BitCoin Exchange BitFloor Shuts Down

Tyler Durden's picture




 

In an amusing development, one of the key alternative BitCoin exchanges, BitFloor, has just announced it is forced to shut down immediately. It is amusing, because one of the primary reasons attributed by the BTC pundits for the recent crash from $260 to $50 was errors and faults in the primary bitcoin exchange MtGox. Well, with alternative exchanges forced to shut down, this may mean the only "faulty" marketplace will sees it monopoly power increase further. It is also ironic because as BitFloor disclosed it "can no longer provide the same level of USD deposits and withdrawals as we have in the past." Whatever happened to decentralized, and unencumbered by legacy fiat currencies?

The Verge has some more:

Bitcoin exchange BitFloor is closing its doors, halting trading and announcing that it will return everyone’s funds. In an announcement on its main site, the company’s founder, Roman Shtylman, says that "due to circumstances outside [BitFloor’s] control" it "must cease all trading operations indefinitely." More specifically, BitFloor says that because its US bank account is closing it won’t be able to provide the same level of dollar deposits and withdrawals that it has been up to this point. The news comes after weeks of DDoS attacks and technical problems at leading exchange Mt. Gox and a roller coaster ride of price fluctuations that saw Bitcoin tank from a high of over $200 back down to a low below $70. The news was reported by The Next Web.

 

Back in September, BitFloor was hit with a $250,000 theft after an attacker got access to an unencrypted backup set of keys for the exchange’s wallet — the software through which people (and organizations) access and transfer their coins. The exchange managed to get back online within a few weeks, with Shtylman announcing his intention to repay the stolen funds.

 

Overall, BitFloor is tiny compared to Mt. Gox — it does less than four percent of that exchange’s trading volume — but it represented an important alternative in the highly concentrated market. At this point it’s still unclear what exactly happened with BitFloor’s US bank account that required such a speedy exit, but a Reddit user points out that the exchange is registered with FinCEN — the US Treasury Department’s Financial Crimes Enforcement Network — indicating that everything was seemingly above board with the US government. We’ve reached out to Bitfloor for comment on what precipitated the closure, and will update if and when we hear back.

In other news, and from the main, and apparently only remaining BitCoin exchange we get:

  • Dear Mt. Gox customers. We are currently experiencing a downtime and will update ASAP. Apologies for the delay.

With the electronic market in limbo, at least demand for physical BitCoins appears to be solid to quite solid... Oh wait.

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Thu, 04/18/2013 - 08:59 | 3465841 achmachat
achmachat's picture

but it seems to be extremely easy for .gov to shut these things down! Just shut down the exchange's bank account, because they control all bank accounts!

O the irony!! the outside the system currency doesn't work because it needs the system...

Thu, 04/18/2013 - 09:02 | 3465865 Gief Gold Plox
Gief Gold Plox's picture

"lie outside US jurisdiction"

Just like lets say Suisse bank account holder's names. Oh wait.

Thu, 04/18/2013 - 09:04 | 3465873 idea_hamster
idea_hamster's picture

"announcing that it will return everyone’s funds"

What a bunch of retarded amateurs!

Thu, 04/18/2013 - 09:07 | 3465890 toys for tits
toys for tits's picture

BitFloor bit the dust.

 

#BitTheDustCoin

 

Thu, 04/18/2013 - 09:13 | 3465924 HoofHearted
HoofHearted's picture

In other news, BeanieBabyFloor will also be closing its doors...because nobody gives a shit! 

Thu, 04/18/2013 - 10:28 | 3466254 malikai
malikai's picture

Comparing BTC to beanie babies.

LOL

Thu, 04/18/2013 - 11:11 | 3466523 Old_Dog
Old_Dog's picture

At least I can give my daughter a Beanie Baby

 

"Here, darling, in my (empty) hand is a Bitcoin.  You can take it and spend it nowhere".

Thu, 04/18/2013 - 13:28 | 3467135 malikai
malikai's picture

Apples, Oranges.

At any rate, what appears to have happened to BFL is their Bank decided to stop doing business with them. They will be closing their accounts and refunding money. This is less suck than previous closures some of which resulted in seizures.

It is a risk. And it will continue to happen. If you're stupid enough to put all your money on an exchange, that's your mistake. The same applies to MFG/PFG/etc.

Thu, 04/18/2013 - 14:16 | 3467326 Harlequin001
Harlequin001's picture

They're going to return everyone's funds... at what price, $260?

