Topic: Bitstamp Acting Very Strange : Heads Up (Read 5098 times)

fallout has a dispersal pattern right?

With real brokers, Know Your Customer issues are dealt with when you open the account. There's something wrong with an "exchange" that brings that up as an issue only when you make a withdrawal.

I've pointed this out before, about Mt. Gox. At Mt. Gox, all their issues were somehow always on the withdrawal side. Never on the deposit side. That was a red flag from June of 2013. There were lots of people (shills?) saying it was "US government Intervention" or some kind of US bank conspiracy. It wasn't. Mt. Gox was broke.

How is situation going on right now ?

Any new "Wall Street type" exchanges will have as much or more verification.
The Good Old Days are over (and they were not always good)

I stopped doing business with these spineless jellyfish last year because of this. Yes, I understand they are in a difficult position caught in the middle between their customers and the authorities. Well, too bad.

My foot!

Bitstamp blocked my coin since weeks, and they ask for a 'high resolution' photo of myself together with my passport.


The options I see are:

 - protecting customers acounts against a phishing attack on customers side
   --> anyone could allways phish for my credentials;
       Would they EVER take responsibility and refund me? No.
       Is it only my obligation to look after my system security? Yes.
       Is this of any concern for them, apart from KYC? No.
       In case I've been phished, the hacker could steal my btc.
       So this one would not be a registered customer, but regarding what amount
       would this be relavant? €10.000 or more.  Not relevant for my account...
       Do they have any agreement with me to block my btc in the event they suspect
       me being phished? No!
       --> this makes no fucking sense
 - they are phishing for bio/ID data
   'high res' photo, banking data, official ID, all in their database
   --> this makes sense
 - their ID database has leaked out or was manipulated, so that they
   cannot distinguish between stolen/false KYC IDs and real ones
   --> why not just check against bank data?
       --> this makes no sense
 - it is KYC, again,
   --> why not just say so?
       --> this makes no sense
 - They want to slow down btc export, because they do not have them anymore and
   hope to be able to replenish, so they impose 'security measures'.
   Didn't they say they had a review just lately and nothing was missing?
   --> this makes sense

All options I see smell more than fishy.

I have no particular love for Bitstamp, or any other exchange currently.  Though, I got out of Gox after they stopped allowing US wires out in the middle of last year.  Their problems were obvious, and they need to be gone completely.

It isn't about receiving the funds, but rather about sending them.  When I was doing that with my previous business, I was not required to fill out that information because I was receiving money.  It was because I was sending it.  I was taking responsibility for myself and the person I was sending it to, by saying that I know who they are, and it is being sent for a legitimate purpose.  The bank was just the intermediary, and they needed this information from me to protect themselves.

Now, with an exchange such as Bitstamp it is a little bit different.  When you are withdrawing money, it is only between you and them.  There is no 3rd person that is sending it to you through them, because if there was, they would be asking that person the questions instead of you.  Since they are taking the risk of sending the money to you, then they must ask additional questions of you, because the risk is not distributed across them and another person.  The risk is ALL on them.  At least a bank can say,"The guy sending the wire checked out, so we did our due diligence, and we cannot be responsible for the person on the receiving end".  Bitstamp has no one to shoulder that blame if something fishy were going on.  They MUST be careful, especially when dealing with cryptocurrencies, as this is a new market that will be seriously scrutinized over the next few years.

Also, yes, the US is much more strict regarding AML\KYC than Europe.  The US is the only country that will actually investigate, bully, and try to regulate banks that are not even located in their country.  Every bank in the world has to follow the US's rules for banking, unless they do not do ANY business with citizens of the US.

I don't know what are the practices in USA I live in the EU and I have received deposits of 10k+. As I said my bank has never asked me to answer idiotic questions like "Where did you hear about the USD" or "What are your future plans and activities planned on our Bank". They only asked me to fill in paperwork about the origin of the funds. Furthermore the amount I am withdrawing right now is $6000. I don't think it is so large amount.

On a side note I managed to withdraw all bitcoins I had in there, so bitcoin withdrawals are still working. I think to ask them to cancel the sepa withdrawal and give me the bitcoins. Now I use a local exchange. The only drawback with them is that they buy at 3% lower price than bitstamp. Anyway this is a price I am willing to pay to get my money on time.

I am curious why some people are acting like bitstamp advocates. I remember months ago people were protecting mtgox like they were holy and see where they are now. The fact with these exchanges is that once problems start to appear you must get away from them as fast as possible. It is a matter of time before all withdrawals stop.

