Topic: KYE (Know Your Exchange): BitFloor (Read 7831 times)

...and Roman Shtylman never did address the Russian question.

~Bruno~

BitFloor has reported a security breach.  No coins were kept in cold storage, and all coins from the hot wallet are now spent. 


 - https://bitcointalksearch.org/topic/bitfloor-needs-your-help-105818
 - https://bitcointalksearch.org/topic/bitfloor-coin-theft-details-105819

Way to miss the point. Look up the original thread: it all started with with disregard for GAAP and separation of funds in accounts. Rest is just details and circumstantial evidence, because of the avoidance of auditing and accountability.

Completely opaque? The source code for the matching engine is available on GitHub. Looks pretty solid to me. I'm more concerned about someone breaking into Bitfloor's server and cleaning out the BTC balance than I am about Bitfloor screwing me over on business terms.

Maybe you don't think the liquidity rebates are a good business model. So vote with your feet and stay away from Bitfloor. You can even voice your concerns and explain your rationale, but merely saying (paraphrased), "Bitfloor cannot be trusted because they don't expose themselves to the legal risk of accepting USPS money orders," is your opinion only.

Not nearly as bizarre as his history if the Buttcoin expose is to be believed:
http://buttcoin.org/has-bruce-wagner-pulled-off-the-financial-biggest-scam-on-the-bitcoin-community

I guess everyone forgot about this?

That said, I'm looking forward to using Bitfloor now that they offer services those of us in the Midwest can use (Wells Fargo deposits).

Thanks for the reply Shtylman,

I like everything you've done at bitfloor so far. One of the reasons I have avoided using your platform is because, as Mathew M. Wright posted earlier, I too believe Bruce Wagner is a stakeholder in bitfloor.

Bruce Wagner is probably a really nice guy but he is also convicted of financial crimes in the U.S. It's unlikely that any individual convicted of a financial crime would get cleared to operate as an MSB so using others is their best option.

Eventually, bitfloor will have the #2 spot in BTC trade volume. Before the "hacks" begin I just wanted to get this out of the way because exchanges at #2 have a terrible track record.

Thank you.

No relationship; he lives a few blocks away so we chat every once in a while

What do you mean by vested interest? He is not a stakeholder, just a user. Maybe he has personal reasons for seeing some US based exchanges grow since he deals with Bitcoins and runs a site to sell them to end users.

I will add that I think the fascination users on these forums have over Bruce Wagner is quite bizarre. From what I have witnessed, all he has done is try to heavily promote bitcoin and give it more public exposure (which unfortunately I see very few in this community doing actively). Regardless of what you may think of his show, it is important to educate new users and understand their needs and Bruce was one of the people I know actively talking to physical merchants in New York when no one else was.

Shtylman, what is your relationship with Bruce Wagner? Does Bruce Wagner have any vested interest in Bitfloor Inc.?

None. I don't know nor cooperate with anyone active on this forum nor any primarily-Bitcoin entity. I prefer to remain a "disinterested party" with respect to Bitcoin.

I can see the clear split as well but both camps can use bitcoin as-is in perfect harmony. I believe the money exchangers can't serve both camps though and ,as with any other business, the bottom line may force them decide. As time goes by, the two models will probably be

• Compliant, High volume, Small profit margins, Large business
• Incompliant, Low volume, Large profit margins, Small business

Btw, what is your relationship and/or vested interest in Camp BX?

LOVE IT!!!!!!!!

LOL

[sarcasm]

Nice, I can trust in the Bitinstant enterprise as long the photos are there:



Wait, I do not like Mr Nelson's hair dressing! It look like his hair was lick by a cow or a dog. I recommend Mr Nelson give it up the hair gel or his customers are going to become suspicious of what he is doing with the Bitinstant transactions.



Mr Shrem with his red eyes and open shirt is very suspicious. The hair dressing is all right, but I still have the sensation that Mr Shrem is a 24h drunk Russian laundering money in North-America.



Well done Mr Ver, well done! The only problem is the tie... It look like one of the cheap tie which my grandfather used to dress for the church attendance. I would never trust money to church attendants...



Finally a man which seems a gentleman. Now I can trust completely in the Bitinstant enterprise since I know there is Mr Voorhees, a gentleman which is "trying to do the right thing".

[/sarcasm]

https://www.bitinstant.com/aboutus

To confirm, Camp BX shows:


 - https://campbx.com/in/xfer.php

Let me rephrase.

