French media are reporting that police have shut down a local Bitcoin exchange, arresting 3 individuals behind it and seizing 388 bitcoins, worth 200,000 euros. 9000 euros in fiat were also confiscated. The exact identity of the exchange was not reported, with commenters on reddit speculating on various possibilities. The crackdown marks the first of its kind in Europe.

Police allege that the business was not properly registered. While the EU has not implemented any formal regulations on Bitcoin, France requires businesses engaging in the transmission of fiat to register with Autorité de contrôle prudentiel (ACPR), the equivalent of obtaining a money services business licence. Bitcoin businesses performing such activities are no exception.

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The arrests and searches were part of a dedicated operation and were made in Cannes, Nice, Toulouse and Bruxelles. The detained include a man and his wife, who operated the site, and one of their suppliers. Two remain in custody while one has been released. One of the arrested already has a history and was previously convicted of fraud in an organized gang. He was charged with illegal employment, money laundering and the illegal operation of online gaming.

A total of 2750 transactions of at least 2500 bitcoins have been carried out on the exchange within a one year span. There have been no reports of other, more serious illegal activity as observed in bitcoin-related arrests in the past.

Police commented that the lack of regulation on Bitcoin and its ability to facilitate anonymous transactions make it ripe for use in criminal activity.