Catharsis Ours

Tim Hornyak · 2014-02-20T10:57:46+00:00

Going , going .... and then will Mt Gox just be gone ?

Bitcoin Price Hits $135 on Mt. Gox Following Office Move and Verification Demand

Jon Southurst (@southtopia) | Published on February 20, 2014 at 12:02 GMT | Companies, Exchanges,Mt. Gox, News

Updates and rumors related to Mt. Gox this week include: a possible company relocation, a requirement for users to hold verified accounts to withdraw bitcoins and a fall in Gox’s listed price of bitcoin.

A user contacted CoinDesk to tell of the verification requirement this morning, saying it “suddenly appeared” on the site. There hasn’t been an announcement of any change on Mt. Gox’s website, however, and other sources said the condition had been there for a while now.

The “Verifying Your Account” section of the website says: “All MtGox user accounts are required to be verified in order to perform any deposits or withdrawals.”

Verification has always been a requirement for depositing and withdrawing fiat currencies. The process involves supplying photo ID and proof of residence, similar to that of other exchanges. Some Mt. Gox customers have reported waits of several months to become verified.

Moving out?

Earlier this week, Mt. Gox also posted a notice on their user support page under the title “MtGox Co., Ltd Location and Address Change – February 19″ with the one-line message “MtGox Co., Ltd. (Japan) has moved to the address below”.

The address supplied is in the same neighborhood, but is possibly a virtual office space only. As yet, there has been no other indication the company has moved staff or equipment there.

The owner of Mt Gox’s office building is said to be annoyed at the attention the company has been getting lately, especially with protestors near the front door and various images of the building appearing on the web. This is not surprising in real-estate conscious and superstitious Tokyo, where even the most premium office space can attract a bad reputation that sticks for years.

Another statement was issued by the company today, which read:

“Thank you for your patience this week while we are working on re-initiating bitcoin withdrawals. In addition to the technical issue, this week we have experienced some security problems, and as a result we had to relocate MtGox to our previous ofﬁce building in Shibuya (details can be found here https://support.mtgox.com/home). The move, combined with some other security and technical challenges, pushed back our progress.

As much as we didn’t want to only provide an ‘update on an update’, this is the current status. We are committed to solving this issue and will provide more information as soon as possible to keep everyone in the loop.

We are very sorry for the delays and deeply appreciate your kind understanding and continuous support.”

Looking at the building’s floor guide in reception, it has few tenants other than Mt. Gox and its parent company, Tibanne.

Protestors, their friends and reporters for various financial media were asked several times by staff and security to step off the building’s premises, and stand only on the public street.

The attention began long before the current protest, with Wired sending a team there for the original unsuccessful doorstop interview attempt last November, and posting pictures of the building.

Also on the ground floor of Mt. Gox’s Shibuya headquarters is the ‘Bitcoin Cafe’, which Wired reported to be a Mt. Gox project due to open in December last year. Since Wired’s visit, some signage (covered) has been installed and several vans stopped to make deliveries during the day on Monday.

Price fall

The price on Mt. Gox last night and early this morning (GMT) hovered around $250 but started to decrease swiftly at around 06:45, falling to $135 by 08:00.

At the time of writing, the price on Gox is just under $150, while the CoinDesk BPI is much higher at $587.

coindesk-bpi-chart (1) — The price of bitcoin is much lower on Mt. Gox (in orange) than on the CoinDesk BPI (in black).

The last time the price of bitcoin on Mt. Gox was this low was back in early October, shortly after black marketplace Silk Road was shut down.

MtGox Update 20/02/2014 (mtgox.com)

Tokyo, Japan, February 20th, 2014

Dear MtGox Customers ,

Thank you for your patience this week while we are working on re-initiating bitcoin withdrawals. In addition to the technical issue, this week we have experienced some security problems, and as a result we had to relocate MtGox to our previous ofﬁce building in Shibuya (details can be found here https://support.mtgox.com/home). The move, combined with some other security and technical challenges, pushed back our progress.