Bitinstant does not accept money orders at this time nor has it ever. When I say "I" being the managing member and CEO of the company, I am speaking on behalf of the company.

I will tell you that on some of your earlier posts about account segregation, you are correct. Most Bitcoin business do not do enough KYC and due diligence.

We pride ourselves on our legal team and trying to do the right thing. To date, we have never scammed anyone and our pictures, address and phone numbers are on Bitinstant.com

Thanks for looking out

Charlie

Oh God.....

I'm not much of a poker player, but here is the explanation: the verbal slipups like "I" vs. "our company" or "he works for me" vs. "he works with us", etc. are a "tell", especially in the fin-serv racket.

Dude, you earned exactly zero brownie points for this observation. I know that and everyone who reads my posts also knows that already:

JDBound is a trooper and we mutually agreed to delete our posts where I uttered ex parte stuff.

I trust BitFloor and BitInstant a little more than MtGox and Dwolla at the moment. Maybe because they are so PERSONAL and the later are so DISTANT!

Thanks for the thoughtfull and informative post.

I'm completely not worried about BitInstant. This is a duo where Charlie is more of a face+mouth and Gareth is more of a cortex. I applied a fraction of a psi pressure to them when they first shown up here and Gareth's answer made them pass with flying colors. Please click over to the following thread from about a year ago, it is just one page to read and it is a beautifull example of how to answer due dilligence questions.

https://bitcointalksearch.org/topic/m.476286

In addition to the above BitInstant has a completely different risk profile from the customer's point of view: the customer funds are in BitInstant custody for less than an hour on the average. I have a hunch that if there are any problems Gareth is the dude who isn't afraid to put on sleve protectors and do the accounting.

Now lets compare the above with the BitFloor's reaction to a mild pressure: a major nonlinear blowout. (The really interesting parts were deleted by Maged.)

https://bitcointalksearch.org/topic/technical-details-for-how-a-wallet-move-request-works-93502

Here you have a founder who professes complete ignorance of GAAP, isn't concerned about segregation of the accounts; basically calls: "lets commingle our funds until we are sore". But the most important difference is the risk profile from the customer's point of view: the sale of market-making seats on some completely opaque exchange platform. It would be completely insane business decision to buy a seat (become a market-maker) at BitFloor.

Anyway, as somebody else already said: I don't have an alpaca in this race. But I have a hunch that people will put their alpacas to the races on the BitFloor. And those alpacas will get a haircut so deep that it will go all the way to the bone, not to the skin.

He's implying that if you don't take postal money orders, which make him feel a little safer, you're admitting to be a scammer.

Because he's an idiot.

I simply don't understand that statement.

Quoted for out-of-context lulz.

I enjoy a good old fashioned conspiracy theory as much as the next guy, but I think the points chosen are likely false-positives in that they could be used as warning signs although in parallel are non-evidence in themselves and can be coincidental.

That said, Bruce Wagner promotes bitfloor at every chance which makes me think he has his grips on it, and I could theorize that bitfloor's request to have you banned is to quiet you before anyone found this out and his business with the wagner kiss of death. This is completely baseless though, as is my theory that Charlie does accept money orders through BitInstant and merely said "I", because he doesn't personally handle them (Charlie pays attention to how lawyers talk, as you saw from the vagueness in the bitcoincard thread), but this is also wild baseless speculation pulled straight from my ass.

Why stop there? I could theorize you're an investor into another exchange that bitfloor is choking business away from and that's why you're latched on to them.

The point of all of this comedic speculation is that it's just that-- provide sone actual evidence. Things are seldom as they seem (Bitcoin Magazine is pregnant!).

I have had nothing but good fortune with BitFloor. A LOT more than I can say with MtGox and TradeHill!

Keep talking 2112. The more you post, the less credibility you have.

I quoted for posterity. I bolded and underlined the part that conforms to the "made a mistake and told the truth" maxim.

I've met Roman on a few occasions, nice guy.

He lives in New York, as do I.

Many people here met him as well.

Oh, I don't accept money orders either.

-Charlie

I think you are too pessimistic. With proper seggregated corporate setup the bitcoin exchanges could operate without any significant intererence. American Express is a great example how to set up a family of companies that will have no problems handling unclean money.

I think a lot depends on the good cooperation with regulators. It isn't that difficult to employ non-confrontational people in the positions that need to interact with governments. Blackdawg had a good post about whom not to employ: Lynne Stewart.

https://bitcointalksearch.org/topic/m.1035118

This is a classic example of confrontation for the sake of ego gratification and not for the business gain.