At my previous company, I sometimes would be required to send multiple wires in a day, often totaling $100,000-$200,000, to many different individuals and businesses.  When we first started doing this, I was required to fill out lots of paperwork, and even after that, I would randomly be asked to provide more information.  This was banking at one of the largest banks in the US.

What Bitstamp is doing may be a bit more than what an established bank would do, but they are trying to err on the side of caution.  Quit complaining.  Would you prefer they have their funds frozen and stolen, like Mt. Gox?

It is not OK and they are making me really angry. They are keeping my money hostage at Bistamp without any explanation.
What kind of BS is this.

Even MtGox never stopped SEPA withdrawals! They are still paying SEPA withdrawals, what is the problem of Bitstamp!

I got the same problem. People who say this is OK are delusional and have no experience with large bank transfers. I totally agree with ab8989. When I receive large deposits in my bank account my bank usually asks me to fill a form to explain the source of the money. But that is the ONLY question they ask. I can fill in anything and they don't ask for any receipts or documents. If the bank suspects something they inform the proper authorities and then it is the authorities' job to investigate and ask questions. That is the normal practice all over the world. Bitstamp already has my ID card, an utility bill and all my banking information. It is enough even to steal my identity. There is no need for them to ask such idiotic questions. Now their support cannot handle all these tickets which were created by them. This is pathetic.

Ok, let's answer your points then.

Bitstamp is likely operating without appropriate licenses. Bistamp is likely trying their best not to come to the attention of authorities in any way, shape or form because it they ever do, they will probably be shut down at the spot for operating without license. - hah. You know what they same about assuming? I would be surprised if they're not licensed, you can't process millions of dollars through your bank account and hope noone notices. Always good to provide some kind of evidence before saying stuff like that.

They cannot even try to be AML/KYC compliant without contacting the authorities. Yes they can. Just because you're not registered as a high value dealer/money transmitter (some countries don't require it for BTC), doesn't mean you can't still be compliant. And again, who says they're not registered?

Ok, then you make the same point over and over again, which I'll skip.

The checking or origin of funds is supposed to take place during DEPOSITING of the funds. Not at withdrawing. When I have deposited cash slightly above 10kEUR into banks they have asked me about the source of the funds. That is okay. That is also the moment when the banks can easily decline the deposit for any reason whatsoever. I have numerous times withdrawn money from banks in the range of 100k-200kEUR and never been asked about anything. I do not think banks are allowed to confiscate any money without having the authorities intimately involved in the process and when authorities are involved in an inquiry about a customer the banks are not allowed to tip the customer about this ongoing inquiry by authorities in any manner including declining the withdrawal.

No, it's supposed to happen at both sides. Were you withdrawing cash from said banks, or just doing a transfer? Because I've also done plenty of withdrawals in my time, and anything above £5k I have to show ID and they have to fill out an AML form. If they didn't ask you for ID, and it was a cash withdrawal of that size, then not only is your bank terrible, they're also in direct violation of multiple laws.

Banks are allowed to freeze/hold money if they have reason to believe the person is acting fraudulently or criminally. AFAIK, no authorities need to be involved initially, providing money laundering is a factor.

Your tipping off point is wrong. while they can't tip off that you're under investigation, they can decline the withdrawal. If you're cagey about giving ID, they should be filing a suspicious activity report, at which point in the UK they wait for clearance from SOCA/NCA. I don't know what the procedure is in Slovenia, but I'd imagine it's very similar, being in the EU. Tipping off means you can't say the reason for a transaction being delayed was obtaining SOCA clearance, not that you have to proceed totally as normal.


Anyways, the rest of your post (and most of your post in general) seems to rely on the fact that Bitstamp is not properly licensed, which you really could have provided some evidence for. I'll skip the rest and move onto the last paragraph.

If anyone of your customers turns up to be a drug-baron the first thought for a possible defense is to deny any knowledge of anything. You do not want to do things that decline yourself the option of using this kind of defense. And if you know you have drug-barons as customers and you are unable to contact authorities you want the drug-baron go away, shutdown their account and withdraw all money and be gone. That is the way of least consequences to the business.
Heh, yeah, until you end up like Charlie Schrem and end up in court for aiding and abetting money launderers and drug dealers. Note that non-compliance of money laundering rules is a civil matter. What you're suggesting is highly criminal.

http://www.coindesk.com/bitstamp-restores-withdrawals-following-security-scare/

There were some phishing attack attempts. They reportedly took a ‘better-safe-than-sorry’ approach.

seems like it's working again.

Lets arrange the things said in this sentence in a different order

>> in addition to being fined for operating their service without the appropriate licences.