As much as we didn’t want to only provide an “update on an update”, this is the current status. We are committed to solving this issue and will provide more information as soon as possible to keep everyone in the loop." " We are very sorry for the delays and deeply appreciate your kind understanding and continuous support." "

Best regards," " " MtGox Team

http://www.reddit.com/r/Bitcoin/comments/1yfinv/mtgox_update_20022014/

[–]surebetSA 5 points 1 hour ago

Reminder that their "new" address is in fact a virtual office:http://www.executivecentre.com/location/shibuya_cerulean_tower

For those unfamiliar with virtual offices: http://en.wikipedia.org/wiki/Virtual_office

It's basically a glorified PO box, they either still are at the same offices or they really are getting the fuck out and trying to hide their tracks

https://bitcointalk.org/index.php?topic=476535.msg5255853#msg5255853

Mt.Gox Class Action Suit

Today at 11:04:12 AM

#1

I have contacted the offices of my law firm (Bingham) in Tokyo to begin proceedings to sue Mt.Gox / Tibanne Ltd / Mark Karpeles for my USD funds. He advised me that suing for USD is much more reliable than suing for BTC (since the price varies and bankruptcy collection on BTC has an unclear legal process). We believe that there are numerous other plaintiffs in the early stages of filing suit and suspect that is why it appears that accounts are liquidating to cash on Mt Gox.

If you are interested in being co-plaintiffs in this suit, please PM me (I'm happy to split legal costs), and I will put you in touch with the partner I am dealing with. Note that you will need to provide full proof of identification as well as proof of account ownership on Gox (to be provided to Bingham, not myself).

In general, a class action type suit is most likely to get everyone their funds (or fair percentage thereof) than if we all file separate law suits.

If it happens that this, or other, lawsuit drives Mt.Gox into bankruptcy, Bingham is also experienced in bankruptcy negotiations to maximize our tier on collections. Hopefully we can collect before that, because Japanese bankruptcy law is not pretty.

http://www.pcworld.com/article/2099620/mt-gox-protesters-still-without-bitcoin-answers.html

Mt. Gox protesters still without bitcoin answers

By Tim Hornyak, IDG News Service

Feb 20, 2014 2:30 AM

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A small protest at Bitcoin exchange Mt. Gox in Tokyo marked seven days on Thursday, with demonstrators saying they want to ensure their bitcoins are safe.

The protesters began their demonstration last Friday and are demanding answers about getting access to their bitcoins on the exchange.

Citing a technical issue with the Bitcoin protocol that could allow fraud, Mt. Gox on Feb. 7 suspended bitcoin transfers to external addresses, a move that was followed by a plunge in the value of the digital currency.

“There is a minor technical glitch with Bitcoin and it is not a major security flaw. It does not prevent the ability to transmit the bitcoins,” said Aaron, a Tokyo resident who asked that his last name not be used.

Both Aaron and Kolin Burges, who flew to Japan from London to protest, said they have hundreds of bitcoins each in Mt. Gox and cannot get them back.

“A lot of my future is tied up in the money that’s inside Mt. Gox,” said Burges, a former software developer. “I was in a kind of semi-retired state, speculating on coins. If those coins disappear, I’ll have to think more about bringing money in through other means. It wouldn’t be very good for me.”

A third man who joined the duo on Thursday afternoon sported a silver mask and yelled “Where is our bitcoin?” in Japanese.

The protesters were streaming live their curbside vigil outside the offices of Mt. Gox owner Tibanne in Tokyo’s Shibuya district.

Tibanne, which is headed by CEO Mark Karpeles, did not respond to interview requests. Karpeles has told The Wall Street Journal that customer-related questions are confidential.

Meanwhile, a notice on the Mt. Gox support site said the exchange has moved to the 15th floor of Cerulean Tower, also in Shibuya.

The 15th floor is home to a company hosting “virtual offices.” A woman who answered the phone there said the company cannot discuss its tenants.

On Monday, Mt. Gox said it is continuing to implement a solution to the technical issue, known as “transaction malleability,” that will prevent any fraudulent exploitation of bitcoin transaction records.

It promised withdrawals would resume soon, and an update “by Thursday at the latest.” None was posted at time of writing.

The situation has led to speculation on online forums that Mt. Gox will collapse.

The fears have been reflected in the value of the bitcoin trading on the exchange. It touched a low of US$134 on Thursday before recovering to around $180, far below around $600 on other exchanges, as cited by CoinDesk.com.

The protesters said Mt. Gox has refused to tell them whether it has all the bitcoins it’s supposed to have.

“It does seem very clear that there needs to be more regulation of the bitcoin exchanges,” said Aaron, “at least with respect to protecting people’s funds and having transparency and ensuring that there’s no insider trading.”