I'm more concerned how long the Bitcoin itself (and the its core development team) can survive serving two masters. I see a quite clear split in the community of Bitcoin users into the pro-law and pro-anarchy camps.

I follow your reasoning for using USPS Money Orders and I trust the Pony Express more than 99%. I am aware of one Bitcoin exchange that accepts money orders Camp BX (unless they have removed this method recently).

But for these Bitcoin exchanges in the USA accepting cash & money orders is really bad for business because they will get their bank accounts frozen. They might get away with it for a short period of time (3-24 months) but why take the risk? It is probably better to leave these cash customers to businesses like Bitinstant, BitPay, Payment Processors, In Person Exchangers, etc.

I try to compare these exchanges to Discount Brokers in the USA but you will find no reputable Discount Broker that accepts cash, nor will they allow funds to move between accounts with different owner names (even if wife, mother, etc). Why? Because they don't want the business shut down or the staff to go to jail.

Of course, there is a long list of Private Bankers who will accept a duffel bag full of cash but they don't operate within the law.  

We may bitch and complain about all these banking rules in North America and Europe but when the shit hits the fan it's where we want our money.

Yeah, I'm a capitalist.

Currently the Bitcoin market is full of sheeple bleating to be shorn. There are young naive sheeple like ninjarobot, gambling-addicted sheeple like MemoryDealers, etc.

I'll leave the sheeple-shearing to sheeple-herds. Zhoutong was an excellent one. I really admire the youthful moxie of the "boy plunger of Singapore". Somebody will soon step into his place.

Sooner or later the people will start showing up on the Bitcoin market. Some of those people will be former sheeple; it is usually the quiet, lurking ones that grow out of the sheeplitude.

With the change in demand the new providers will show up on the market.

The difference between MoneyGram/WesternUnion and USPS is simple.

With the first two if you have problem you have a commercial dispute under the civil law. With additional effort you could escalate it under per-state criminal law.

With the USPS if you have problem you call USPS postal inspectors. They'll do the investigation and prosecute under the federal mail fraud statues.

Basically the advantage for USPS money orders is that it is much easier and cheaper to start the legal proceedings in case of problems.

I know for that both Amazon and Apple happily took both certified checks and money orders from the company I used to consult for. One has to know how to open a proper business account with them.

Netflix doesn't take money orders because their business model is based on monthly subscription charges that people forget to cancel. What was that company that used to send you CDs and DVDs every month and then billed afterwards? Edit: I don't know anyone using Netflix, but for other similar companies I'm familiar with: when the credit card expires they'll gladly take a money order to settle the account.

Edit: special addendum for Death And Taxes a.k.a. Tangible Cryptography:

The Apple Online Store accepts a variety of payment methods. Click on a payment method below to find out more:
Credit Cards or Debit Cards
Cashier's Check or Money Order
Wire Transfer
Barclaycard Visa Cards
Apple Business Lease (AFS Commercial Credit)
Apple Gift Card
Bill Me Later© (Consumer and Education Individuals)

http://store.apple.com/us/help/payments

I'm going to do a full quote, because he's know to delete/edit his messages.


USPS money orders: they work like a holy water on a devil.

Try hard troll.  

How about name one that does:
http://www.internetretailer.com/top500/list/

I have no interest in exhaustively proving the point but I know for a fact Amazon, Apple, and Netflix don't take Postal Money orders and that is 3 of the top 10.  I am pretty sure none of the top 20 or so accepts Postal Money Orders but I haven't (and don't care to) prove such a stupid point.

I guess the worlds largest eCommerce company is "disreputable".  Amazon Prime is just a scam so consumers won't notice they don't accept Money Orders. 

LOLZ. 

If it's such a monumental problem that you make it out to be, perhaps you should be the first to create an exchange that uses them? Actually, quick tip: don't bother, because you are the only person I have ever heard ask for such a thing, so I can't imagine a sustainable demand for it.

I don't see any problem with using MoneyGram via Bitinstant/ZipZap, other than a few fees, and it would seem to achieve what you are looking for, mostly, as far as I can tell.

Honestly, I'm not really sure why you have a bee in your bonnet in regards to postal money orders at all.

Well, you've seem to discovered on your own the problem with the current Bitcoin ecosystem in the USA.

How about turning your question around:

Can you name any reputable, well known organization in the USA that refuses to accept USPS money orders?

