The biggest and most famous Bitcoin exchange platform in the world, the Japanese-based Mt. Gox, temporarily stopped paying out customers in US dollars. The decision was taken on June 20 and Mt. Gox didn’t exactly explain what happened, only referring to an “increased volume” of transactions that was making them suspend US dollars withdrawals for two weeks.
The service blames the processing of “the sheer volume” that’s made by their banks in Japan, “which is causing a delay” in the all process, according to Thomas Glucksmann-Smith, from Mt. Gox. “We are currently attempting to improve our services for this. In the meantime, USD deposits are unaffected, as are other currencies“. Well, not the deposits, but the withdrawals are a different story…
This might not have nothing to do with Mt. Gox’s recent past, but we can’t help to remember that the company has recently fallen afoul of regulators and is being pressured by the USA authorities, like FinCen.
This suspension is happening only a month after a Mt. Gox’s account at Wells Fargo, which was used to pay funds to the Dwolla mobile payment service, was frozen by the Department of Homeland Security. According to some experts, banks didn’t like this and are closing their doors to the company. At least, that’s the opinion of Larry De Palma, the CEO of the financial service TDG-Phenix. “They can’t go out and trade or cover trades”, he says, confirming the suspicions out there: Mt. Gox might be suffering a serious liquidity problem.
The problem is that US banks are apparently afraid of doing business with Bitcoin companies, especially because that might draw the attention of the regulators, says Will Voorhees, director of the financial intelligence unit with Silicon Valley Bank. Although it’s a very different subject, the recent shutdown of Liberty Reserve contributed to this general fear. “I’ve been in this space for 10 years and I can tell you that I’ve never seen a more visceral reaction to an industry than the way I’ve seen banks respond to the digital currency industry”, claims Voorhees.
However, according to Thomas Glucksmann-Smith, that’s not the reason why the cash withdrawals were suspended: “this has nothing to do with the US banks”. Nobody, except for the people at Mt. Gox, can be sure for now. The reason that explains this suspension might be just a technical problem or a red-tape issue… But the timing is suspect, that’s for sure.