He said he intends to maintain the protest until he gets convincing answers from Mt Gox.

http://www.mtgoxprotest.com/?p=36

Thursday 20th Feb 2014 – Where are MtGox? Live video feed at http://ustre.am/1aqKD

We are outside their original office now, the receptionist claims that MtGox have moved away but their parent company Tibanne are still here.

There is various speculation about what could be going on.

15:35 A new protester has joined and is not happy.

Stay tuned! We are watching events at the building.

Please watch our live video feed at http://ustre.am/1aqKD where Aaron is answering questions and giving updates

This chart is licensed under a Creative Commons Attribution-ShareAlike 3.0 Unported License.

Additional news items .......

Brazilian Central Bank Outlines Digital Currency Risks

Nermin Hajdarbegovic | Published on February 20, 2014 at 10:31 GMT | News, Regulation, US & Canada

The Central Bank of Brazil (Banco Central do Brasil) has issued a digital currency warning, joining the central banks of India, China and many other large economies across the globe in outlining risks associated with digital currencies.

The Brazilian warning does not bring anything new to the table, it reads likesimilar statements issued by other national regulators over the past few months.

The bank points out that digital currencies should not be confused with electronic money, as defined by Brazilian legislation. Unlike digital currencies, electronic money is governed by various normative acts and it allows the users to make transactions denominated in domestic currency.

Digital currencies do not, and therefore they are not considered ‘electronic money’.

No guarantees, no consensus

The Central Bank of Brazil points out that digital currencies and payment systems have been a subject of international debate for a while, but no concrete conclusions have been reached so far. It stated:

“Virtual coins are not issued or guaranteed by a monetary authority. Some are issued and brokered by non-financial entities and [others do] not even have a responsible authority for its issuance. In both cases, entities and persons who make or issue these virtual assets are not regulated or supervised by the monetary authorities of any country.”

The bank also pointed out that digital currency conversion cannot be guaranteed, as these currencies are not backed by tangible assets or traditional monetary authorities. The conversion value depends on the trust and confidence of those using the currency.

“There is therefore no government mechanism to guarantee the value of currency instruments known as virtual currencies,” the bank said. All the risk is in the hands of the users.

Volatility, illegal activities

Volatility is also mentioned as a serious concern. The low volume and limited acceptance of digital currencies can lead to substantial fluctuations, and the bank warns volatility could even lead to a “total loss” of value.

Another concern is that monetary authorities in different countries can use their power to introduce measures that can affect the prices of digital currencies, or take other actions that could hurt investors, or even inhibit trading. The bank warned:

“Moreover, these virtual instruments can be used in illegal activities, which may give rise to investigations conducted by public authorities. Thus, the user of these virtual assets, although acting in good faith, can become involved in these investigations.”

Lastly, digital currencies can be targeted by cyber criminals and stolen from digital wallets.

No threat to Brazil’s financial system

The Central Bank of Brazil concluded that digital currencies do not represent a risk to the national financial system, particularly in the retail payment space.

“The Central Bank Brazil is following the evolution of the use of such instruments and discussions in international forums on the subject – in particular about their nature, ownership and operation,” the bank said.

The organisation will keep track of international developments before it decides whether to adopt any measures within its mandate, provided they are applicable.

Hungarian Bitcoiners See Silver Lining in Central Bank Warning

Pete Rizzo (@pete_rizzo_) | Published on February 20, 2014 at 00:28 GMT | Europe, News, Regulation

The National Bank of Hungary issued a warning to its citizens about the potential dangers of virtual currencies on 19th February, calling the payment method “much riskier” than other electronic payment options such as credit cards.

The central bank cited bitcoin specifically in its statements, which it said were meant to ensure current and future users had the proper knowledge before investing.

Said the official release:

“The Bank warns consumers to be extremely cautious.”

The National Bank of Hungary did acknowledge the benefits of virtual currencies, nodding to their anonymity, speed and ability to cut out intermediary financial institutions, though it went on to say that these strengths also posed “significant risks and problems”.

For example, the bank noted that its stock market regulations currently do not apply to bitcoin, and that “no legislation” protects virtual currency customers.

The statement marked the first time the National Bank of Hungary has commented on bitcoin publically, and despite the fear, uncertainty and doubt these kinds of announcements can spread, the country’s virtual currency users are choosing to view the news as a positive.

A warm reception

Speaking to CoinDesk, president of our Hungarian Bitcoin Association David Pajor suggested the bank’s statements merely echoed past releases from the European Central Bank (ECB), and that more importantly, the remarks were not extreme, like those issued from Russia before its ban.

