26 August 2016
Find out more

Paxum ditches Bitcoin as Tradehill exchange shuts down

20 February 2012  |  9303 views  |  0 Euro Coin Cash

Bitcoin's tribulations continue, with e-wallet provider Paxum ceasing all business involving the virtual currency after coming under pressure from MasterCard and banks, and major exchange TradeHill shutting down.

For the past year, Canadian electronic commerce payments outfit Paxum had been an option for Bitcoin users wishing to transfer funds to and from exchanges.

However, spokesperson Ruth Blair says in a message board post that after two weeks of talks with banking partners, MasterCard and auditors, Paxum has decided to cut ties with Bitcoin, closing all accounts related with the currency.

"After much discussion and consideration it has been decided that, though Bitcoin's are not illegal, they are considered high risk. At Paxum we do not want to jeopardise our clients, or our business model, in any way. In light of that, and after considerable consultation, we have chosen to take the pro-active step of ceasing all business with Bitcoin and Bitcoin Exchangers," says Blair.

After accounts were closed and "conspiracy theories" swept forums, Blair posted a second statement saying banks "instructed us to close all Bitcoin-related accounts. We had no choice but to follow those instructions and therefore, all Bitcoin associations were severed on Friday [10 February]."

In a separate blow to the currency, Bitcoin exchange TradeHill has shut down, blaming Paxum's decision, regulatory changes and a dispute with a payment processor.

Says CEO Jered Kenna: "Due to increasing regulation TradeHill can not operate in it's current capacity without proper money transmission licensing. Combined with multiple bank account closures and Paxum's decision to close all Bitcoin business accounts, we have deemed the best course of action is to halt trading and pursue licensing while raising funds."

Kenna also revealed that "one of our payment processors removed over $100,000 dollars from our account without notice" meaning employees have been working without pay for months. TradeHill says it is taking legal action against the unnamed processor and hopes to release a new site by the end of the month.

The latest blows saw Bitcoin's value slump around 20% to about $4.50 on the MT.Gox exchange, well down on its peak of $30 last summer.

Finextra verdict: Taken at face value, Paxum's decision to cut ties with Bitcoin is worrying. From the blockade of WikiLeaks to the attempts by US politicians to debarr Iran from the Swift network, it now seems acceptable for politicians and payment scheme incumbents to use their muscle to switch off infrastructural support for potential trouble-makers. At what point does a legitimate business decision become an abuse of power? We're treading a fine line here people.

KeywordsE-COMMERCE

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Bitcoin POS system developed

Bitcoin POS system developed

21 October 2011  |  12424 views  |  0 comments
Exchange lets users pay cash for Bitcoin at bank branches

Exchange lets users pay cash for Bitcoin at bank branches

22 August 2011  |  12415 views  |  0 comments
US customs agents turn away Bitcoin-dependant visitor

US customs agents turn away Bitcoin-dependant visitor

27 July 2011  |  11006 views  |  0 comments
Phoney Bitcoins caused MT Gox virtual currency crash

Phoney Bitcoins caused MT Gox virtual currency crash

05 July 2011  |  11582 views  |  1 comments
Bitcoin value crashes after exchange compromised

Bitcoin value crashes after exchange compromised

20 June 2011  |  18786 views  |  0 comments
US senators voice fears over Bitcoin link to online drugs market

US senators voice fears over Bitcoin link to online drugs market

09 June 2011  |  7584 views  |  0 comments

Related blogs

Create a blog about this story (membership required)
Visit VocaLink.comVisit capgemini.comVisit www.abe-eba.eu

Top topics

Most viewed Most shared
hands typing furiouslyBlockchain: what to expect for 2017?
9039 views 0 | 56 tweets | 46 linkedin
hands typing furiouslyBig Data's Three Big Trends in 2016
7465 views 5 | 22 tweets | 13 linkedin
hands typing furiouslyHow Banks Are Losing Millions by Ignoring...
7167 views 11 | 24 tweets | 9 linkedin
Nordea looking for AI and blockchain breakthroughsNordea looking for AI and blockchain break...
6445 views comments | 17 tweets | 20 linkedin
R3 blockchain consortium sheds light on Concord projectR3 blockchain consortium sheds light on Co...
5789 views comments | 14 tweets | 14 linkedin

Featured job

Find your next job