Thu, 04/18/2013 - 15:38 | 3467697 malikai
malikai's picture

If you are trading, you'll probably have some USD and some BTC in your account. In that case, you probably already have your BTC by now, since most people have already taken that back. The USD you will get back as they process the wires and draw it all down.

Provided nobody gets scammed in this (a risk), everyone gets back what they have. Most people don't keep much money on any single exchange anyway, because this isn't the first time it's happened. Won't be the last, either. Cost of doing business I guess.

Thu, 04/18/2013 - 11:57 | 3466763 zuuma
zuuma's picture

beanie babies are stupid.

 

on the other hand, tulip bulbs are a very real, useful & tangible asset class.

Plant 'em. Play catch, Stack 'em. Eat 'em.

Just last year they were going for $1.22 a ton.  Now they're at $1.90 a ton!!!

(I got 2 TONS!)

There's no topside limit on this baby.  I'm Set for LIFE!

 

Get in before the real wave kicks in!

Thu, 04/18/2013 - 13:50 | 3467231 ncdirtdigger
ncdirtdigger's picture

No no no. Shares in the Mississippi Company are where you need to be. They are backed by the French government afterall!

Thu, 04/18/2013 - 22:29 | 3469586 MeelionDollerBogus
MeelionDollerBogus's picture

RIGHT, beanie babies have intrinsic value whereas bitcoins do not. So silly.

Thu, 04/18/2013 - 10:46 | 3466364 smlbizman
smlbizman's picture

2 things....nothing is outside this us's jurisdiction...and secondly are the returning funds being returned in dollars or bit coins..and as i type this the ebay guy is saying that bitcoin is a disruptive process that will be taken care of soon...

Thu, 04/18/2013 - 09:17 | 3465938 Pool Shark
Pool Shark's picture

 

 

Oh, well, back to "Magic the Gathering"...

http://en.wikipedia.org/wiki/Mt.Gox

 

Thu, 04/18/2013 - 09:42 | 3466085 DaddyO
DaddyO's picture

Where the heck is fonestar when you need him? Someone has to tell us plebes what all this really means.

DaddyO

Thu, 04/18/2013 - 10:39 | 3466324 JimBowie1958
JimBowie1958's picture

You really dont see how the theft of $250k+ might be a fatal loss for such small players?

Really?

There are some big players backing alternate currencies, a few of them billionares, as I understand it. They are not going to let bitcoin and its better cousins become bitdust.

lol

Thu, 04/18/2013 - 12:01 | 3466776 Herd Redirectio...
Herd Redirection Committee's picture

The owner left an unencrypted backup of the wallet on the server....  Yeah, I'm sure it was malicious hackers.

Thats like owning a bank and telling your buddies, "Yeah, tonight I will 'accidentally' leave the back door open, the vault open, and the cash lying there.  Hope its still there in the morning!"

Thu, 04/18/2013 - 12:11 | 3466810 Jack Napier
Jack Napier's picture

Rumor has it that fonestar can no longer afford an Internet connection after the BTC crash. Market commentary is dependent upon its pundits remaining solvent, unless they have the economy held hostage with derivatives.

Thu, 04/18/2013 - 14:38 | 3467388 moonstears
moonstears's picture

"Market participation is dependent upon its participant's remaining solvent, unless they have the economy held hostage with derivatives.".

Jack, I changed it a little and it's one of the most brilliant writings I've ever read. Thanks, man.

Thu, 04/18/2013 - 13:26 | 3467129 DaddyO
DaddyO's picture

What I see is a great idea swimming in a sea of sharks!

As long as the FED or any other CB has a vested interest in protecting their fiat currencies and the system that allows them, all bets are off for a competing mechanism of currency.

As long as there are rooms full of "hackers" with marching orders to disrupt any competeing currency, this type of outcome is certain...

DaddyO

Thu, 04/18/2013 - 10:36 | 3466297 WhiteNight123129
WhiteNight123129's picture

Well, well

How about starting an application that can be installed easily and provide for physical money to Bitcoin electronic money only.

In other words restrict bitcoin payments to physical gold coin.

What happens?

The Bitcoin dealer only has a physical stash of Gold, he does not need a bank account.

The bitcoin exhange rate with Gold is what matters, the reference to fiat currency is erased.

