Mt. Gox hasn’t been having the best month with payment sources with the freeze of its Dwolla account and now OKPay apparently withdrawing entirely from bitcoin processing and funding of exchanges. In what seemed like a surprise to everyone, the payment processor posted a one-sentence notice that it was no longer working with bitcoin and Mt. Gox released their own press on the subject.

Also, Liberty Reserve has suffered a total shutdown with its website shuttered and its founder arrested in Spain. A look at the worldwide expectations of virtual currencies and semi-anonymous payment processing that continuously casts the shadow of criminality over such operations.

In brighter news, Coinbase has added paper wallet support! And BitAngels, a powerful startup incubator with numerous investors, has announced a huge gain of money ($6.7 million) for the purpose of assisting in the innovation, development, and generation of Bitcoin related ventures.

OKPay Withdraws Services From Bitcoin Exchanges

Yesterday, it came to SiliconANGLE’s attention that OKPay was temporary suspending payments to and from Bitcoin exchanges from a statement released by Mt. Gox and from OKPay themselves. The suspension of services appears to be immediate, but Mt. Gox has told customers a solution will persist while customers work to shift away from using OKPay to fund their accounts.

OKPay has left a bit of confusion for their own customers with a very short, one-line blog post citing the action: “Dear customers, we are currently suspending bitcoin processing.”

This suspension of services comes on the heels of several shake-ups to hit the BTC economy. One that struck Mt. Gox directly happened to be the seizure of the exchange’s account on mobile payment processor Dwolla by the Department of Homeland Security claiming the exchange was in violation of US Code 18 USC § 1960 by operating an “unlicensed money transmitting business.”

Then, also last week, the US government shut down the virtual currency Liberty Reserve along with the website with the arrest of founder Arthur Budovsky in Spain (with the expectation that he will be extradited to the US.) All this pursuant to a lawsuit filed by the US Department of Justice claiming that the LR site and business were involved in money laundering and cybercrime. Having another virtual currency struck down in this way has caused a little bit of a shake-up for the BTC community as slowly-but-surely eyeballs are turning towards businesses involved in its value, exchange, and transmission.

As for Mt. Gox, the business has put a positive spin on OKPay withdrawing from the space, even if it seems to have come as a giant surprise to everyone else:

“Mt. Gox wishes the best to OKPay, and we look forward to working together more closely in the future,” the company’s statement explained. “The Bitcoin economy is going through many changes recently, and we are positive that they will ultimately work themselves out in the best interests of the community and the World.”

Bitcoin Startup Incubator BitAngels Raises $6.7 Million in Three Weeks

The Bitcoin world could really use the same sort of attention that the rest of the startup world does and that means boards of investors, angels willing to pour money in, and incubators with the firsthand experience and networking to make startups flourish. To address this need, BitAngels formed at the May 19th Bitcoin Conference in San Jose. Aside from multiple on-site locations and money, BitAngels also seeks to offer more than 1,000 hours per month of experienced developer, designer, business developer, and advisor time.

Yesterday, the startup incubator announced that together with over 60 investors it has raised over approximately $6.7 million (53,620 BTC) and has expanded to three on-site locations–Austin, San Francisco, and New York. Amid the additional investor angels the startup incubator now includes Gyft CEO Vinny Lingham, Memory Dealers CEO and “Bitcoin Jesus” Roger Ver, and Tradehill CEO Jered Kenna.

“In a post-Bitcoin world, everything moves much more quickly, and the same has been true for BitAngels in its very short history,” said co-founder and Executive Director David A. Johnston.  “This past weekend, I was discussing Bitcoin opportunities over beer. Today, we’re the only borderless business incubator focused on Bitcoin-related startups globally.”

Coinbase Adds Paper Wallets

Paper wallets are a way to store wallet-information for keeping BTC offline—essentially by storing the information for accessing that wallet (address and private key) on a piece of paper. The usual technology to do this is a QR code. Bitcoin virtual wallet service, Coinbase, has added the ability for customers to produce paper wallets so that they can safely backup access to their wallets offline as they choose.

The paper wallets produced by Coinbase can be used to import coins back from the wallet back into Coinbase. It also means people can continue to have the wallet funded via the public address (if released) but nobody can withdraw from it without the paper wallet.

Video of the Week

Since Bitcoin Conference 2013 came and went this month, it’s a good time to pull out something that my readers can take a bite out of. Namely the State of the Union of Bitcoin, the protocol, and the future a speech given by developer and Bitcoin Foundation Chief Scientist Gavin Andresen on May 18th 2013.