Topic: BitSpend Business Indefinitely Closed Because Their Bank Doesn't Like Bitcoins (Read 2720 times)

You're new here, the chief symptom of which being that you take yourself way too seriously. Tone it down by about two degrees of magnitude, it's getting annoying.

Yeah and if the bank's computer model says you are high risk the account will be closed by corporate and there is absolutely nothing your local banker (who has no real power) can do.  We did $20M in transactions, generated nearly $50K in banking fees, never had a single complaint, never had a single case of fraud, were registered as an MSB, provided both bank anti-fraud team and local banker a 20 page document outlining our business model and the account was summarily closed by corporate due to high risk nature of our business.

Every major bank I've talked to about my own bitcoin & crypto plans has been so excited they nearly humped my leg.

Yeah and if the bank's computer model says you are high risk the account will be closed by corporate and there is absolutely nothing your local banker (who has no real power) can do.  We did $20M in transactions, generated nearly $50K in banking fees, never had a single complaint, never had a single case of fraud, were registered as an MSB, provided both bank anti-fraud team and local banker a 20 page document outlining our business model and the account was summarily closed by corporate due to high risk nature of our business.

I read somewhere that before 1929 and the Great Depression that number was at least an order of magnitude higher.

Luckily there are over 1,100 national banks in the United States.

And how you got through this?

I know this is talking from an idealist POV but banks are infrastructure and that should merit a different set of mind.
This case is basically like saying "We're gonna cut your power and water supply because we don't like that you're producing giant purple dildos."

Banks are private property.

Yeah once again a) there were no issues and b) the closure had nothing to do with Bitcoin (in our case).  The model based on account transaction volume predicted the account was high risk and the closure was absolute.  Our local banker was actually pretty upset given we were a high grossing account for the local branch.

If you never reach that point then your "relationship" with local branch manager is meaningless you wouldn't be closed anyways and if you do reach that point your local branch manager isn't going to stop a closure.

As it relates to the OP like I said they will get all their funds back and they have absolutely no grounds to sue.  A bank can close an account for any reason at any time even without a reason and there is no grounds for a suit.

BitSpend only needed a bank account to restock the dollars on the payment cards they use for making the purchases as part of their service.   If they used a bank account debit card, then obviously that was at risk of the bank taking an action like this.     But if instead they had a credit card or prepaid debit card even which could be reloaded as needed, they simply only need a way to convert bitcoins to the funds for reloading.  One labor-intensive approach is to convert bitcoins to cash and use the cash to buy Moneypak, which is then used to reload the card.   No bank account is necessary.

Where before we were using as a regular business, we'll instead form distributed informal networks. We'll focus all our efforts on meeting the needs of our customers and resisting your efforts to shut us down and none of our efforts on compliance.

as for bitspend and any future fiat touching businesses:
stick to the rules
keep in regular contact with your bank
have a well developed 'handbook' to reduce risks a bank would see

Yeah once again a) there were no issues and b) the closure had nothing to do with Bitcoin (in our case).  The model based on account transaction volume predicted the account was high risk and the closure was absolute.  Our local banker was actually pretty upset given we were a high grossing account for the local branch.

you got no clue how the system works.. so here goes..

regulators such as fincen/FSA dont proactively shut down businesses. they work off of reports known as SARS reports given by banks and individuals where there is a real risk of a crime happening based on the best judgements of banks and individuals evidence at hand., so the FINCEN/FSA will never tell a bank to shut down an account, on a whim.

now stepping down the ladder to the level of banks. it is the banks responsibility to monitor its customers (not the regulators) and if a bank see's something dodgy or gets a complaint from a customer they are suppose to freeze an account and investigate the legitamacy of the business and or the complaint. the bank are not allowed to reveal to the bank account holder the exact nature of why they are being investigated.

once the bank has done its internal investigation and decided a crime has been committed then and only then would a SARS report be generated and FINCEN/FSA(SOCA) made aware of the potential crime. for further investigations to occur. if other bank account holders are involved fincen/FSA would suggest to those banks to begin investigations and if enough info is there to freeze the account then they will but only after fincen/FSA receive a SARS report with enough evidence to act on.

the banks don't freeze accounts on a whim, they have to have good reason. and even after the good reason they have to have enough information to make a sars report of an actual crime.

i repeat
fincen/FSA will not ask a bank to freeze an account on a whim. fincen/FSA need to have received a SARS report about the people involved to then get the banks to act.

take mtgox for instance.. they had a confidential informant send them a SARS report before anything happened to MTGOX

now the weakest point is the banks.. as they are the point where a account can be frozen on less legitimate reasons. and if a crime has not been committed they HAVE TO release the account.

the banks do not simply run away with the money on a whim.

it may be worth reading the regulations once in a while. so having a working relationship with the local bank manager more so then just one hand shake and a business plan you can quash any concerns the bank has and ensure your rating with the bank is not high risk.