Here's Why The Feds Shut Down The World's Biggest Bitcoin Exchange

Ars Technica reports on the finer details of how the government was able to shut down Mt. Gox, the world’s largest Bitcoin exchange.

Homeland Security says it had probable cause to believe that Mt. Gox is guilty of money transmitting without a licence. Companies like PayPal and Western Union have this licence, but Mt. Gox does not.

Punishment for money transmitting without a licence is a fine or a maximum of five years in jail.

By using a confidential informant to move Bitcoins through Mt. Gox to Dwolla, one of the most popular ways to turn the digital currency into physical currency, authorities were able to trace the money and find it to be a violation.

This is an interesting (and major) way for the government to acknowledge Bitcoin.

We reached out to Dwolla, but it was unable to provide us with any additional information.

NOW WATCH: Tech Insider videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.