Or maybe differnet way:

Think of all the payees in the USA that accept the payments under $1k and sort them into two group: those that accept USPS money orders and those who don't. Now sort them into reputable and disreputable. Do you see the correlation and overlap?

Thank you ofr your comment. It is very interesting to read a perspective of an attorney. But as you've observed this isn't the court and we don't have to obey the the codes of procedure. I purposely didn't say "Federal", because the concept of "cross-examination" is way broader than just Anglo-Saxon legal systems. I'm not going to say that you are "over-lawyered", but perhaps allow yourself to look at the cross-examination from the inquisitorial angle, not adversarial.

In commercial due dilligence settings things are different. I've seen men coming to the meetings wearing hair-nets, counting on their fingers, intensely staring at the presenter's breasts, etc. Anything that works, because you don't do it for an audience, judge and jury; you do it for yourself. The idea is to discern whether the examinee is interested in running a business or is interested in ego gratification.

Anyway, as you have seen the mention of USPS money orders worked like sprinkling of holy water on a devil. The 19-th century mail fraud statues are still potent. And because of the USPS postal inspectors it is easier for the small timer to get the ball rolling: no need to hire an attorney or deal with a local law enforcement. People can go directly on the federal level, where prosecution rates are much higher.

Please point me to an exchange that does accept them. I know of none.

I just quote it for the future reference.

The red flag is "We do NOT accept postal money orders."

Anyone still willing to use BitFloor should spend some time reading the additional ACH/EFT disclosure that comes with their account. It is almost as long as the basic disclosure because you'll going to voluntarily relinquish some protections.

How exactly is that good advice?  Bitfloor doesn't accept Money Orders so they will be returned.  It waste both the user and operator's time and money.

Um, no. Cross-examination is not a search for the truth or new information, it is a process by which the examining attorney forces a hostile witness to admit various facts that are damaging to the witness' credibility or their adversary's case. One of the basic principles of cross-examination is to never ask a question where you don't know the answer in advance - ideally, the "questions" should be phrased so that the witness can only make a short answer, with the questioner doing most of the talking.

If that's what you want to do, it would probably be more productive if you'd just say what it is you're trying to communicate.

And, yes, it is an important part of the US court system, but this is a message board, not a court.

Can you provide some sort of reference to the use of cross-examination in due diligence? I have been through the startup funding/acquisition grinder a few times and have never even heard someone propose cross-examination as a due diligence technique. In fact, the very idea of it seems counterintuitive, since the goal of a cross-examination is to force the witness to admit facts that the examiner knows in advance but wants to place in front of the finder of fact.

I will certainly agree that part of the "due diligence" process can involve asking pointed or difficult questions, but that's not cross-examination.

Blatant trolling is blatant.  Honestly OP is just a bunch of unsupported accusations. 

Shtylman made a single statement that "Banks allow negative balances" and the OP spun that into an entire conspiracy theory.


Which has nothing to do with nothing.   Your entire baseless accusation was based on upon a statement made about BANKS not BROKERAGES!

Please do not provide misinformation about our supported deposit methods. We do NOT accept postal money orders. Please refrain from speaking on behalf of our exchange about our deposit options.

We encourage all our users to fully understand our deposit methods and give suggestions to others about how best to use our deposit methods, however we do not encourage the spread of false information about what our deposit methods are. Users are strongly encourage to verify with Bitfloor support and/or the Bitfloor website before assuming anything about how you can deposit funds into your account.

Constructive protection suggestion:

When depositing USD on Bitfloor (or any other US-based exchange) try using USPS postal money orders. They give you additional protection under mail fraud statues and the USPS postal inspectors enforcement will talk to you even if the sums involved are small. When sending postal money orders do not use FedEx/UPS or other courier services. Use plain old registered mail with return receipt requested.

It is a very low tech but very good protection for those that plan on trading only small sums.

That was because when opening the account you consented to the credit check and pledged allegiance to their right of offset. The bank account opening forms in the USA are very long and very confusing. They however are legally significantly different than e.g. forms required when opening stockbrokerage accounts.

It means he probly isn't as familiar with US banking as he would like us to believe

I'm sorry I offended you. Time will show like time had shown already. By the way, I used the phrase "cross-examination" not "cross-referencing".

Thank you for everyone's attention.

Your previous posts on the subject:
 - https://bitcointalksearch.org/topic/m.521426

Mr.Shtylman claimed that many banks in the USA routinely grant overdraft without being asked or informed about customer's identity and location. That actually happens very often, not in the USA, but in the countries where majority of banking deposits is done with the electronic transfers.

