Bitcoin Suffers Another Setback

Thanks to the exit of e-wallet service Paxum, and a $100,000 fraud incident, trading has been suspended at TradeHill, a Bitcoin exchange site that mostly played second-fiddle to the more prominent Mt. Gox.

In a blog post, the Chile-based company outlines their reasons for halting trading and returning funds to customers, basically saying that in addition to the other factors, regulation has made the price of transaction licensing too costly. As for the fraud:

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.

Bitcoin, of course, was being championed around the internet last year as the future of currency; one that wasn't tied to any nation, or government, or corporation, or physical object. After trading at a price over 30 USD, security issues began to pop up, highlighted by the hacking of Mt. Gox, which led the site to freeze all trading and roll back the timeline of events. The price of Bitcoin eventual fell to a much lower price, which severely stifled the amusing little experiement.

TradeHill says it's not completely down for the count, and promise to relaunch with Bitcoin.com, but forgive me if I remain a bit skeptical of that ever happening. [TradeHill via BetaBeat via The Verge]