It’s been a strange and rocky month for the Bitcoin economy with the loss of the payment network Paxum last week and now TradeHill suspending trades dealing with the cryptocurrency.

In an open letter to TradeHill clients, CEO Jared Kenna, addressed the situation apologetically citing the sudden withdrawal of $100,000 by a payment processor and the loss of Paxum’s capabilities. There’s also been a sighting of TradeHill’s CEO in a thread on the website Reddit expressing his sorrow at having to shut down trading Bitcoins and soliciting questions. (SiliconANGLE has sent an e-mail to TradeHill asking them to verify that this is indeed their CEO, we will update upon comment.)

Here are the salient points of the letter to TradeHill customers,

Effective immediately TradeHill will be shutting down trading / deposits and returning all client funds.

Due to increasing regulation TradeHill can not operate in it’s current capacity without proper money transmission licensing. Combined with multiple bank account closures and Paxum’s decision to close all Bitcoin business accounts, we have deemed the best course of action is to halt trading and pursue licensing while raising funds.

SEPA transfers for our Euro customers have been enabled.

Everyone at TradeHill has also been working without pay for several months after one of our payment processors removed over $100,000 dollars from our account without notice. We decided to cover this loss for now instead of passing it on to our customers and are taking legal action against the processor. We would also like to make it known that our relationship with Paxum has been great and hope to work with them in the future.

We will be focusing on Bitcoin.com and are preparing to release a new site before the end of the month.

It has been a pleasure working with the Bitcoin community and look forward to continuing our business in the future. More details to come soon.

According to the letter, TradeHill intends to focus on Bitcoin.com–an e-wallet site that will use Bitcoin–but it’s hard to say where they will go with that if the exchange itself will not be involved.

The Loss of Paxum

As for Paxum, they announced their closure recently, 2012 February 10. The e-wallet had been part of the Bitcoin economy since 2011, but cited increasing regulations and restrictive new bank regulations as the reason they’d be ending their acceptance of the cryptocurrency as payment. Previously the Canada-based company had gained quite a bit of notoriety for being part of that economy.

“This was not an overnight/impulsive choice,” posted Spokesperson Ruth Blair for Paxum in a thread on GFY [unavailable as of this publication]. “We had been in discussions with our banking partners, Mastercard and our auditors for the last couple of weeks, and on Friday our banking partners ended the discussions with us and stated that it was too much of a potential risk to continue doing business with Bitcoin and Bitcoin Exchangers and instructed us to close all Bitcoin-related accounts. We had no choice but to follow those instructions and therefore, all Bitcoin associations were severed on Friday.”

Although Paxum has declined to state which banking partners pressured them into leaving the Bitcoin enterprise, Blair did make it clear that Paxum had not encountered any fraudulent activity while trading in the cryptocurrency nor had they been hacked.

With this recent exit from the Bitcoin community, it makes TradeHill the second in a short span of time to stop trading in Bitcoins while blaming regulators and financial partners.