The Department of Homeland Security appears to have shut down the ability to use Dwolla, a mobile payment service, to withdraw and deposit money into Mt. Gox, a Bitcoin trading platform. A Dwolla representative confirmed the move to Betabeat. Chris Coyne, cofounder of OKCupid, posted a screenshot of an email he received from Dwolla, stating that due to recent orders from the Department of Homeland Security, Dwolla cannot complete the bank transfer to Mt. Gox.

The Disneyfication of Times Square really has come full circle—the formerly gritty crossroads of the world has become so family-friendly that it's starting to become seedy again, thanks to a mob of street hustlers dressed as cartoon characters demanding tips from tourists. On Sunday, a man dressed as Cookie Monster allegedly shoved a child and cursed at his mother when she didn't tip fast enough, and several other characters have been arrested in recent months. The situation has attracted so much media attention that now regulation is being considered.

The federal agency charged with enforcing the nation's laws against money laundering has issued new guidelines suggesting that several parties in the Bitcoin economy qualify as Money Services Businesses under US law. MSBs must register with the federal government, collect information about their customers, and take steps to combat money laundering by their customers. The new guidelines do not mention Bitcoin by name, but there's little doubt which "de-centralized virtual currency" the Financial Crimes Enforcement Network (FinCEN) had in mind when it drafted the new guidelines.

A ride sharing service called SideCar that is very popular in San Francisco and Seattle is under attack by the Austin City Council for being an unregulated taxi service. The City wants to conduct Sting operations to bust, fine, and impound the vehicle of volunteers who give rides to people on a donation basis only. This would be conducted during South by Southwest when the company plans to launch in Austin. The service is offered through a smartphone app and no cash is exchanged.

In the war on drugs, federal grant programs like the Edward Byrne Memorial Justice Assistance Grant Program have encouraged state and local law enforcement agencies to boost drug arrests in order to compete for millions of dollars in funding. Agencies receive cash rewards for arresting high numbers of people for drug offenses, no matter how minor the offenses or how weak the evidence.