Bitcoin Drama

Bitcoin Drama

Newsweek Reporter Bashes ‘Fanatical’ Bitcoiners on Facebook

Ms. McGrath Graham. (Screengrab via

Newsweek reporter Leah McGrath Goodman has hardly been mum about her notorious March 6 story “Bitcoin’s Face: The Mystery Man Behind the Crypto-Currency.”

It seems the entire Internet has been trying to rip her story apart, including no less a Rap Genius user than Marc Andreessen. Still, Ms. McGrath Goodman and Newsweek have remained strong in defending the article, through both a statement and a video. Ms. McGrath Goodman has also been vocal on Twitter. Read More

Bitcoin Drama

Marc Andreessen and Others Annotate Newsweek’s Bitcoin Story on Rap Genius

WHO MADE YOU?! (Photo: Silicon Angle)

It seems everyone has an opinion on Newsweek‘s über-controversial story about reported Bitcoin inventor Satoshi Nakamoto.

And now, all of those dissenting opinions can accumulate in one place (we mean besides Twitter). Popular lyrical annotation site Rap Genius has posted the story, and users — including the venture capitalist Marc Andreessen — have been adding info for the last few days. Read More

Bitcoin Drama

BitInstant CEO Calls Bitcoin a ‘Really Risky Investment’

Money of the future. (Photo: Flickr/Zach Copley)

As evidenced in the past week, dealing with Bitcoins can be a traumatic experience. With so many record highs followed by equally steep drops that seemingly happen several times an hour, we wouldn’t be surprised if traders have broken out the Xanax by now.

Now, some fans of the hacker-created, crypto-currency are complaining that their problems are only being compounded by BitInstant, an online exchange service that transfers cash into Bitcoins. Read More

Bitcoin Drama

FBI: That Bitcoin Report Was Authentic, But It Wasn’t Leaked by Us

(Wikimedia Commons)

Last week, Betabeat received an email from an anonymous source claiming to have leaked an internal FBI report about the virtual currency Bitcoin. The report, published April 24, revealed the agency is worried the currency could become a payment method for cyber criminals in the near future, and could be used to fund “illicit groups.” (Wikileaks, anyone?) The FBI also determined the currency to be an “increasingly useful tool for various illegal activities beyond the cyber realm,” and could become attractive to money launderers.

The report, titled “Bitcoin Virtual Currency: Intelligence. Unique Features Present Distinct Challenges for Deterring Illicit Activity,” was the FBI’s first research report on Bitcoin. The report was not classified, but it was marked “for official use only.” BetabeatWired, and a number of blogs ran with the story without confirming the report’s authenticity, but today we got a call back from the FBI. “It is legitimate, but it was not leaked by the government,” an FBI representative told Betabeat. Read More

Bitcoin Drama

Bitcoin Exchange TradeHill Suspends Trading


The Bitcoin economy may be in some real trouble. After the announcement last week that e-payments service Paxum would no longer support Bitcoin clients, at least one major Bitcoin exchange has shut down. Chile-based TradeHill had been using Paxum, a PayPal competitor, for a large percentage of money transfers. The loss of Paxum, coupled with recent problems banking with Citibank that caused TradeHill to fall behind on processing transactions and other troubles, left the founders feeling like they had no choice but to suspend trading and return client deposits. Read More

Bitcoin Drama

Banking Partners Force Paxum to Drop Bitcoin Due to ‘Potential Risk’


Established banks and payments processors are skittish about the cryptocurrency Bitcoin, it would seem, prompting Canadian e-payments service Paxum to drop its Bitcoin clients last week.

Paxum, an e-commerce payments solution popular with adult web sites, started working with Bitcoin exchanges more than a year ago. Paxum hooked up with leading Bitcoin exchange Mt. Gox in December 2010, major Bitcoin exchange Tradehill in July 2011, and more recently with BitInstant, a service that speeds up Bitcoin transactions by fronting customers the credit, and others.

But on Friday afternoon, the operators of Paxum’s Bitcoin-related accounts received an email with the subject line “Bitcoin termination.” Paxum’s banking partners, which include MasterCard, had called off the Bitcoin party.

Paxum declined to name the partners that were responsible for the change. Read More