US-Based eTailers Increasingly Accept Bitcoin

More US-based online retailers—including Dish Network, Expedia, and Overstock.com—are allowing payments via bitcoin. Market analysts say the virtual currency is moving toward mainstream acceptance for online purchases, with full adoption occurring in about five years. Currently, market analysts note, consumers still prefer to use credit cards. Continuing volatility in the bitcoin exchange rate, which is unregulated, is also deterring consumer acceptance. However, merchants like using bitcoin to avoid credit-card fraud and transaction fees paid to credit-card companies. (Reuters)(Mashable)

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US Bitcoin Hardware Maker Hit with Complaints

Roughly 300 complaints have been filed with the US Federal Trade Commission against a Bitcoin hardware maker that has failed to ship product to customers. Butterfly Labs, a Kansas-based manufacturing company that provides hardware for virtual currency mining operations, has faced numerous accusations of fraud and is in federal court now with a lawsuit, having previously lost a 2013 civil suit. The complaints lodged against the company are from customers around the world, including Argentina, Canada, and Estonia, filed between September 2012 and April 2014 whose orders were never filled or else requested refunds that never materialized, according to Ars Technica. In the court documents it obtained, a Kansas federal judge told the company’s co-founder, Sonny Vleisides, “his company had a ‘strong smell’ of fraud about it during a probation hearing.” (He is on probation after entering a guilty plea in connection with a 2010 lottery scam. The judge extended his probation an additional two years.) Butterfly Labs has claimed it has experienced manufacturing delays. “In light of new details from the recently published transcript of that January 2014 probation hearing,” concluded Ars Technica, “the legitimacy of the Butterfly Labs operation could soon be decided once and for all.” The FTC merely fields complaints, acting on them as warranted, which may include and investigation and possible litigation. It does not guarantee those complaining consumers that they will receive any refund. (Ars Technica – 1)(Ars Technica – 2)

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Bitcoin Exchange Mt. Gox Closes amid Allegations of Missing Funds

The Tokyo-based bitcoin exchange that was once the largest in the world abruptly closed on 25 February. Its website is offline and its headquarters are empty. The only activity is outside its offices, where protesters are picketing after losing money on their bitcoin investment. Wired.com reports that the closure is the result of Mt. Gox “losing hundreds of millions of dollars due to a years-long hacking effort that went unnoticed by the company.” The exchange, open since 2010, reportedly lost 744,408 bitcoin, valued at roughly $425 million based on current exchange rates. Mt. Gox’s closure follows a series of events that began 23 February when CEO Mark Karpeles resigned from the Bitcoin Foundation board. The company abruptly suspended trading today citing “unusual activity.” The website was taken down in the following hours. Six other bitcoin exchanges—Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle—issued a statement that read in part, “This tragic violation of the trust of users of Mt. Gox was the result of one company's actions and does not reflect the resilience or value of bitcoin and the digital currency industry.” (Reuters)(Associated Press @ San Francisco Chronicle)(WIRED)
 

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Banks Back off Bitcoin

The list of international governments and financial institutions concerned about Bitcoin is growing. Bank of France issued a warning about the risks associated with the digital currency, including its volatility as of late. The valuation rose late last month to $1,000/Bitcoin. China also issued a warning against trading in Bitcoin. Canada’s so-called “Big 6 banks,” including Scotiabank and National Bank, have reportedly frozen or shut down accounts owned by Canadian companies that trade the digital currency and convert it to cash. The US government is also investigating the digital currency. Bitcoin is unregulated and not backed by any central bank or government. Governments’ other primary concerns include money laundering and the ability for individuals to use it to circumvent currency controls. (Financial Times)(Global News)(Reuters – 1)(Reuters – 2)

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