An illegal bitcoin exchange was dismantled by French police last week. Over 388 bitcoins were seized during a raid at one of the suspects’ home. All bitcoins total 200,000 in euro (or $272,800) at current market prices.
Three persons were arrested in Nice, Cannes and Toulouse on suspicion of selling and lending bitcoins through an illegal website.
Olivier Caracotch, the prosecutor in the investigation that started in Foix, said this is the first case in Europe when legal proceedings led to the shutdown of an illegal digital currency exchange.
“It’s also the first time in France that bitcoins have been seized as part of a judicial procedure,” he said.
The suspects are the website’s administrator, his wife and the site’s supplier. Still, one of them was released, whilst two remained under detention and were presented to court. They were accused of money laundering, illegal banking and running an illegal gambling website.
In addition, the police seized computer hardware, credit cards and a sum of 9,000 euro in cash.
Within November 2013 and July 2014, about 2,500 bitcoins, or €1 million were sent in 2,750 transactions via the website. The police told that Autorité de contrôle prudentiel et de resolution, which is responsible for the banking and insurance segments, did not approve the site.
They also stated: “Like all virtual currencies, it has a high risk of criminal abuses taking into account, on the one hand, the opacity that surrounds their existence and operation and, on the other hand, the complete absence of regulation by money market participants.”
Eric Larchevêque, the founder of La Maison du Bitcoin, commented the news, saying that the case is not surprising as gambling in France is heavily regulated.
“From our point of view, it confirms that bitcoin is not the ‘dream currency of the criminals’, as police investigations succeeded to shut down the operation in the same way they would have done with euro-operated activities,” he said.
Opened in April, La Maison du Bitcoin is the first bitcoin centre operating in France. It was opened after the central bank of France warned bitcoin users about the threat that comes from virtual money. He added that risks are not high for financial stability, but for those who want to invest in bitcoin.
In April, the Ministry of Economy and Finance announced that bitcoin is not the legal currency in France now. Still, he admitted that money on transactions involving the cryptocurrency could be charged.