Mt. Gox Suspends Withdrawals In US Dollars

EnterpriseFinancial MarketsOpen SourceSecuritySoftwareWorkspace
BitCoin © Mopic, Shutterstock 2013

The virtual currency exchange assures users that taking a time-out will let it process transactions faster in the future

Mt. Gox, the largest BitCoin exchange in the world, is temporarily suspending cash withdrawals in US dollars. The company says the two-week hiatus will allow it to improve the trading engine.

The announcement is seemingly unrelated to the fact that last month, some of Mt. Gox’ funds were confiscated by the US Department of Homeland Security (DHS) which claimed the Tokyo-based business had violated US laws governing currency exchange and transfer.

A recent report by the US Government Accountability Office (GAO) called for the Inland Revenue Service (IRS) to start tracking virtual currency transactions and tax them.

Withdrawals in other currencies remain unaffected. BitCoin currently trades at around $110 for one Bitcoin.

Trouble in USA

Mt. Gox was established in 2010 as Magic: The Gathering Online Exchange – a platform for trading collectible game cards, but its focus soon shifted to transactions in alternative online currency.

BitCoin © Psim, Shutterstock 2013The company is going through something of a rough patch – in May, it was sued by CoinLab, a US-based exchange which claimed MtGox failed to transfer ownership of its US assets as per a November agreement, and demanded $75 million (£48m) in damages.

Now, Mt. Gox has suddenly stopped taking withdrawal requests in US dollars, explaining that the overwhelming demand “has made it difficult for our bank to process the transactions smoothly and within a timely manner”.

The exchange says two weeks will give it time to sort out the withdrawal process in American currency, and “dramatically” improve the performance of the trading engine.

“Please be reassured that USD deposits and transfers to Mt. Gox will remain unaffected, as will deposits and withdrawals in other currencies, and we will be resuming USD withdrawals once the process is completed,” says a message on the Mt. Gox blog.

Earlier this week, GAO published a report entitled “Virtual Economies and Currencies: Additional IRS Guidance Could Reduce Tax Compliance Risks”. In it, the watchdog criticised the handling of virtual currencies by the IRS, including those bought for real money in videogames. According to GAO, currency systems which exchange real-world money for virtual currencies, which are then used to buy either virtual or real goods, are subject to US taxes.

The report mentions Bitcoins and Linden Dollars from once popular virtual reality game Second Life (which was created in collaboration with Silicon Valley philosopher and ‘nanopayment’ advocate Jaron Lanier) as examples of such systems.

What do you know about Bitcoin? Take our quiz!

Read also :
Click to read the authors bio  Click to hide the authors bio