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French police bust illegal bitcoin trading ring

A common logo used for bitcoins.
A common logo used for bitcoins. REUTERS/Andy Clark

French police busted an illegal bitcoin trading network worth 200,000 euros, authorities revealed on Monday. Officials said it was the first time a virtual currency trading ring had been intercepted in Europe.

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Three people, including the website administrator, his wife and a supplier, were arrested in last week’s raids in the French southern cities of Nice, Cannes and Toulouse and Brussels.

“This is the first time that an illegal exchange platform for bitcoins like this one has been dismantled in Europe,” a police statement said.

Police seized 388 bitcoins – an e-currency that enables relatively anonymous transactions without a central bank and is highly susceptible to criminal activity.

One person of the three initially arrested has been released while the other two have been charged.

The website had been used for at least 2,750 transactions with at least 2,500 bitcoins – valuing around one million euros – between November 2013 and July 2014

Started in 2009 by an enigmatic computer whiz, bitcoins have come under increased scrutiny by financial regulators for their lack of legal framework.

In France, platforms that exchange bitcoins and euros have to be approved by bank and insurance supervisory body ACPR.

The website in question had not been authorised.

Eric Larcheveque, the co-founder of the Maison du Bitcoin (Bitcoin House), a Bitcoin information centre in Paris, says the digital currency is currently not very regulated, and should stay that way to boost innovation.

He adds that when there is criminal activity involved it's just like any currency and that if it's not authorised it should be shut down.

"It's a confirmation that bitcoin is just a tool. Even if you make illegal activity, and you use bitcoin to make payments, to gamble, the police can shut down the operation. It's not because you are using bitcoin that you will be above the law so for us in fact it's a good thing," Lacheveque told RFI. "It can show to the general public and authorities that bitcoin is just like cash."

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