Bitcoin and Gold unite so that technically bitcoin becomes the only way to send physical Gold from one place to another, without bank account. So Gold never is referenced to fiat and bitcoin is never referenced to fiat. Bitcoin become the ally of Gold by allowing a secure anonymous Transfer of Gold from one place to other, bypassing the central banks and the banks. The problem of cost of transportation of Gold solved, the problem of corrupt banking system and control solved.

Again the bitcoin dealer has Gold as form of money only, no bank account. You design an application so that many people can become bitcoin dealers in precious metals. 

If you want to move your Gold from 1 place to the other, you load up your Gold to bitcoin, next you travel. On the other side of the transaction  you go to teh local bitcoin-Gold dealer and you get your Gold at the other side of the plane travel. Not traced, no link to banks at no point. The only thing you need is the internet not to be shut down.

People who want to do the same thing in a reverse flow do the same. The issue is interlinking the network of anonymous gold to bitcoin dealers.

 

 

 

 

Thu, 04/18/2013 - 12:21 | 3466856 TPTB_r_TBTF
TPTB_r_TBTF's picture

 

 

So in place of a paper gold account,

i would have an electronic gold account?

Thu, 04/18/2013 - 12:48 | 3466966 unununium
unununium's picture

See ripple.com

Ripple's distributed open banking network idea is interesting, but

 - including gold as a currency seems intractable for the same reasons gold is not traded as a currency on existing FX platforms

 - it's not actually open, "yet"

 - platform is polluted by inclusion of and emphasis on a proprietary currency "XRP" which the VC-backed company behind ripple, OpenCoin, intends to profit from via seignorage

 

Thu, 04/18/2013 - 22:30 | 3469593 MeelionDollerBogus
MeelionDollerBogus's picture

So long as fiat exchanges also exist this will create massive arbitrage of btc vs fiat vs tangibles. Btc needs to be limited to tangibles only to remain valid so that no fiat exchanges are used. So long as fiat exchanges are exposed to the btc system, no one else gets to play.

Thu, 04/18/2013 - 09:07 | 3465893 BLOTTO
BLOTTO's picture

What am i going to do with the shed size digital miner that was on order and coming to my house?

.

Does that thing hook-up to my X-box?

Thu, 04/18/2013 - 09:25 | 3465971 NoDebt
NoDebt's picture

I finally got Mt.Gox to stop kicking me a 502:BadGateway message.  My BitCoins are still worth $92 a piece, apparently.  I just can't..... um...... GET TO THEM right now.

I'm not sure we're going to have to wait for governments to shut down BitCoin, as was my original fear.  I'm pretty sure the internet hackers and the DDOS attackers are going to accomplish it much more quickly.

..... and then there was only one.  The original one.  Mt.Gox, where it all started.  Besieged on all sides, realizing the forces that want it dead are far more numerous and powerful than those who want it to live.  Under the waves it went.  And was heard from no more.

I need coffee.

Thu, 04/18/2013 - 09:24 | 3465993 toys for tits
toys for tits's picture

I'm sorry about your loss.

Thu, 04/18/2013 - 09:32 | 3466025 NoDebt
NoDebt's picture

Yeah, me too.  Me too.  This might be the best $500 I ever spent.  It's like have a front row seat to watch Mike Tyson beat up my old Computer Science professor.  I've already got blood splatter on me and the old Prof. is looking a little wobbly in the knees.

Thu, 04/18/2013 - 09:45 | 3466098 whether underground
whether underground's picture

+1

Thu, 04/18/2013 - 10:04 | 3466163 ParkAveFlasher
ParkAveFlasher's picture

We are taking a beating on the vanguard.

 

Thu, 04/18/2013 - 10:12 | 3466190 rubiconsolutions
rubiconsolutions's picture

So, it's kind of like having all your money, gold and silver too, in a safe deposit bank but the bank is closed....temporarily? It's there, your gold is worth $1,400/oz and your dollars are worth, er, crapola, but you can't get to it to pay your bills or buy food. What's the saying? "A bird in the hand is worth two in the bush."

Thu, 04/18/2013 - 09:38 | 3466054 toys for tits
toys for tits's picture

Blotto,

You'll be able to do a lot of math equations !!!

