The recent finding of misplaced Bitcoin worth $166 million spurs the US to continues regulation efforts regarding money laundering and protection of owners, but not every department is concerned. Terrorist finances came up on March 18, and apparently they usually, “need ‘real’ currency, not virtual currency,” to handle their bills according to US Treasury Undersecretary for Terrorism and Financial Intelligence.
Thursday Mt. Gox discovered $116 million. It was all in Bitcoin, 200,000 of them, and they had apparently not been stolen but instead kept in “old-format wallets.” These are only around 24 percent of the missing coins, but the chief executive, Mark Karpeles, said this was the amount that remained in wallets the company used before June 2011. In his statement, Karpeles said the old wallets were searched after they filed bankruptcy when Mt. Gox lost 750,000 belonging to customers and over 100,000 of their own.
A plaintiff’s attorney of the class-action lawsuit in Chicago, Jay Edelson, is working on the case to prevent Mt. Gox and Karpeles from moving money from the United States. They are also requesting a full account of Mt. Gox’s assets. Edelson said he was a part of a group that found 200,000 coins with code tracing back to Karpeles. They believe that the coincidental discovery happened because Mt. Gox realized people knew that these coins were in their possession. Because that information had become public and much discussed, Edelson said it was their belief that the company chose to claim the coins to the public with a story of how they discovered them.
Bitcoin Found as US Regulation Efforts Continue
Karpeles testified in bankruptcy court that hackers were responsible and Mt. Gox had been the target of large-scale attacks. He then admitted the business knew it was insolvent but chose to continue operating. It is still unknown why there was such a discrepancy between the company’s bank accounts and the cash liabilities from their balance sheet. The discovered coins are reassuring, however the owners with funds tied to Mt. Gox still can only view their wallets, and no withdrawals can be made at this time. Finding the Bitcoin was a step forward, however the argument for regulation continues with some US efforts now expanding to protecting the owners.
Mt. Gox was falling before losing and being robbed of coins. Bulgaria based BTC-e, and Slovenian Bitstamp were rising to the top as Mt. Gox decreased in popularity. No matter which exchanges come out on top, they are dealing with a digital currency that is more comparable to gold than actual money. No bank is going to reimburse lost coins as these events impact the traders. Afraid that Mt. Gox set a precedent for how all exchanges could fall, and wanting to tax Bitcoin, many countries are now discussing regulations.
The founder of the only exchange that has ever been in New York was arrested on money laundering charges and the company is no longer running. Proposals for establishing regulated exchanges in New York will now be accepted by the Sate Department of Financial Services. Ben Lawksky, the state’s first Superintendent of Financial Services, was urging the state towards, “robust standards for consumer protection, cyber security, and anti-money laundering compliance.”
Some legal work is hindering Bitcoin trade on both business and consumer side internationally because unregistered exchanges have attracted interest from The Treasury Department’s Financial Crimes Enforcement Network (FinCEN). The desire for secure exchanges continues, and Texas is making efforts in that direction, working to find a solution that will keep Bitcoin investors safe. An emergency order stopping a private energy exploration company from taking Bitcoin from any non-accredited investors was issued by the commissioner of Texas State Securities Board. The company will now disclose to their potential investors that Bitcoin can come with risks as the price fluctuates.
By Whitney Hudson