GO
Loading...

Bitcoin Clampdown: Major Exchange Enforces User Checks

Thursday, 30 May 2013 | 7:43 AM ET
Getty Images

Bitcoin fans learned that one of the virtual currency's major exchanges will enforce customer verification checks from Thursday, two days after U.S. authorities revealed they had shut down a rival digital money transfer company.

(Read More: US Busts Bitcoin-Like System Liberty Reserve in Costa Rica)

Mt. Gox, the world's biggest Bitcoin exchange, announced on Thursday it had altered its code of conduct, meaning now users must now verify themselves to perform any currency deposits or withdrawals.

"Beginning May 30, 2013, all Mt. Gox user accounts are required to be verified, in order to perform any currency deposits and withdrawals," said Tokyo-based Mt. Gox, in a press release on its website.

"The Bitcoin market continues to evolve, as do regulations and conditions of compliance for Mt. Gox, to continue bringing secure services to our customers. It our responsibility to provide a trusted and legal exchange, and that includes making sure we are operating within strict anti-money laundering rules, and preventing other malicious activity."

Bitcoin users expressed their opinion on Mt. Gox's Facebook page after the announcement, expressing a mix of delight and anger.

"This is good, every improvement of security is good," Martin Wiszczor wrote. However, Greg Fultz vented his frustration in the same post. "So much for unregulated currency," he said.

Bitcoin is a virtual currency that allows users to exchange online credits for goods and services. While there is no central bank that issues them, bitcoins can be created online by using a computer to complete difficult tasks, a process known as mining.

(CNBC Explains: Bitcoin)

Coming soon: An ATM for bitcoins
The world's first vending machine for the digital currency is coming to Silicon Valley, reports CNBC's Jane Wells.

Mt. Gox's security has come under fire from users recently, after a series of hacking attacks, called distributed denial-of-service attacks (DDoS), delayed orders and panicked sellers, leading to price crashes.

While Thursday's move may not end the hacking attacks, it may placate U.S. regulators in the short-term, after the closure of Liberty Reserve, which is based in Costa Rica.

(Read More: After Government Raid, Jittery Future for Bitcoin)

Five people associated with Liberty Reserve were arrested last Friday and bank accounts were seized. In a statement, officials said Liberty Reserve had been widely used around the world by cyber-criminals.

(Read More: Bitcoin Great for Narco-Dollar Traffickers: Pro)

Mt. Gox, which claims to handle over 80 percent of all Bitcoin-U.S. dollar trades, has suffered its own share of drama. The U.S. Department of Homeland Security seized its bank account earlier in May, saying it had not property registered as a money services company when it opened two years ago.

By CNBC.com's Matt Clinch; Follow him on Twitter @mattclinch81

  Price   Change %Change
Bitcoin/USD - MT Gox
---

Featured

Contact Technology

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More
  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.