Thu, 04/18/2013 - 10:23 | 3466224 viahj
Thu, 04/18/2013 - 09:26 | 3465998 YHC-FTSE
YHC-FTSE's picture

"Lie outside US jurisdiction"

Please visit Europe's biggest EURO Bitcoin exchange and say that again:

https://bitcoin-24.com/more

 

 

Thu, 04/18/2013 - 09:53 | 3466129 sleigher
sleigher's picture

Our Service is momentarily not available.
1. All funds (EUR, USD, PLN, GBP & Bitcoins) are safe.
2. All withdrawals will be gradually processed chronologically from another bank account.
3. The Polish authority closed our Bank account in Poland.
4. Our lawyers are working with high pressure on a solution.

Thu, 04/18/2013 - 09:57 | 3466142 sleigher
sleigher's picture

https://www.bitstamp.net/

 

Appears to be working however...

Thu, 04/18/2013 - 10:29 | 3466259 Anglo Hondo
Anglo Hondo's picture

bitstamp working with new bank account details in Slovenia.  That's the EU country that is about to go bankrupt, right?

 

Thu, 04/18/2013 - 11:34 | 3466631 Joe Sixpack
Joe Sixpack's picture

Don't worry. At most yuou will lose 40%.

Thu, 04/18/2013 - 16:05 | 3467824 Tango in the Blight
Tango in the Blight's picture

And Mt.Gox is located in Tokyo, Japan. Which is soon to be irradiated to the point of fatal levels thanks to the blessing that is Fukushima.

Thu, 04/18/2013 - 22:32 | 3469596 MeelionDollerBogus
MeelionDollerBogus's picture

counter party risk, bitchez! And now back to our regularly scheduled boating accidentz…

Thu, 04/18/2013 - 09:30 | 3466009 mick_richfield
mick_richfield's picture

 

As long as the server and bank accounts used lie outside US jurisdiction then the FINCEN regulations mean nothing.

 

tee hee

Thu, 04/18/2013 - 09:42 | 3466083 Mr. Magoo
Mr. Magoo's picture

Are you implying that japans financial system is outside the treasuries jurisdiction??? It may be time to wake up

Thu, 04/18/2013 - 10:56 | 3466444 JimS
JimS's picture

There IS NOT a single square millimeter on this entire globe that "lies outside US jurisdiction". If you don't realize this simple fact, you are not paying attention.

Thu, 04/18/2013 - 11:37 | 3466655 therover
therover's picture

You mean they can get to my stash buried in Antarctica surrounded by Emperor Penguins  ?

 

Thu, 04/18/2013 - 22:31 | 3469601 MeelionDollerBogus
MeelionDollerBogus's picture

China. Russia. US tries but it still can not.

Thu, 04/18/2013 - 11:33 | 3466627 piceridu
piceridu's picture

Oh yeah, tell that to Kim Dot Com...

Thu, 04/18/2013 - 13:33 | 3467148 HoaX
HoaX's picture

Sorry for being a semantic nazi but it´s not Mt Gox as in Mount Gox (as opposed to Fort Knox) but MtGox as in Magic the Gathering Online eXchange, a bunch of nerds from a Magic the Gathering auction website started MtGox as a hobby project some years ago.

Thu, 04/18/2013 - 23:43 | 3469813 MoneyChasingReturns
MoneyChasingReturns's picture

"Mt Gox is based in Japan. As long as the server and bank accounts used lie outside US jurisdiction then the FINCEN regulations mean nothing."

 

Wrong... One American drug dealer selling his cash to a "bitcoin buyer" on the street then gets transferred to mtGOX. Then gets transferred to cash and wired to an offshore account being watched by the IRS in the Bahamas. From there it goes back to the exchange to bitcoin. Then to a Bitcoin Wallet in Colombia. From there a bitcoin transfer purchases a very discounted commercial real estate building in Cyprus. From there the bitcoin goes to Russia and is transferred to mtGOX and wired to a Russian Bank account.

US Drug Wholesaler cashed out

US based cash to bitcoin buyer got a great deal buying coin at a discount

Bahamas shell of a Cartel got the ability to launder money

Cartel Boss got payment

Cartel Boss Accountant made a "legal" investment with clean Bitcoin to Cyprus where he bought a 3 million euro commercial real estate deal at 1/2 price! From a desperate Russian Businessman

Cartel Boss Laundered his money and doubled it Tax free plus has a large income monthly from legitimate commercial rental income sent to a "Very Clean" Swiss bank account

Russian Businessman sent money to his business to cover expenses.

TAX PAID ZERO

 

Thu, 04/18/2013 - 09:03 | 3465862 unununium
unununium's picture

Yes that is the real story here. Not sure what Tyler's point was...

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