Bitcoin Under Fire; Declared Illegal in Russia

ClayMeow - February 10, 2014 08:31PM in General News

The Olympics isn't the only news coming out of Russia. According to Reuters, on February 6, the Russian Prosecutor General's Office stated that, "Systems for anonymous payments and cyber currencies that have gained considerable circulation – including the most well-known, Bitcoin – are money substitutes and cannot be used by individuals or legal entities." Not only is the virtual currency often used to fund illegal activities, Russian law states that the rouble is the sole official currency in the country, thus any other currency is illegal.

This announcement comes just a couple weeks after Charlie Shrem, an operator of a bitcoin exchange company called Bitinstant, was arrested for money laundering. So is it only a matter of time before other countries follow Russia's lead? United States authorities have already been trying to crack down on illegal activity associated with bitcoin payments, so how long before major restrictions are placed upon it?

If that wasn't enough, a day after Russia's statement, bitcoin digital marketplace Mt. Gox put an indefinite halt on all withdrawals after it detected "unusual activity." As a result, bitcoin's value dropped as low as $500 early this morning before climbing back up to just under $600, but that's still well below Friday's closing price of $692. For comparison, in January it had topped $1,000. Ouch.

So if you are a bitcoin user or have been thinking about getting involved in it, you may want to tread carefully.

Source: Reuters [1] and Reuters [2]