Taking Another Closer Look at Mutum Sigillum

I recall having discussed the strange idea that Mutum Sigillum is a “money transmitter” under American law in some detail before. But I would like to take another even closer look right now.

Again, The United States District Court in Maryland has issued a Seizure Warrant against Mutum Sigillum. It is based on the following chain of payments:

MtGox transfers funds from Tokyo, using Wells Fargo, to the Dwolla account of Mutum Sigillum. Mutum Sigillum uses these funds to pay MtGox customers that wish to withdraw dollars from their MtGox account, by transferring funds from their Dwolla account to some customer account.

Both Wells Fargo and Dwolla are licensed money transmitters.

The Affidavit in Support of Seizure Warrant states that MtGox moved funds to their customers in this way.

However, there is really no way to explain how Mutum Sigillum is supposed to be a money transmitter in this chain of events. They are only users.

There are already two money transmitters involved. These are Wells Fargo and Dwolla.

If everyone who uses these money transmitters for the purpose of moving some funds from Japan to a person in the United States, there are no customers left who are not money transmitters themselves.

One clear difference between a money transmitter (like Wells Fargo and Dwolla in this case) and a user is that users move their own funds. They are parties to the payment transaction involved. They are only moving their own money.

If this makes MtGox a money transmitter, could someone please tell me how to use a service like Wells Fargo or Dwolla and avoid being called a “money transmitter” by the ridiculous standards of the American government? What is the magic ingredient that shields a user from this kind of absurd allegation?

 

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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