Bitcoin Stock Exchange Shuts Down Suddenly
GLBSE is a stock exchange for shares of companies denominated in Bitcoins. Late last week, without warring, the exchange was closed. “Nefario”, the owner of the website, shut it down with no explanation given.
A post on a popular Bitcoin forum accuses Nefario of shutting the site down “without a shareholder motion and in violation of the bylaws and GLBSE ToS.” This post also goes on to say that “Users will be able to collect deposits only after submitting identity info…I feel that it is somewhat possible that Nefario is working under some sort of plea bargain and is gathering IDs for future prosecution.” However, this theory seems to contradict the information available at the GLBSE website this evening which states that users will be able to retrieve their bitcoins with just “your username, email, and a bitcoin address to accept payments with.”
The suggestion that the owners of GLBSE are somehow being coerced into collecting users “identity info” is unfortunately fairly plausible. Could this be a glimpse into the future of Bitcoin regulation? It does seem to be a real possibility that regulators will force Bitcoin businesses to collect identification information from clients following Know-Your-Customer (KYC) rules under anti-money laundering legislation.
At this point not much is known of the reasons behind the shutdown but it does appear likely that it was due to pressure from governments, or upon advice from lawyers.
Update: Bitcoin magazine has put together this piece on the GLBSE shut down.
“as soon as the lawyer began offering advice Nefario almost immediately started to play a different tune. The GLBSE quickly shut down, …Theymos, a pseudonymous shareholder and treasurer at Bitcoin Global, believes that Nefario has been approached by legal authorities and the current events are really Nefario desperately doing everything he can to avoid prosecution. Nefario’s behavior is particularly problematic because, officially, he does not even fully control the exchange;… However, Nefario has stated on advice of his solicitor that he will ignore any attempts to remove him, … According to Nefario, keeping control of the company is his only choice; Nefario writes, ‘keep in mind that GLBSE is linked to me and my identity, I’ve used my credit cards to pay for the domains, servers and other items. If I passed control of it to anyone else(especially an anonymous person), and it continued to operate, knowingly breaking laws and attracting attention then I would be found liable.‘ “
“Nefario himself has stated that the GLBSE is never coming back, … Currently, many more are concerned with a far more pressing question: what will happen to the GLBSE deposits? Theymos has added fuel to these worries, claiming that users will be required to submit identification documents to get their money back. Nefario, while not explicitly denying this, has simply stated that ‘all deposits will be returned to GLBSE users.’ … the GLBSE’s website now claims that the company is ‘currently working on a simple, safe, and easy to use method that will allow you to continue your relationship with your asset holders’; given that there is no evidence that the GLBSE’s databases have been confiscated or destroyed there is no reason to believe that this will take an excessively long time. Once the GLBSE’s issuers receive the data needed to continue their relationships with their asset holders, however, they will still need a platform on which to manage it.”
