Person-to-person payments provider Dwolla Corp. responded late Tuesday to a lawsuit filed by the Bitcoin exchange TradeHill, saying allegations that it put TradeHill out of business were "specious" and that the suit is little more than an attempt to generate publicity.

TradeHill filed its suit Monday in U.S. District Court for the Northern District of California, claiming that Dwolla fraudulently advertised a no-charge back policy, and precipitated the shutdown of the exchange by reversing $100,000 in credited transactions and blocking TradeHill from transferring $70,000 of its funds from Dwolla.

TradeHill, of San Francisco, ceased operating in mid-February.

Dwolla, of Des Moines, said in a statement released Tuesday that it had received no formal notice of a potential lawsuit and that it would defend itself vigorously against any allegations of wrongdoing.

"What we will not do is provide specific comment on specious allegations made by those who have a self-serving interest in seeking publicity," Dwolla said in the statement.

Without responding directly to the allegations, Dwolla said that chargebacks are a serious issue and it needs to respond quickly to people who are claiming to be victims of fraud.

"Predators can use stolen identities to create fraudulent accounts without a victim's knowledge… A necessary byproduct of this kind of fraud is bank-level reversals, 'chargebacks' issued by the institutions on behalf of the victim, not Dwolla," the statement said.

Chargebacks are a thorny problem for Bitcoin transactions because they closely resemble cash, and unlike credit card chargebacks, which are well-regulated, they are new territory for payment processors.

Bitcoin is a digital currency that has no central issuing authority.

"We will not play accomplice to sources of ongoing fraud. In such cases, we move quickly and act appropriately to facilitate restitution on behalf of the financial institution and its members (the victims). This is required by federal and state consumer protection laws, but more importantly it's the right thing to do," Dwolla's statement said.

TradeHill's attorney, Pierre G. Basmaji, said the plaintiff is seeking $2 million in damages.