The Department of Homeland Security has shut down Dwolla payments to and from Mt.Gox, the world’s largest Bitcoin trading platform.

OKCupid co-founder Chris Coyne aired his concerns regarding the recent developments involving Bitcoin, Mt.Gox and Dwolla in an interview with Betabeat.com.  He received an e-mail from Dwolla stating that his bank transfer request from Dwolla to Mt.Gox could not be completed because of the DHS order.

“The Department of Homeland Security and U.S. District Court for the District of Maryland issued a ‘Seizure Warrant’ for the funds associated with Mutum Sigillium’s Dwolla account (a.k.a. Mt. Gox),” Coyne said.

“In light of the court order, procured by the Department of Homeland Security, Dwolla has ceased all account activities associated with Dwolla services for Mutum Sigillum while Dwolla’s holding partner transferred Mutum Sigillium’s balance, per the warrant. Dwolla requires a court order before honoring requests such as seizing funds or revoking access to an account.”

Mt.Gox was contacted by Betabeat, and it quickly confirmed that Dwolla transactions are no longer being processed.  The trading platform only discovered of the seizure warrant via the internet and stated that the DHS has not informed them of it.

In a statement posted on its Facebook page, MT. Gox further said:

“MtGox has read on the Internet that the United States Department of Homeland Security had a court order and/or warrant issued from the United States District Court in Maryland which it served upon the Dwolla mobile payment service with respect to accounts used for trading with MtGox. We take this information seriously. However, as of this time we have not been provided with a copy of the court order and/or warrant, and do not know its scope and/or the reasons for its issuance. MtGox is investigating and will provide further reports when additional information becomes known,”

As for the DHS, no word yet as to why Dwolla transactions to and from Mt.Gox have been ordered to be blocked.

Naturally, there will be suggestions that the US government feels threatened by the digital currency, and that by blocking Dwolla, its taking its first steps towards hindering its progress.

Adam Penenberg of Pandodaily recently wrote that:

“It’s conceivable the government will try to either regulate or destroy Bitcoin if it becomes widely adopted. With more than $1 billion worth of Bitcoins in circulation that could happen any time now. In the past the government has aggressively fought back threats to the U.S. dollar’s preeminence. There’s the lesson of Bernard von Nothaus, a “monetary architect” who created his own currency based on precious metals called the “Liberty Dollar.” After von Mothaus managed to inject some $60 million of his homemade currency into circulation, a government prosecutor accused him of “domestic terrorism” for attempting to undermine the government. Unlike with Liberty Dollars and Wikileaks, there’s no single person identified with the movement.”

So is the government really trying to shut down Bitcoin?  Or is this just a simple DHS-Dwolla issue rather than an attempt to derail Bitcoin? Let us know your thoughts!