Bitstamp is likely operating without appropriate licenses.

>> in the hope that if they come to the attention of authorities they won't get prosecuted

Bistamp is likely trying their best not to come to the attention of authorities in any way, shape or form because it they ever do, they will probably be shut down at the spot for operating without license.

>> try to be AML/KYC compliant

They cannot even try to be AML/KYC compliant without contacting the authorities.

>> Annoying as it might be to feel like your transactions are being unfairly scrutinised, it's preferable to going to withdraw your funds only to find that the domain has been seized by authorities and all funds frozen

I would think everyone would like to get their withdrawal processed right NOW instead of waiting for weeks or months for it during which time the exchange could be seized by authorities or go bankrupt or both.

>>None of these services are going to stay in business for any length of time without being AML/KYC compliant

None of these services are going to stay in business for any length of time without having appropriate licenses.

>>And why the very small amount of 9 thousand dollar from an already identified customer would give any red flags regarding illegal activity KYC is aimed at? BIG LOL.

The checking or origin of funds is supposed to take place during DEPOSITING of the funds. Not at withdrawing. When I have deposited cash slightly above 10kEUR into banks they have asked me about the source of the funds. That is okay. That is also the moment when the banks can easily decline the deposit for any reason whatsoever. I have numerous times withdrawn money from banks in the range of 100k-200kEUR and never been asked about anything. I do not think banks are allowed to confiscate any money without having the authorities intimately involved in the process and when authorities are involved in an inquiry about a customer the banks are not allowed to tip the customer about this ongoing inquiry by authorities in any manner including declining the withdrawal.

Lets imagine a situation if some authority comes to an exchange to bust them for operating without appropriate licenses either before or after they have gone bankrupt. Which additional things are going to give the exchange most additional grief:

A) If the illegal exchange has determined that some customers are laundering drug money and the exchange has not promptly informed the authorities with full disclosure about their operation as an illegal exchange and the customer relation they have but instead have stolen the money by themselves which they without any court order have by themselves declared as probable drug money and they are keeping the possession of that money themselves.

B) The exchange has performed normal KYC paperwork at account opening time and performed additional checks at money depositing time but have not done any extra checking when customer wants to close an account nor stolen customer funds when they want to withdraw.

My bet is that the option A is about the most incriminating thing the exchange can do in this particular situation and bring them the most grief with law, much more than the option B which brings nothing extra in addition to the basic problem of operating without appropriate licenses.

Actually I think there is an option C which also looks very bad for the illegal exchange:

C) The exchange has taken specific interest in some customer but has not contacted authorities but instead some backcountry adhock bullshit procedure they have resumed business and later this person turns up to be a drug-baron.

This option C looks much worse to the illegal exchange than option B of not noticing anything suspicious in the first place.

If anyone of your customers turns up to be a drug-baron the first thought for a possible defense is to deny any knowledge of anything. You do not want to do things that decline yourself the option of using this kind of defense. And if you know you have drug-barons as customers and you are unable to contact authorities you want the drug-baron go away, shutdown their account and withdraw all money and be gone. That is the way of least consequences to the business.

Sad, but true...This is the Dawn of the age of Big Compliance.

Asking for information about the origin of funds is an AML thing.  It's a legitimate thing done by many financial institutions when the system flags a transaction as "suspicious" and the answers given to such questions often determine whether or not a formal report is made to financial intelligence organisations.

It's possible that they're being overly cautious at the moment regarding possible money laundering activity.  They can't really afford not to be as it's the thing most likely to bring down legitimate services as the fallout from SR1 continues.  

None of these services are going to stay in business for any length of time without being AML/KYC compliant.  Annoying as it might be to feel like your transactions are being unfairly scrutinised, it's preferable to going to withdraw your funds only to find that the domain has been seized by authorities and all funds frozen.


Many Bitcoin enterprises try to be AML/KYC compliant in the hope that if they come to the attention of authorities they won't get prosecuted for money laundering in addition to being fined for operating their service without the appropriate licences.

The bare minimum KYC required and the enhanced KYC which is required if something flags the system as "suspicious" are two different things.  Any financial service can ask for additional KYC information at any time.  Enhanced KYC is extremely common.  Financial institutions develop their own risk management systems and tend to err on the side of caution because they're facing massive fines if they fail to take adequate measures to detect money laundering.  Your remedy if you don't like one service's policies is to use another service.

only 2btc

As far as I know this is not affecting everybody, and doesn't seem to be affecting anything sub 10 btc or $XXXX

To try and get a better picture, how much approx did you withdraw?

i made a withdrawal 30 minutes ago. no problems