US federal court order halts Dwolla wire transfers to Mt. Gox

The contents of the order, which has not been made public, are unknown

A not-yet-public U.S. federal court order has apparently halted wire transfers between payments startup Dwolla and the largest bitcoin exchange, Mt. Gox.

Dwolla, based in Des Moines, Iowa, offers inexpensive wire transfers. Mt. Gox, headquartered in Tokyo, runs a popular exchange where people can buy and sell the virtual currency bitcoin.

The intent of the court order is not clear, although some Dwolla customers have said they received an email saying transfers to Mt. Gox will no longer be processed.

Dwolla's email cites a court order in U.S. federal court in Maryland involving the Department of Homeland Security (DHS), according to a screenshot, which was posted on the Twitter account of Chris Coyne, who founded the online dating site OkCupid. Numerous users on Bitcointalk.org, a large bitcoin forum, wrote they've also received the email.

The email recommends that queries should be directed to Mutum Sigillum LLC, which is affiliated with Mt. Gox.

The court order is not available yet on Pacer, the online document system for U.S. federal courts. Officials from DHS could not immediately reached after office hours, and Dwolla officials did not immediately respond.

Mt. Gox issued a statement on Facebook on Wednesday morning saying it has not seen the order or knows its contents.

"We take this information seriously," the company said. "Mt. Gox is investigating and will provide further reports when additional information becomes known."

No country has yet issued regulations specific to bitcoin, a virtual currency that is transferred via peer-to-peer software for free worldwide. But its increasing media exposure and interest has prompted widespread speculation over how governments may try to impose regulations.

One of the primary concerns around bitcoin is its use in money laundering. Mt. Gox has said it verifies the identity of its trading platform users in order to comply with international anti-money laundering standards.

Although the transfer of bitcoins lies outside traditional banking systems, buying the currency often requires bank transfers. Mt. Gox has encountered banking problems.

In September 2012, Mt. Gox wrote on Facebook that U.K. bank Barclays had suspended British pound deposits into its account.

Several startup companies are now vying to crack open the U.S. market for bitcoin in compliance with the law, said Jeff Garzik, a core developer of the Bitcoin software. Even at the best of times, buying bitcoins through Mt. Gox in Japan has been awkward, he said.

Those startups that succeed in jumping through the regulatory hoops "will be the big winners in the race for U.S. bitcoin customers," Garzik said.

Earlier this month, a partnership that promised to make it easier for Americans and Canadians to buy bitcoins disintegrated.

CoinLab of Seattle sued Mt. Gox, alleging in a federal court complaint that Mt. Gox breached an agreement that would connect the companies' IT systems for North American bitcoin purchases.

Send news tips and comments to jeremy_kirk@idg.com. Follow me on Twitter: @jeremy_kirk

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Tags internetInternet-based applications and servicesMt. GoxDwolla

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Jeremy Kirk

IDG News Service
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