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

Tue May 20, 2014 6:44am IST

A Bitcoin sign is seen in a window in Toronto, May 8, 2014.    REUTERS/Mark Blinch

A Bitcoin sign is seen in a window in Toronto, May 8, 2014.

Credit: Reuters/Mark Blinch

Related Topics

Coal Mining In The Punjab

Coal Mining In The Punjab

In Choa Saidan Shah miners dig coal with crude pick axes and load it onto donkeys to be transported to the surface earning a team of 4 workers around $10 to be split between them.  Slideshow 

(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. (r.reuters.com/wus49v)

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)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Hacking

TECH SHOWCASE

Samsung Results

Samsung Results

Samsung downbeat on Q3 prospects as profits slide.  Full Article 

Under Scrutiny

Under Scrutiny

Factbox - Google under European regulatory spotlight.  Full Article 

Internet Effort

Internet Effort

Facebook mobile app to offer free, limited Internet in Zambia.  Full Article 

Reducing Workforce

Reducing Workforce

Apple to lay off about 200 people at Beats - Bloomberg.  Full Article 

New Offering

New Offering

Amazon quickens push into tough local services market.  Full Article 

Drone Pioneer

Drone Pioneer

China's drone king says the revolution depends on regulators.  Video 

Telemedicine Service

Telemedicine Service

Khosla-backed startup hopes to bring doctors to patients' mobiles.  Full Article 

Sony Earnings

Sony Earnings

Sony warns smartphone weakness will brake profit progress after Q1 surge.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage