Topic: TradeHill - Dwolla is being scammed and reversing transactions - page 2. (Read 19229 times)

Do you?  I would not have been surprised if Mt Gox was pretty busy with other things, and their books got pretty scrambled in the fallout of their other recent issues anyway.

That Dwolla would be editing their books was kind of a shock to everybody and I don't think anybody would have expected it (and parenthetically, I have not heard *anybody* come up with a defense for this except for CampBX who seemed to be of the opinion that they may have a possible, if distasteful, 'out' from a legal perspective.)

Indeed it seems like Mt Gox and has gone through a 'no-problem -> maybe small problem ->stop using Dwolla' range of responses after being tipped off.  That tells me that they had probably something less than a full situational awareness.


You do?  Tradehill mentioned that they are hard at work finding a replacement for Dwolla which, as others seem to be finding, is not currently usable (and many others postulate never will be.)

The main thing which surprised me was how quickly they found a company in this business, and one who claims to have found a solution for the charge-back issue.  I'm dubious of that claim but would be delighted to see them prove me wrong.(*)  Also the outfit claims to have been setting up for three years before they went into action.  That's plausible I suppose, and I can understand it in some scenarios, but it also is something I would investigate.

* Actually, I personally don't care all that much.  Wire transfers are working well for me in my situation.  OTOH, I might someday want to use the service for things other than funding my BTC trading.

I don't find Tradehill's promotion of Paxum in the least suspicious under the circumstances.  Without Dwolla, they *must* have some means of processing payments/letting customers transfer money in and out of Tradehill accounts.  This appears to be the means that they currently have chosen.

That doesn't mean you or anybody should put huge amounts of money at risk through this channel.  But IMHO Bitcoin itself is too new/untried to risk any money that you can't afford to loose anyway.  So I'm going to give this a try and see what happens.

It does seem impressive, but it doesn't add up IMO.

TradeHill claims that there is a *huge* percentage loss of invalid transactions occurring which the likes of MtGox hasn't even bothered to check. Considering that MtGox has recently suffered a major setback I find that claim dubious, considering the tender freshness of bitcoin trading.. Tradehill claims losses are in the thousands of dollars range... why would *any* financial keep on business as usual while such quantities of money are being thrown around as potential losses?

I also find it suspect that in the other thread, TradeHill starts promoting Paxum.

I've been a bit hesitant (to put it mildly) to use TradeHill because I was slammed with a bunch of spam with TradeHill URLs right after the Mt. Gox breakin.  It looked at first as if Tradehill was trying to take advantage of Mt. Gox's problems.  I wasn't impressed with the plausible deniability because of their affiliate program.  Affiliate programs are how many companies spam while avoiding responsibility for spamming, and is how most actual spammers get paid for sending spam.  I'm one of the people that tries to clean up the virtual piles of manure that spammers spread around the Internet. Because of this, affiliate programs leave a *really* bad taste in my mouth.  Rightly or wrongly I attribute the attitudes of spammers to those who run affiliate programs.  :/  So my trust in Tradehill hasn't been great.

However, I'm impressed by how they are handling their current issues with Dwolla.  They are making clear, detailed allegations of fraud against Dwolla backed by names, numbers, charts, etc.  They're talking and acting like a company who has the facts on their side and is confident of prevailing in court should it come to that point, but that prefers not to go to court.  In other words, they're acting like people who are telling the truth.  I believe them.

Dwolla needs to answer these allegations, publicly and in the same forums where they have been made.

Excellent point. I don't think Dwolla could have refused to do business with Bitcoin marketplaces from the start. Part of their business model and sales pitch is that they don't care what you do so long as it's legal.

Compare Bruce's argument that all they'd have to do would be to publish an e-mail they'd sent to Tradehill informing them about the transaction reversals with (a) their initial statement that they can't release details about specific customers or transactions and (b) Bruce's second e-mail to them. (It's revealing that they haven't quoted any concrete policy of informing customers about reversed transactions but unsurprising that they won't publish private e-mails.)

Finally managed to find the actual article Bruce was referring to - that was a bit of a pain.

Edit:
It matters because Tradehill were offering a service that had the equivalent of a big neon sign on it reading "ideal for laundering stolen money". Of course, they should've reacted by refusing to do business with Bitcoin marketplaces from the start.

