BitFunder, a Bitcoin stock exchange, closes

BitFunder, launched at the end of 2012 and which held $16 million in assets in July, ceased trading on November 14. Any Bitcoins left over will be transferred back to users on December 2.

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BitFunder, a Bitcoin stock exchange, closes

BitFunder, launched at the end of 2012 and which held $16 million in assets in July, ceased trading on November 14. Any Bitcoins left over will be transferred back to users on December 2.

Other recently closed Bitcoin exchanges includes Global Bitcoin Stock Exchange, which shut down in October of last year, and btct.co, which shut down in 2013.

Trouble was already apparent in October when BitFunder banned anyone in the US from using the exchange. US users were subsequently instructed to remove their money by December.

Americans fled, and BitFunder’s stock markets crashed.

The Securities and Exchange Commission has for a while been interested in Bitcoin and issued a warning in July to be mindful of “Ponzi schemes using virtual currencies.”

Meanwhile, the minimum withdrawal amount on BitFunder was lowered to 0.00000001 BTC so users could remove small amounts. On the one hand, the site’s move to ban US users could have excused it from the SEC’s jurisdiction. But that move could have also been akin to removing a pound of flesh.

BitFunder’s owner, Ukyo, operates another site called WeExchange that lets users exchange Bitcoins into USD, CAD and AUD. Users of that platform have complained about delays and an inability to withdraw their funds.

The BitFunder website is still live, and a notice says that on December 2, 2013, Bitcoin balances on BitFunder will be transferred to WeExchange accounts, and that the site will be online until at least December 15, 2013, so users can request records.

Frustrated users on the Bitcointalk.org forum have begun to speculate wildly about BitFunder’s closing and their own accounts. One user pasted a message that his/her withdrawal of 250 BTC ($177,598 at the time of writing) was still pending.

When Global Bitcoin Stock Exchange shut down, its founder — another pseudonymous Bitcoin community member (real name, James McCarthy) — was also accused of scamming traders. That exchange closed abruptly after legal advice from a solicitor suggested McCarthy “shut it down as soon as possible.”

“You can't just build a financial service and worry about the legal issues afterwards," McCarthy told Wired Magazine in an article last month about his own experiences. "You are dealing with real jurisdictions, customers and money. You have to follow the rules the rest of the world operates in."

Meanwhile, the minimum withdrawal amount on BitFunder was lowered to 0.00000001 BTC so users could remove small amounts.

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