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Online payment platform Dwolla extinguishes every cryptocurrency-related service

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Online payment platform Dwolla extinguishes every cryptocurrency-related service.
The platform Dwolla is shutting its doors to virtual currency exchanges and other Bitcoin-related services . The online payment system warned its customers who operate cryptocurrency-related businesses via email, letting them know that the company is withdrawing its services as of 28th October (at 16:00 CT).
You can read part of the message sent to the clients here:
As you know, Dwolla does not sell, accept, mine, value, take possession of, or hold Bitcoin or any other virtual currency product, and none of Dwolla's users transact business with Dwolla using Bitcoin or any other virtual currency product. However, recent interest involving virtual currency and its exchanges has created uncertainty and confusion around virtual currency, and Dwolla's relationship with a small number of its exchanges. This has forced Dwolla to reassign resources, funds, and services.
As Dwolla gears up for a new stage of growth, we recognize that we can no longer sustain this merchant base (.1 percent of Dwolla merchants) and its unique needs, and that attempting to do so jeopardizes both of our communities' starkly different, but similarly ambitious, vision for improving payments.
Effective October 28, 2013 at 4pm CT, Dwolla will be withdrawing its service offerings to virtual currency exchanges and virtual currency related services.
We intend to work with you in meeting your needs and satisfying obligations to your customers.
The email also includes a list of events that clients should be aware of, which show that the company is gradually winding down the services available to its virtual currency customers before cutting them off completely.
October 10 (15h00, Eastern Time): only existing Dwolla users will be able to send funds to your business. October 15 (17h00, Eastern Time): your account will be limited to sending money only. You will no longer be able to receive funds from customers. You will be able to issue refunds to customers at this time. October 28 (17h00, Eastern Time): your account will be suspended. No further activity will be provided. October 29 (15h00, Eastern Time): you will receive a copy of your final statements in .CSV format. We will transfer any remaining funds in the Dwolla system to your linked bank account. If you have more than one bank account linked, we will use the bank account with the most recent transaction, unless you notify us otherwise. October 30 (and subsequent dates): If Dwolla receives a reversal or chargeback, we will notify you by email to the address on file. The email will provide the name of the sender and the dollar amount involved. The amount of the reversal will be debited the next business day from your linked bank account. If we fail to recover funds, we may utilize collections procedures. If you wish to receive an affidavit from the financial institution, you may request one by emailing contact form.

