Topic: What Do Centralized Exchanges Consider as Taint? (Read 736 times)
Monthly bump
Ok but you can only exchange btc - just took a look - and what can you do with the USD? Not sure exactly how it would work unless I test it out myself.
The USD is received directly by you via whatever payment method you choose. If you choose a bank transfer, then you will get it directly in your bank account. If you choose some payment processor like Zelle or CashApp, then you'll receive the USD in your account on those apps. There is no wallet on these DEXs which stores USD for you.Some of the ones I have listed above support a few select altcoins such as Monero. If you want to trade bitcoin/altcoin pairs, then there are a variety of non-KYC instant exchangers you can use, but I'm not familiar with this area so I can't recommend any. Maybe try the altcoin boards.
But how? i thought you have to use usdc or usdt - thanks will look at dex exchanges
Use them for what?All the DEXs I have listed above let you trade bitcoin for USD and vice versa peer to peer, using a huge variety of payment methods. You can pick and choose which payment methods you are interested in using. At no point do you need to trade for or hold any stablecoins, and given that most stablecoins are centralized and fractional reserve, better not to touch them at all if you can help it.
Ok but you can only exchange btc - just took a look - and what can you do with the USD? Not sure exactly how it would work unless I test it out myself.
Also, most of the support personal do not even know what you are talking about, they just give you some generic answer that was prepared for them. 
Support personnel know how to handle the most common types of issues that users run into. If you have a serious question, concern, or you ask them something uncommon (like taint algorithms or blockchain analysis), they will give you an answer that is somehow connected to topic but in reality has nothing to do with what you asked. Or they will simply tell you to read the TOS. But the support staff doesn't have the needed information because things like "taint" is surely handled by a different department and they aren't going to connect you with those people. And even if by some miracle they do, you won't find out anything because any information they might give you could be used to try and trick their systems.
But how? i thought you have to use usdc or usdt - thanks will look at dex exchanges
Use them for what?All the DEXs I have listed above let you trade bitcoin for USD and vice versa peer to peer, using a huge variety of payment methods. You can pick and choose which payment methods you are interested in using. At no point do you need to trade for or hold any stablecoins, and given that most stablecoins are centralized and fractional reserve, better not to touch them at all if you can help it.
In my experience, most startup exchanges and relative new exchanges have no serious issues with "Coin tainting" ...because they are simply too focused on building a large user base. (The same goes for KYC requirements at casinos) .... once they reached their target, they suddenly start asking KYC verification and they they start to adhere to strict regulations.
Also, most of the support personal do not even know what you are talking about, they just give you some generic answer that was prepared for them.
Also, most of the support personal do not even know what you are talking about, they just give you some generic answer that was prepared for them.
But how? i thought you have to use usdc or usdt - thanks will look at dex exchanges
From my experience these exchanges are now worse than banks.
Absolutely they are. Your standard fiat bank asks for far less KYC than most centralized crypto exchanges, freezes coins and accounts far less often, and has actual channels people can go down to have their accounts unfrozen if it does happen, rather then being left endlessly spamming Reddit and Twitter and getting nowhere. Not to mention that they don't perform "taint analysis" on all the cash you deposit or even track your withdrawals to see how you are spending your money, like centralized exchanges do. CEXs are antithetical to the whole concept of bitcoin.They all started out singing the tune of crypto and btc decentralised and private. But now its just crazy.
As with many companies and entities in this space - started out with great intentions, but as soon as some nice profits came along, morals and ideals were discarded in favor of greed.If you want convert to USD now and again we unfortunately tied to exchanges.
DEXs are the way forward. Using something like Bisq, LocalCryptos, or RoboSats to trade bitcoin to fiat and vice versa, all without having to complete KYC or even registering an account.
