Bitcoin Foundation Gets Warning From California

The Bitcoin Foundation, the nonprofit group which helps maintain the Bitcoin standard, the protocol behind the open, electronic currency which is not tied to any country or governing authority, has received a warning from the State of California's Department of Financial Institutions. The letter--widely released to the media--warns the nonprofit group that it has "engaged in the business of money transmission" without obtaining a license from California, and that it must cease and desist from conducting business in California at a threat of further legal action.

The move threatens a growing interest in Bitcoin by venture and angel investors. Bitcoin has become an area of interest for investors, including the angel group BitAngels, which recently announced its first investment. The Bitcoin Angels has investor connections into the Los Angeles market, although there have yet to be any Bitcoin startups to emerge here.