[il]

This was inevitable. People can wax rhapsodic about the decentralized nature of Bitcoin, but once the feds freeze a few million dollars of a major exchange's assets, as they have done with every single anonymous digital currency since the beginning of time (e-gold,1mdc,Liberty Dollar) and launch a criminal investigation, the currency will be severely destabilized.

Within the next year I expect to see a cottage industry emerge where the true believers cash out frozen bitcoin accounts for pennies on the dollar.

[300bps]

Well the important thing to keep in mind is that there are several ways to fund or de-fund a Mt Gox account. One method entails going to a local kiosk and submitting cash.

Sure, the feds can shut down all of them eventually but how many innocent people are they taking out with this Sledgehammer-Shotgun approach? This is reminiscent of their heavy-handed takedown of Megaupload which caused legitimate individuals and business to lose access to their legitimate date.

[il]

How would the funding method make a difference? Any money you send, cash or otherwise, is going to end up the in the same Mt Gox account frozen by the feds, with no way to get the money out. Again, see e-gold.

[dmazin]

Dwolla isn't a bank, it's a payments processor.