Department of Homeland Security Shuts Down MtGox Dwolla Account

The Department of Homeland Security issued a seizure warrant for funds located in the Dwolla account belonging to Mutum Sigillum, commonly referred to as MtGox in the Bitcoin community.  MtGox, located in Tokyo, Japan, is the world’s largest Bitcoin exchange. 

Dwolla is an ewallet that allows real time transfers between individuals and companies.  Dwolla is not involved in the decision and their actions to handover the MtGox Dwolla account to authorities was based entirely on the Department of Homeland Security’s demands.

This move only affects Bitcoin traders that used Dwolla to fund their trades.  Traders in the U.S. may still use bank wires to send and receive cash from MtGox trades.

The Dwolla accounts of traders are not affected, only the ability to transfer directly to MtGox via Dwolla.  Bank wires can be expensive for small traders.  Dwolla was only available to US traders so this news does not affect banking options available to clients in the rest of the world.

US Bitcoin traders still have other options.  BitInstant allows clients to deposit by cash.  They also still accept Dwolla, though Bitcoin buyers and sellers may be reluctant to use it for their transactions.  These funds may then be transferred to a number of exchanges including MtGox.

Bitcoin prices were originally down about 10% on the news but rebounded to around $110 once the market stabilized.  This is still down 60% from its high in April, though more than 20 times its 52 week low.

SealsWithClubs is the largest Bitcoin online poker room.  The anonymous poker room’s traffic has been unaffected by this.  Considering the price recovery of Bitcoin after the Department of Homeland Security announcement it seems safe to say that there is still confidence in Bitcoin and online poker rooms that accept it.

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