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Dwolla Put Us Out of Business, Bitcoin Exchange Says in Suit.
TradeHill, the Bitcoin exchange that shut down unexpectedly in February, is now blaming Dwolla Corp. for its demise and suing the payment provider for $2 million.
The suit, which revolves around chargebacks, underscores one of the challenges facing emerging payments companies: the lack of defined mechanisms for settling disputed charges. TradeHill claims Dwolla fraudulently advertised a no-chargeback policy.
"Visa, MasterCard and the other card providers have well-established chargeback practices that are well-understood by nearly all of the participating parties," says Beth Robertson, director of payments research at Javelin Strategy & Research.
Dwolla, of Des Moines, is a person-to-person payments provider that lets consumers pay each other digitally with just an email account or through social networks. TradeHill, of San Francisco, is one of about a dozen exchanges that allow people to trade traditional government currencies for Bitcoin, a purely digital currency that does not depend on any central issuing authority. As with cash, once a Bitcoin is spent, it's gone.
Like the other Bitcoin exchanges, TradeHill depended on providers like Dwolla to act as funding conduits from consumer bank accounts. Similar providers include Liberty Reserve and Paxum.
The suit -- which Jered Kenna, the chief executive officer of TradeHill, wrote about on his company's blog Tuesday -- alleges TradeHill incurred fatal losses last summer when Dwolla reversed $100,000 in credited transactions and "unjustifiably blocked an attempt by TradeHill to transfer $70,000 of its funds from Dwolla's control."
"As a result of these losses, TradeHill was unable to pay its employees and was forced to shut down exchange operations," Kenna wrote. The complaint accuses Dwolla of racketeering and bank and wire fraud.
Dwolla said Tuesday afternoon it was working on a response.
When TradeHill shut down in mid-February, it cited compliance burdens and the need to pursue proper licensing. At the time, Kenna wrote on the TradeHill blog that it was closing "due to increasing regulation" and to pursue proper money transmission licensing.
That blog post said the company would focus on a new site called, which was to have been a kind of supermarket of Bitcoin services including, but not limited to, exchanging Bitcoin for other currencies.
When asked about the discrepancy between that explanation and the claims in the suit, Pierre G. Basmaji, TradeHill's attorney, said: "TradeHill had been referring to [problems with Dwolla] since last year, but wanted to keep things quiet and first put together their allegations before coming out with the complaint."
Basmaji confirmed the amount of damages being sought but would not discuss the suit further. It was filed in U.S. District Court for the Northern District of California.
"We spent months attempting to contact Dwolla to resolve this dispute but were met with silence or obfuscations," Kenna wrote on the TradeHill blog Monday.
Dwolla recently raised $5 million from the venture capital firm Union Square Ventures.
In February American Banker asked Jordan Lampe, Dwolla's chief executive, whether his company was the unidentified payment processor that Kenna, in the earlier blog post, claimed had removed $100,000 from TradeHill's account "without notice."
In response, Lampe wrote in a Feb. 17 email, "We operate legally under a very defined set of laws and regulations [and]...we can't/won't comment on individual accounts, past or present. We are extremely focused on our financial institution products right now."
TradeHill also alleges that Dwolla's actions hurt its reputation and scuttled its plan for On Tuesday afternoon, that domain appeared to be disabled.
The blog BetaBeat reported the suit earlier Tuesday.

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Homeland Security cuts off Dwolla bitcoin transfers.
Immigration and Customs Enforcement confirms an "ongoing investigation" that led to Dwolla cutting off bitcoin transfers to Mt. Gox.
The U.S. Department of Homeland Security confirmed it has initiated legal action that prompted the Dwolla payment service to stop processing bitcoin transactions.
Nicole Navas, a representative for U.S. Immigration and Customs Enforcement, confirmed the legal action to CNET this afternoon.
Dwolla, a Des Moines, Iowa-based startup, which raised $16.5 million in funding two weeks ago, notified users about the move earlier Tuesday. It blamed the decision on "recent court orders" limiting its ability to send money through Mt. Gox, the largest bitcoin exchange.
"In order not to compromise this ongoing investigation being conducted by ICE Homeland Security Investigations Baltimore, we cannot comment beyond the information in the warrant, which was filed in the District of Maryland earlier today," Navas told CNET.
Mt. Gox did not respond to questions from CNET. It did, however, post a statement to its Google+ account saying:
MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox. We take this information seriously. However, as of this time we have not been provided with a copy of the court order and/or warrant, and do not know its scope and/or the reasons for its issuance. MtGox is investigating and will provide further reports when additional information becomes known.
Chris Coyne, co-founder of OkCupid, posted a screen snapshot of email he said he received from Dwolla this afternoon. It says: "Dwolla will be unable to complete your recent bank transfer [to Mt. Gox] and any future transactions."
Dwolla is not elaborating. Jordan Lampe, a company spokesman, told CNET that "Dwolla advanced the news of the seizure to Mt. Gox in under an hour of its execution. At their request, Dwolla followed up the initial communication to Mt. Gox with a copy of the warrant." Lampe said questions should be directed to Homeland Security or Mt. Gox, and refused to release a copy of the warrant.
Even though ICE's name refers to immigration and customs, the agency's actual mandate is far broader.
ICE's Homeland Security Investigations unit boasts 7,000 special agents in 200 U.S. cities that focus on crimes including drug smuggling, financial crimes, computer crimes, and export enforcement. That has included seizing Internet domain names, targeting sports streaming sites, and arresting a student for jailbreaking game consoles.
Homeland Security declined to elaborate on the warrant or court proceedings.