U.S. authorities probe bitcoin exchanges over illegal transactions: WSJ

Mon May 19, 2014 9:04pm EDT

A man walks past a building where Mt. Gox, a digital marketplace operator, is housed in Tokyo February 25, 2014. REUTERS/Toru Hanai

A man walks past a building where Mt. Gox, a digital marketplace operator, is housed in Tokyo February 25, 2014.

Credit: Reuters/Toru Hanai

Related Topics

(Reuters) - Several bitcoin exchanges including the now-defunct Mt. Gox received subpoenas from Manhattan federal prosecutors this winter as they look into possible ties between the exchanges and the online drug market Silk Road, the Wall Street Journal reported on Monday, citing people familiar with the matter.

The subpoenas to Mt. Gox demanded customer-transaction logs and materials related to solicitation of investors. The report did not mention any other bitcoin businesses that received subpoenas.

Mt. Gox's lawyers advised Chief Executive Officer Mark Karpeles against going to the United States after he was summoned by a judge there to testify for a class-action lawsuit, because they were concerned he would be arrested in connection with this case.

The prosecutors and Federal Bureau of Investigation agents are examining whether the exchange and others like it may have processed transactions connected to Silk Road, the people said.

The investigation was at an early stage and there were no conclusions yet on whether the exchanges were connected with Silk Road, one of the people familiar with the matter told the paper.

Last month, prominent bitcoin entrepreneur Charlie Shrem was indicted by a federal grand jury in New York on charges of funneling cash to Silk Road.

Shrem, one of the digital currency's most visible promoters, is accused of conspiring with a Florida man, Robert Faiella, to sell more than $1 million in bitcoin to the users of Silk Road despite knowing that it would be spent on illegal activities including drug trafficking.

It was preceded by the arrest of alleged Silk Road founder Ross Ulbricht in San Francisco last year when he was charged in federal court in Manhattan with counts relating to drug trafficking, money laundering and computer hacking, all stemming from his alleged involvement in the illicit online marketplace, which sold drugs and criminal services in exchange for bitcoin. After Ulbricht's arrest, the government shut down the website.

(Reporting by Mridhula Raghavan in Bangalore and Sophie Knight in Tokyo; Editing by Ken Wills)

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (3)
phmadore.com wrote:
What? It’s not bad enough that he is despised by his entire community, now he’s got to be responsible for some nonsense that went on in the United States, a country he’s never lived in? Garbage. Total garbage. I don’t like Bitcoin because of the people who are holding it all and no other reason. There are other great and exciting currencies that the people of the world have put forth as alternatives to the Dollar, Pound, and Yen, and these currencies can be traded on other exchanges such as Bittrex or AllCrypt. If you are reading between the lines here, you’ll notice that Reuters meant to publish this article almost six months ago. Why did they wait? Is it because BTC went up $10USD today? Listen, don’t ignore the Cryptocurrency movement. It precipitates the collapse of all corrupt governments everywhere and insinuates a better future for all of us, one decided by all of us. And blood? Well, I suppose as long as fascists are in play, there will have to be blood.

May 20, 2014 4:00am EDT  --  Report as abuse
bitcoinrocks wrote:
how many bank owners/managers have been charged=millions stolen. No they just go on stealing.
have the liar`s Blair and Bush been charged=millions dead.
If i get cash from my bank and buy drugs are the banks going to be charged.
this story is proof of corruption on a global scale. all large companies and govenments fear losing control.

May 20, 2014 10:24am EDT  --  Report as abuse
DirtAddsHP wrote:
funny how they arent looking into cash transactions.. used every day for illegal things and laundered… oh wait, that stuff is printed by the millions every day and the government has full control of the presses. They dont with bitcoin and thats why they are looking for something bad.

May 21, 2014 4:56pm EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.