Mt. Gox Registers with FinCENMt. Gox Registers with FinCEN

Six weeks after federal agents seized $2.9 million from its US accounts, Mt. Gox filed the compliance paperwork it should have had all along. The exchange handling 70% of global Bitcoin volume was trying to get right with US regulators. It was already too late.

The Regulatory GapThe Regulatory Gap

FinCEN issued its first formal guidance on virtual currency businesses in March 2013, just eight weeks before the seizure. The rules were new, but they were clear: any company transmitting money in the United States had to register as a money services business. Mt. Gox had been operating for years and handling millions in US dollar flows with none of the required controls in place.

The SeizureThe Seizure

On May 14, 2013, the Department of Homeland Security obtained a warrant and seized $2.9 million from Dwolla accounts belonging to Mutum Sigillum LLC, Mt. Gox's US subsidiary. The charge was straightforward: operating an unlicensed money transmission business. Mt. Gox had never registered with FinCEN. It had no anti-money-laundering program, no suspicious activity reporting, and no proper record-keeping. The DHS seizure was the inevitable result.

The FilingThe Filing

CEO Mark Karpeles submitted the FinCEN registration on June 29, six weeks after the seizure. It was a compliance fig leaf. The banking relationships Mt. Gox needed to process US dollar withdrawals were already gone. Wells Fargo and Bank of America had both cut ties. USD withdrawals that should have taken days were stretching into weeks, then months. The paperwork changed nothing.

The Bull Run BackdropThe Bull Run Backdrop

The timing made the situation more absurd. Bitcoin was entering its historic 2013 bull run, climbing from around $100 in April toward $1,000 by November. Mt. Gox sat at the center of that market, handling the majority of global Bitcoin trading volume. While the price surged, its back office was quietly collapsing. The company that the world relied on to price Bitcoin could not reliably move dollars.

The EndThe End

Eight months after the FinCEN filing, in February 2014, Mt. Gox suspended all trading and filed for bankruptcy in Tokyo. Approximately 850,000 Bitcoin were missing, worth around $450 million at the time. The June 29 registration was, in retrospect, the clearest public signal of what was coming: a company attempting to paper over a structural collapse it had no way to stop.

Part of an ongoing series on Bitcoin history. This event falls on June 29, 2013.