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Government Pressure Drives a Wedge Between Bitcoin and U.S. Banks

The world’s best-known Bitcoin exchange stopped paying out customers in U.S. dollars Thursday. Mt. Gox didn’t exactly explain what was going on, though. It blamed an “increased volume” of transactions, and said it would suspend U.S. cash withdrawals for two weeks as it sorted things out.

The issue “is with processing the sheer volume through our banks in Japan, which is causing a delay,” said a Mt. Gox representative in an email message. “We are currently attempting to improve our services for this. In the meantime USD deposits are unaffected as are other currencies.”

But the Japanese company has fallen afoul of regulators and is clearly under pressure in the U.S.

The suspension comes a month after the Department of Homeland Security froze a Wells Fargo account that Mt. Gox had been using to pay U.S. funds to the Dwolla mobile payment service. When it set up the account, Mt. Gox had failed to properly identify itself as a money transmitting business, a violation of U.S. anti-money-laundering regulations, the DHS said.

And that, according to some observers, has made it radioactive to U.S. banks.

Source: Wired. Read full article. (link)

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