The riskier fraud is and the harder it is to make money on it, the less likely it is to happen.

I couldn't figure out what was and wasn't written between Bruce's numerous interjections declaring what was obvious, pathetic, or dishonest. Just the facts sir!

Watching Bruce's show from yesterday covering Dwolla's emails.

Their "answers" to his direct questions are downright despicable, and even the irrelevant garbage they are saying is dishonest.

And their CEO thinks it's funny to mock Bitcoin investors? Who are making up almost his entire customer base.

They deserve the failure that's coming to them.

I agree with Mr JoelKatz: Why should tradehill have to have "tracable proof" of products and services? Why isn't a list of account transactions good enough? That is good enough for Dwolla obviously because all they provide is a list of transactions (one that apparently they can change over time whenever they want)

How would it matter if there's a delivery of a product that's traceable? The claims in this case aren't that TradeHill didn't do what they said they were going to do, the claim is that the original transfer is unauthorized. The situation would be precisely the same if TradeHill had shipped them a physical product.

Suppose instead of buying bitcoins, TradeHill had shipped a physical product and TradeHill could prove that. How would that change things? TradeHill would still be out the product they had shipped and Dwolla would still have taken back the money.

Even if the physical product could be recovered, someone would still be out the costs of preparing, shipping, and restocking the product. There would still be the issue of whether Dwolla or TradeHill eats that loss. Dwolla can't afford to eat that loss on $0.25 per transaction. And TradeHill can't on .5% commissions. And there's always the chance the physical product couldn't be recovered.

They're not reversable if you, as the owner of the account being transferred from, gave a correct account number and name. They are reversable with certain restrictions if the original transfer request itself was made fraudulently, even after the funds have supposedly cleared. Mt Gox's problem was that phishers were carrying out fraudulent transfers from other people's accounts to Mt Gox.


They can't do anything about it. Normally there'd either be a delivery of a product that's traceable or no way for someone to make large amounts of money from this and thus no incentive to do it, but due to the nature of Tradehill's business neither is true.

[POLL] Will you reverse your Dwolla transactions?
http://forum.bitcoin.org/index.php?topic=32354.0

If the results of this poll are accurate, there are more reversals coming. If I were running an exchange, I would disconnect my bank account from Dwolla ASAP, changing banks if necessary. Let Dwolla sleep in the bed they made.

For emergency trade, sure I can wire the money and pay the fee. But like my stock brokerage account, I usually keep money in there for years and don't deposit and withdrawal constantly, 60 days isn't a big deal to me, it's just an option to fund cheaply.

You really think its practical if you want to trade to wait 60days ? Id rather pay $5 or $10 to be able to trade in less time than that but maybe its fine with you to wait 2 months to get in a good trade o_0

There is other funding options, tradehill just have to add it. Dwolla isnt the only alternative, just wait for tradehill to add other methods if this doesnt get resolved.

What other option is there for funding with a $0.25 fee? I'd take the 60 days rather than no funding options at all.

this is an overstatement by a long shot.  remember this is an exchange, not a bank.  ppl move money in and move money out rather quickly for the exchange only.  no one is paid any interest like a bank therefore no one has an incentive to leave money there on a long term basis.  this is why exchanges don't make loans and are thus not "fractionally reserved" in the traditional sense.

i suppose if mtgox got defrauded lets say $35K (they did say less than TH), then yes, on an absolute basis they might be a bit short but considering they have hundreds of thousands in USD and BTC it won't be a problem.

but it's my money, and i want it NOW.

If thats the best option, simply dont allow dwolla. No business can operate by forcing clients to wait 60days, no clients would tolerate this either.

I think best approach if you want to use dwolla from now on then clients must verify themself with the normal legal bullshit ie. photo id, proof of residence, bank account statement etc etc. so would be scammers wouldnt even think twice wasting their time to try and defraud a company.

All this of course only in case someone wants to make use of dwolla, other methods can still be as anonymous as it is atm and unchanged.

Just hold all dwolla deposit for 60 days before the fund is allowed to be used for trading from now on

Yes, you have "counter-party" risk. That is the reason for holding bitcoin in your personal wallet. Local, in-person exchanges are best. Develop local, trusted, trading networks. Only leave in the exchanges and online wallets what you can afford to lose.