Topic: What Do Centralized Exchanges Consider as Taint? - page 3. (Read 804 times)

Pretty much this. Especially if the exchange is in cahoots with Chainalysis(as in the company that's the best with chain analysis as far as I know), then it's probably a very safe assumption that just doing 1 address hop before depositing to the exchange won't do the trick. Not sure if depositing to an exchange without KYC will do the trick (in the hopes of your withdrawal coming from another wallet address), but it poses an additional risk.

I think so too, and crypto.com's answer should be the final answer for a service that is still under regulation. Explaining the method of analyzing tainted coins to customers in detail is like creating their own loopholes which will eventually get them in legal trouble because many violators are circumventing the rules.

After all, the exchanges would rather freeze your account than help you avoid freezing.

Gambling is actually on coinbase's list of prohibited usage for most countries so they could've just asked where you're from... support these days feels like a lottery.

For customers who reside outside the United States of America, United Kingdom, European Economic Area, Japan and Singapore:

and take note of:

I really appreciate your effort. But it's not surprising they have relative poor transparency and customer service who're not able to answer uncommon or specific question.


That might work for new or small exchange, but on other hands they could accuse you for "conceal" origin of the coin (see Gemini response).

I think the reason why you did not get a detailed answer is that these platforms are looking for profit, but they are forced to comply with some legal regulations, and therefore they cannot tell you frankly that they will not check the source of the money, but they will freeze it if a problem occurs.

I remember that one of the members of the forum said that one of the platforms asked him to verify the identity and told them that he could not. The response of the other party was, “Submit any papers, we cannot communicate with governments to verify their authenticity,” in other words, they are forced to ask users about identity verification. But no one is looking thoroughly unless there is a problem.

None of the support personnel were willing to give away hints in my case. Support agents are used to responding to the same questions over and over again. They don't really know what is going on in the background or how to handle complicated matters. Ask them about some specifics about their Privacy Policy or TOS, and they wont know how to handle it. There are other departments within the company that handle the real stuff, but they reveal their methods only to government agencies and law enforcement, not to regular folks who come knocking.   

I respect your effort to create this thread.

I did research of those centralized exchanges and gambling sources problem, but I don't find any discussion except this one Bovada to Coinbase (the other discussion already old). Gambling source is one of illicit sources by Chainalysis, so if gambling is prohibited in your jurisdiction and you haven't KYC your account, your funds will be frozen and they will demand KYC.


Don't get me wrong, if they give full explanation of tainted coins that can lead a further investigation on client's account, they like giving away a trick how to abuse their exchange. That's why most of them didn't response to you and some only give short answer. To be honest I don't believe what does Gemini said above (they will close your account), I have been this forum for few years and most centralized services which mention they will close your account if you broke etc etc, but they will ask your KYC first, then close your account.

Some people tricking centralized exchanges by don't directly send your coins from casino, but they send it to their own wallet first, so:

Casino --> Wallet --> Exchange

If the exchanges hired poor analysis companies, I think this can be solution since they're only look from the address come from, not search more deeply. However the another solution is you shouldn't use centralized exchange to prevent of this problem.

Ever since I read about Wasabi’s and zkSNACKs’ newest partnership with blockchain analysis companies, I wanted to find out more about what is considered tainted in the eyes of centralized exchanges. So, I asked them about it. Of course, I didn’t expect much, but I got even less than what I thought I would.

Nevertheless, I decided to create this thread and share the little bits of information I found out after contacting some of the best-rated exchanges (spot trading) according to CoinMarketCap.   

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I pretended to be a gambler and professional poker player searching for an exchange to buy and trade coins. The message I sent to the CEXs was this one:



And here are some of the answers I received.

#1 Binance

I contacted Binance via live chat. Their response contained nothing of substance, and the agent didn’t even try to answer my questions. He was only advertising how wonderful the exchange is and tried to speak about it and promote it the best way he could. Absolutely useless for this purpose.

#2 FTX

I reached out via email, but there was no response. I then contacted one of their Telegram moderators in their English Telegram group to hear what they had to say. There was nothing useful besides generic messages about how exchanges don’t block coins deposited from casinos and only block funds from certain flagged addresses. He couldn’t comment on anything related to taint.



#3 Coinbase   

I sent them an email and received an automated reply that they would be in touch as soon as possible. After a few hours, I got a reply saying that I should contact them from the email account associated with my Coinbase account. After that, there was no further communication with them.

#4 Kraken

They didn’t answer my questions. Instead, they said they have to verify my identity and that their compliance with KYC and AML regulations requires them to continuously fight fraud, money laundering, etc.



#5 KuCoin   

No valuable information was obtained from KuCoin either. All they said was that I could trade crypto and withdraw up to 1 BTC daily without going through KYC. No info about taint whatsoever.

#6 Huobi Global   

I got no reply to the email I sent.

#7 Gemini   

Gemini was the first exchange that said something meaningful. If the coins originate from gambling, they can’t be deposited and used on Gemini. They analyze their customers' transactions to ensure they don’t come from casinos and sportsbooks because if they do, the accounts will be closed according to their support. Attempts to “conceal” the origin is not allowed. That probably means moving them around a bit between your own addresses or maybe mixing them.



#8 Bitfinex   

The Bitfinex support rep informed me that no KYC is needed to trade on the platform. But the coins can’t be deposited from restricted territories.



#9 Gate.io   

After I sent them my mail, I was told that my inquiry was forwarded to a specialist of theirs who will answer me in due time. But unfortunately, that has still not happened.

#10 Binance.US   

Binance.US answered similarly to Gemini. I was told that transferring money from a gambling platform into a Binance.US account is prohibited.



#11 Coincheck 

Coincheck is a Japanese crypto exchange. Their answer explained that people younger than 20, older than 75, and those who don’t live in Japan can’t register on Coincheck. Additionally, they can’t comment on their regulations publicly.



#12 bitFlyer 

I didn’t receive any reply to the message I sent to this exchange.

#13 Bitstamp 

No reply from Bitstamp either after contacting their support.

#14 Bithumb 

Bithumb is for Korean traders, and I didn’t find a suitable way to contact them.

#15 OKX 

Their chat support is a bot suggesting different segments from their FAQ. Unfortunately, I Couldn’t get in touch with a real person.

#16 Crypto.com 

I spoke with their live chat support, who said that the exchange doesn’t have a policy on tainted coins. Upon asking a second time if the site will block deposits originating from gambling sites, mixers etc., I was told to wait until they receive clarification from the relevant department. A bit later, I was told that such information couldn’t be provided.



#17 Bybit 

Bybit sent a reply with some information from their TOS. It’s about them having the right to terminate, suspend, or limit exchange accounts of customers when they think it is needed. No details about how they handle taint.




Conclusion 

I wish I had more information, but sadly that’s it. Did I expect to get some detailed info on taint algorithms? No. But I was hoping I would gather some more details. At least, we found out that Binance.US and Gemini don’t allow their users to deposit coins with a gambling background.