Pajor explained:

“The Hungarian Bitcoin Association is happy to have any authority say anything about bitcoin. The government, the tax authority, the national bank, everyone was silent about bitcoin.

So, first of all it’s great to hear anything about how to treat virtual currencies. It’s a great thing.”

Pajor was particularly pleased that the bank compared bitcoin to financial assets, suggesting that he believes it is a sign that bitcoin could gain legitimacy on similar grounds. In addition, he indicated that such statements, while seemingly negative now, could help lead to positive regulation down the road.

“This is the first step I think,” Pajor said.

Community impact

Tamas Blummer, founder and CEO of Bits of Proof, echoed Pajor’s belief that the statements will help smooth relations between the local community and regulators. Blummer said that Hungary has an “active community” of bitcoin users, and that local startups are becoming increasingly interested in the technology.

“There is quite a bit of buzz about bitcoin, unfortunately the legal environment is not yet clear,” he said.

On the subject of regulation, Blummer was optimistic about the future in light of the statements as well.

Stated Blummer:

“It’s an opportunity for us to ask for more, because this at least shows that they have to say something about it.”

Recent warnings

Notably, the statements come just two days after Ukraine issued its first guidance on bitcoin, and roughly one week after Greece broke its silence on the subject.

The tone of the recent statements, many of which draw on past remarks from the ECB, increasingly suggest that decisions from the European Union will set the tone for further action in eastern Europe and Asia.

Estonian Police Target Bitcoin Trading Site BTC.ee

Jaroslaw Adamowski | Published on February 19, 2014 at 17:34 GMT | Crime, Europe, Law, News,Regulation

As the Estonian authorities continue to tighten their grip on the digital currency trade, local bitcoin trading site BTC.ee (not to be confused withBTC-e) has announced via its website that it has “temporarily stopped trading due to threats issued by the Estonian police”.

The move follows a warning about bitcoin and other virtual currencies issued by a member of Estonia’s central bank earlier this year, in which he called bitcoin a “problematic scheme” and said that “virtual currency schemes are an innovation that [deserve] some caution”.

Otto de Voogd, the site’s owner, told local broadcaster ERR he had received emails in which the Estonian Financial Intelligence Unit of the Estonian Police and Border Guard Board said that, under the country’s Money Laundering and Terrorist Financing Prevention Act, he is obliged to provide personal information on the platform’s users and written proof that the site was operated in compliance with Estonia’s regulation.

Money laundering and terrorist finance

The act (translated into English) regulates the activities of Estonia-based credit institutions, financial institutions, the Financial Intelligence Unit and other agencies and persons with the aim of preventing money laundering and financing of terrorist activities.

It applies to the economic or professional activities of a wide range of persons, including credit and financial institutions, organizers of games of chance, intermediaries in transactions with real property, traders in transactions involving more than €15,000 or its equivalent, pawnbrokers, precious metals and stones traders, auditors, providers of trust and company services, and non-profit associations and foundations.

The BTC.ee website shows de Voogd’s new message.

Among other provisions, the act stipulates that, upon provision of currency exchange services, a provider of currency exchange services shall identify and verify all persons participating in the transaction if the amounts exchanged in cash either in a single transaction or related transactions exceed €6,400 or its amount in another currency.

In addition to this, the act includes an obligation to apply a range of due diligence measures if a situation involves a risk of money laundering or financing terrorist activities.

Should he fail to provide the requested information, including copies of clients’ IDs, to the authorities, he could be sentenced to three years of prison and imposed a fine of up to €32,000 ($44,000), de Voogd said.

Aivar Paul, the spokesperson for the Estonian Police, dismissed claims made by de Voogd that the emails were “threats”, he told ERR:

“We have simply noted in conversation with Mr de Voogd that without the registration required by the Money Laundering and Terrorism Prevention Act, offering financial service could be grounds for criminal proceedings for illegal economic activity.”

Lack of regulation

The available data suggests that to date, bitcoin has not gained prominence in Estonian retail. According to statistics released by Coinmap.org, there are currently only two outlets which accept payment in bitcoins in Estonia; a holiday location in Tallinn, the country’s capital; and car repair shop Kagu Auto in Võru, in Estonia’s south.

In comparison, the two neighbouring Baltic states, Lithuania and Latvia, host three and nine outlets which accept payment in the digital currency, respectively.