I know, at the beginning it always looks like nit-picking.

I nitpicked Zhoutong on the day he announced Bitcoinica:

https://bitcointalksearch.org/topic/m.517560

I nitpicked Vince Torres withing couple of weeks of announcing trade-btc.com:

https://bitcointalksearch.org/topic/m.562031

What are you talking about? No seriously because none of it makes sense to me. Inadvertently disclosed? Unfamiliar with US banking? Loans? None of this makes any sense nor is it true. Anyone that has met with me in person (there are a number of Bitcoin users who have met me), talked to me on the phone, or otherwise done their research regarding Bitfloor can attest that I do indeed reside in the USA and that Bitfloor is as legitimate as it gets. If you look on the forums you will find nothing but satisfied users and a solid track record.

Your comments about loans and liquidity rebates really shows that you have no grasp of how trading or markets work. Please refrain from making baseless accusations against persons or businesses and claiming you are just "cross referencing" things.

Anyone who reads the linked technical discussion will show that I asked a very legitimate question and you proceeded to give non answers, troll, and otherwise insult anyone else related to that topic.

It is my opinion that you should be banned from these forums for such actions as they reflect poorly on not just your but the bitcoin community. I can't imagine how you respond to actual new users asking relevant questions just to be insulted. And then to go on an claim things about their residency or otherwise legitimacy without having done any research.

Firstly: it isn't called "attack". It is called "cross-exmination" and is one of the core percepts of adversarial system of justice in the USA. It is also commonly used while performing "due dilligence" in the USA.

Secondly: I questioned Gavin Andresen on him continuing to provide what appears like accounting advice, despite the following:

2a) he had closed his personal Bitcoin business (Clearcoin) before he was legally obliged to submit paperwork under the penalty of perjury.
2b) he continues to make implicit statements portraying bitcoin{d,-qt} as compliant with the GAAP (both for the USA and the rest of the Western world and its accounting tradition).

Moderators: I know this is a sore subject on this forum. Try maybe moving it to the appropriate place instead of simply deleting. Thanks.

Overdrafts are not a required feature of a bank, and current regulation demands that all banks send a letter to customers to make them opt-in or out of overdraft protection. (OT: I have opted out)

I don't know what your worry is. It seems that you have something personal against him or his business, and are picking on extremely small points to try and demonstrate an imaginary flaw.

In case anyone is interested in him, here is an interview on Bruce's show in person: http://onlyonetv.com/2012/02/the-bitcoin-show-056-roman-shtylman-of-bitfloor-com/

Mr. shtylman had inadvertently disclosed that he is completely unfamiliar with how US banks operate in regards to account overdrafts. I'm suspect that he not only isn't a US resident but he also doesn't have a business nor personal nexus in the USA (meaning a short-term permanent or temporary resident with no family connections).

The business/residence photographs aren't really going to help. In the thread below Mr. shtylman is soliciting for the loans in the form of "rebates for liquidity provider". This is an activity that is regulated in the USA. The loans aren't paid interest in the TVM sense but are paid by a negative trading commission.

https://bitcointalksearch.org/topic/liquidity-rebates-and-price-volatility-93632

I would recommend that people who are tempted to became the "liquidity provider" do the same due dilligence as those who became the liquidity providers for Bitcoinica. The regulations in the USA provide for the collateral security and rights of offset that are available to the "liquidity providers".

I read that thread, and it appears that you immediately attacked him for not understanding a certain rarely-used portion of the reference bitcoin client. Is there another issue on your end that we need to know about?

Can you clarify this a bit? Because I was under the impression that:

1. He lived in Brooklyn (which is just across the bridge from Manhattan).
2. There are many people living in the USA who aren't US residents, are you saying he doesn't live in the USA?

If you guys are willing to pay a fee, I can have someone visit his business/residence and provide videos & pictures. So here we are...

At the request of Gavin Andresen and shtylman couple of messages were deleted from the thread in "Development and Technical Discussion":

https://bitcointalksearch.org/topic/technical-details-for-how-a-wallet-move-request-works-93502

In one of the deleted messages shtylman (the operator of BitFloor) had inadvertently disclosed that he isn't an US resident and doesn't reside on Manhattan where the exchange offices are allegedly located. I wish I saved those messages before posting, but I'm working from a borrowed laptop.

Anyway, be safe or be sorry. The choice is yours.