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I received the following after trying to make a USD deposit to Mt. Gox from Dwolla today. Does anyone know more information about this or if the court order may apply to other methods of deposit/withdraw?

As of 12:13 PM on 5/14/2013:

You’re receiving this notice because our systems have indicated that you’ve processed and completed a real-time Dwolla-to-Dwolla payment to Mutum Sigillum LLC (“Mt. Gox”) within the last 24 hours.

Due to recent court orders received from the Department of Homeland Security and U.S. District Court for the District of Maryland, Dwolla is no longer legally able to service Mutum Sigillum LLC’s account.

This is a courtesy email encouraging you to follow up on any uncompleted orders with Mutum Sigillum LLC as Dwolla is now unable to move money to and from Mutum Sigillum LLC’s Dwolla account.

Dwolla is not party to this matter nor does it have any information or further insight into the situation. We strongly encourages those with questions to contact Mutum Sigillum LLC

Note: Dwolla requires a court order before honoring requests such as seizing funds or revoking access to an account.

On behalf of Dwolla, we apologize for this inconvenience.

UPDATE:

Here's what I got back thus far after contacting Mt. Gox to ask about the situation. Looks like they will make a formal announcement about it:

Hello,

Thank you for the email. We can see that the Dwolla transactions are not getting processed right now. We will contact Dwolla and post an announcement regarding this. Your patience is appreciated till then.

Thanks, MtGox.com Team

Update 2:

The balance that I transferred in on the morning of 05/14 was added to my MtGox account that evening, so it appears they are still honoring the transfers that went through before the lockdown.

Update 3:

Here's the current statement from Mt. Gox (still waiting for the real reason for the court order):

TOKYO - JAPAN - May 15, 2013

MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox. MtGox takes this information seriously. However, as of this time MtGox has not been provided with a copy of the court order and/or warrant and does not know its scope and/or the reasons for its issuance. MtGox is investigating and will provide further reports when additional information becomes known.

Regards Mt.Gox Co. Ltd Team.

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  • So far Google News turns up only this one item: 4flush.com/online-poker-news/… – Michael Hardy May 15 '13 at 4:24
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    When you say "because there's no other escape for their dollars" you are incorrect. I would like to hear others refute this blatantly false statement. One "escape" as you call it - I call it a liquidation or Investment - would be to send your Bitcoins directly to Amagi Metals as PAYMENT for Gold and Silver. – user5042 May 15 '13 at 12:48
  • Gox will not just let the money go to the US gov. They will have to do what they have to do to get the seizure off of Dwolla and continue biz as usual. Think about it!! – user5046 May 15 '13 at 20:17
  • Dwolla is the only means of exchange attacked by FEDGOV. This looks like an attempt to disrupt the Bitcoin markets and,so far,seems successful.people should expect such actions and not panic sell but continue transfers by all other means available (and there are many). Business as usual. – user5050 May 15 '13 at 23:24
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Mutum Sigillum LLC was the legal entity that Mt. Gox used for transferring funds using account-to-account transfers and for adding to (and withdrawing from) their account using bank funds.

Mutum Sigillum LLC is not registered as a money transmitter in any states.

It may not even be registered as a Money Service Business (MSB) through FinCEN.

FinCEN provided guidance that those exchanging "virtual currencies" (which they misapply, but intend to refer also to Bitcoin) for dollars are money transmitters and required to register.

This action by the DHS may be related to that.

Or it could be related to the Bitcoinica lawsuit in which Mt. Gox is holding funds of Bitcoinica customers that the court-appointed liquidator in New Zealand has requested access to.

Or it could be related to any number of additional factors, including a single illicit transaction in which the funds traveled through Mt. Gox, who knows.

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Quoted from BitcoinTalk:

As of 12:13pm on 5/14/2013, the U.S. District Court for the District of Maryland issued a "Seizure Warrant" for the funds associated with Mutum Sigilum's Dwolla account (a.k.a. Mt. Gox). In light of this court order, procured by the Department of Homeland Security, Dwolla has ceased all account activities associated with Dwolla services for Mutum Sigilum.

So the outcome looks something like this:

  1. Holders of dollars at MtGox will buy as many btc as possible and remove them from MtGox, because there's no other escape for their dollars
  2. Holders of btc at MtGox will presumably send them elsewhere because selling them for dollars doesn't make sense if you can't get the dollars out (although perhaps it still makes sense for euros/pounds/yen etc)
  3. There is a loss of liquidity at Gox from all the btc being pulled from there
  4. The dollar price at other exchanges starts falling because they are still exit points for dollars

Most of the trading volume is in dollars at Gox if I'm not mistaken, so this might be the death blow for them. Although given their history of incompetence, it was kind of sad the network effect was protecting them. Perhaps a phoenix will rise from the ashes.

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    -1 doesn't make much sense, they didn't close all their exit points for dollars, they just blocked dwolla transfers... – o0'. May 15 '13 at 12:48
  • Dwolla was the largest and easiest way to get money into Gox. Also, I would note that my prediction of a spread in prices between Gox and smaller exchanges (Gox dollar exchange prices being higher) was correct. There has been a spread of up to $10 between Gox prices and the smaller exchanges. – Vijay Boyapati May 16 '13 at 0:01
  • Still, you are stating patently false things. Don't care if you consider the main entry/exit point, "there's no other escape for their dollars" is still a blatant LIE. – o0'. May 16 '13 at 7:52
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    It's not a lie for those whose dollar connection to MtGox is dwolla. Btw "Lohoris", I've noticed from some of your other comments that you have a very trollish-style. There is no need to be so inflammatory in your comments. It does not serve you or the stack exchange community. – Vijay Boyapati May 16 '13 at 17:26
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    No, "Lorohis", it wasn't a lie, it was just imprecise. The conclusions I drew applied to those whose entry and exit points for dollars were Dwolla, which happens to represent a very large fraction of the dollar users to Gox. The predictions I made regarding the outcome of the subpoena are exactly what was observed empirically. Your comment could have been much more constructive without the trollish tone. I think it would avail you in your other posts and general online behaviour to avoid acting the troll. – Vijay Boyapati May 20 '13 at 23:03
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Here is a picture of the warrant.

From that, here's why the funds were seized:

subject to forfeiture pursuant to 18 U.S.C. section 981(a)(1)(A) because the contents of the Mutum Sigillum LLC account were involved in transactions and attempted transactions in violation of 18 U.S.C. section 1960.

This references 18 U.S.C. section 1960, which is pertinent to the "Prohibition of unlicensed money transmitting businesses", so the root cause of this is that Mt. Gox (or Mutum Sigillum LLC) is not properly licensed as a money transmitter, as Stephen correctly deduced.

The law also states that "the term 'money transmitting' includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier;", so it is possible that this will affect more methods of transfer to/from Gox in the future if they do not comply and get properly licensed.

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