With 9,669 downloads of the bitcoin client and wallet to date, Estonia is ranked 56^th worldwide. Lithuania is 45^th, with 15,527 downloads, while Latvia lags behind its two neighbors at 59, with 7,918 downloads.

On his website, de Voogd said he offered transactions of between €50 ($69) and €500 ($690) worth of bitcoins:

“[I aim to serve] people with a legitimate interest in using bitcoins, such as converting into euros a few bitcoins they’ve received or paying for an online service with bitcoins.”

According to the latest updated bitcoin exchange rates from 19^th February, BTC.ee was selling at €474.40 ($652.3) and buying at €432.50 ($594.6) per bitcoin. According to data from 19^th February, the website was not included on the list of bitcoin markets maintained by bitcoincharts.com.

De Voogd claims that BTC.ee did not allow third-parties to participate in the virtual currency trade, limiting the scope of the site to his personal dealings with the users. He also pointed to the lack of regulation on the use of bitcoins in financial transactions carried out in Estonia.

“Promoting bitcoins is just a hobby for us, we do not wish to make a big operation out of this,” the Estonian site says.

Israeli Regulators Issue Joint Warning on Cryptocurrencies

Nermin Hajdarbegovic | Published on February 19, 2014 at 13:54 GMT | News, Regulation

The Bank of Israel (BoI) and the Israeli Ministry of Finance have issued a joint statement calling on the public to exercise caution with regard to digital currencies.

The warning falls in line with what we’ve heard from regulators across the world over the past few months.

The Bank of Israel and the ministry stress that digital currencies are not legal tender, nor are they issued or backed by a central bank, which means there is not legal requirement for anyone to accept or exchange them.

The joint statement was issued following a meeting convened by the Governor of the Bank of Israel, with the participation of representatives from the Capital Market, Insurance and Savings Department, the Israel Tax Authority, the Israel Securities Authority, and the Israel Money Laundering and Terror Financing Prohibition Authority.

The participants agreed to continue to examine various perspectives related to digital currencies.

Anonymous transfers, risk of fraud

Israeli regulators highlighted that digital currency transfers can be anonymous, which means they can be used to dodge taxes, launder money and finance terrorism.

Thus, financial institutions will need to take this fact into account in their risk management policies and keep the Israeli Money Laundering and Terror Financing Prohibition Authority in the loop.

Another problem is fraud: Israeli regulators warn that digital currencies are “fertile ground” for fraudulent activities, including Ponzi schemes. They can be used to devise innovative products and attract potential investors who don’t understand what they’re getting themselves into.

Transactions cannot be cancelled, so digital currencies offer limited recourse in case something goes wrong – a fact easily exploited by fraudsters.

Volatility and security

Unsurprisingly, volatility is also mentioned in the warning. Security is another problem addressed in the warning. Since transactions are processed using decentralised peer-to-peer networks, many of them remain anonymous and difficult to trace.

This makes digital currencies suitable for illegal activities and it also warrants attention from law enforcement authorities. Law enforcement could even close trading platforms and prevent the use of customer’s capital held by affected platforms, the regulators warn.

In addition, exchanges usually don’t operate under a license and they lack oversight. In several instances exchanges were successfully targeted by attackers and many proved unstable and prone to questionable business practices.

Theft is yet another possible problem. Since most digital currencies are stored on computers, they are susceptible to cyber attacks. In addition, the loss of a device holding the bitcoins or a wallet password can also lead to the loss of digital currencies.

Of course, experienced users know how to steer clear of such risks.

What next for Israeli users?

The warning is more or less standard, it echoes what we’ve been seeing from regulators across the world for months. Israel does not appear willing to introduce any new restrictions or prohibitions on digital currency, concluding:

“In light of the issues noted above, the Bank of Israel, the Capital Market, Insurance and Savings Department, the Israel Tax Authority, the Israel Securities Authority, and the Israel Money Laundering and Terror Financing Prohibition Authority recommend to members of the public considering the use of decentralized virtual currencies to understand their characteristics, to be aware of the unique risks inherent in their use, and to display heightened awareness and caution. With this, the authorities in Israel join regulators in the US, Canada, the EU, and elsewhere, who have published similar warnings to the public.”

Earlier this year it emerged that Israeli regulators were taking a “wait and see” approach – they were waiting to see what the rest of the world would do about cryptocurrencies.

For all intents and purposes, the use of digital currencies in Israel remains legal and unregulated, despite this latest warning.