for being stupid (Score:2, Interesting)
for all their faults, ordinary banks, in general, do not like dealing with certain types of criminal customers.
Only because the gov't has criminalized the free movement of funds. Banks could care less about their customers so long as they behave themselves while in the lobby. But they have been pressed into service by the state as quasi-police. Because the state cannot detect (or be bothered with identifying) actual criminal activity.
The amount of funds that move per unit time for legal purposes is orders of magnitude more than those supporting criminal activities. Compliance with FINCEN regs for all of these legal transactions is so high we would be better off legalizing drugs and losing one or two WTCs or year. We'd still be money ahead.