I met Tradehill CEO Jered Kenna at a San Francisco area bitcoin meetup last year. He shared that payments startup Dwolla had reversed aover $90,000 of supposedly confirmed transactions, and was holding $70,000 of other funds. This was impactful to the bitcoin startup exchange, as it was operating without venture funding. The instroduction of chargebacks was apparently in violation of Dwolla’s previously published terms of service.
Basically fraudsters were using Dwolla to buy bitcoins, and then charging back Dwolla, or were using fraudulently acquired bank accounts (probably phished or keylogged consumer bank accounts) to fund Dwolla, and buy bitcoins from Tradehill.
Last month Tradehill shut down operations due to a combination of the shutdown of bitcoin relationships with processor Paxum, the expenses needed to acquire a money transfer agent license, and the Dwolla chargebacks.
Tradehill is fighting back. This week they filed a $2M lawsuit against Dwolla. Dwolla recently made the rookie startup mistake of announcing a $5M venture funding round.
Good luck to Tradehill in this dispute!