From my experience these exchanges are now worse than banks. They literally want a photo print of your backside before you can really use their services. More KYC and AML procedure than the strictest banks because hey - its crypto. They all started out singing the tune of crypto and btc decentralised and private. But now its just crazy. Whats needed is like a swiss style crypto account or even just a company who just collects the ID etc like a bank and dont act all crazy like Kraken or Coinbase over large value clients asking for backside pictures. How any institutions do business is beyond me. And they block all your funds anytime you do something they dont like the smell of. Basically anything high value. And accepting any crypto from a friend to any exchange account is an automatic ban usually and hold of all funds. Bitstamp did that to me once over 150$ worth of XRP. I had no wallet so sent it there and wham. Had enough. Thats why these web 3 wallets seem good if you can just convert to USDC - but again you taking a risk in the stable coin. If you want convert to USD now and again we unfortunately tied to exchanges.
I for one am going to test a Web 3 wallet, then send to exchanges for buys or sells.
I for one am going to test a Web 3 wallet, then send to exchanges for buys or sells.
I think a lot of what you describe are failures to implement procedures/policies properly, to have proper controls, etc. I think if Coinbase had a procedure to intentionally confiscate property in small amounts for reasons they knew were invalid, they would have difficulty retaining customers.
I don't think Coinbase are setting out to deliberately steal coins from their users, but there is absolutely no doubt that their poor procedures and controls to which you refer are having the outcome of users being deprived of their coins. You can go their subreddit or Twitter accounts and see post after post after post of people having accounts locked or restricted and coins frozen or seized and receiving absolutely no help from Coinbase Support or even an explanation, even after months of sending support tickets. I'm sure that as you mentioned above that a not-insignificant proportion of those users will be telling a slanted story or leaving out important details, but it certainly isn't all of them and Coinbase are certainly to blame in some situations.I know you disagree with my conclusion, but I believe the reason there are no court cases whose resolution is to provide their customer with access to their funds that were frozen is because coinbase is not denying access to funds by their customers for reasons that are not consistent with the law. I think if this was not the case, there would be at least a handful of cases in which a competent lawyer would take the case on a pro-bono basis.
I think for the most part users simply do not have the time, money, or resources to pursue a lengthy legal challenge against a multi-national multi-billion dollar corporation, the cost of which in most cases will be more than the value of the coins they have lost.I think we disagree on many issues, but I always find your arguments to be articulate and well reasoned. Further, I find your arguments to be made in good faith, which is not something I can say about everyone on the forum. I have found that you are capable of engaging in debate with those who disagree with you. As a result of the above, I often respond to your posts. I hope that neither you, nor anyone else views my responses as any kind of flame war, or anything like that.
+1I think a lot of what you describe are failures to implement procedures/policies properly, to have proper controls, etc. I think if Coinbase had a procedure to intentionally confiscate property in small amounts for reasons they knew were invalid, they would have difficulty retaining customers.
I don't think Coinbase are setting out to deliberately steal coins from their users, but there is absolutely no doubt that their poor procedures and controls to which you refer are having the outcome of users being deprived of their coins. You can go their subreddit or Twitter accounts and see post after post after post of people having accounts locked or restricted and coins frozen or seized and receiving absolutely no help from Coinbase Support or even an explanation, even after months of sending support tickets. I'm sure that as you mentioned above that a not-insignificant proportion of those users will be telling a slanted story or leaving out important details, but it certainly isn't all of them and Coinbase are certainly to blame in some situations.I know you disagree with my conclusion, but I believe the reason there are no court cases whose resolution is to provide their customer with access to their funds that were frozen is because coinbase is not denying access to funds by their customers for reasons that are not consistent with the law. I think if this was not the case, there would be at least a handful of cases in which a competent lawyer would take the case on a pro-bono basis.
I think for the most part users simply do not have the time, money, or resources to pursue a lengthy legal challenge against a multi-national multi-billion dollar corporation, the cost of which in most cases will be more than the value of the coins they have lost. I think the risk to Coinbase loosing a case when they took $1000 is more reputational than anything. If they were to lose this type of case, they would have trouble attracting and retaining customers.
I think simply we fundamentally disagree on this point, which we have discussed before: https://bitcointalksearch.org/topic/m.60068274I think we disagree on many issues, but I always find your arguments to be articulate and well reasoned. Further, I find your arguments to be made in good faith, which is not something I can say about everyone on the forum. I have found that you are capable of engaging in debate with those who disagree with you. As a result of the above, I often respond to your posts. I hope that neither you, nor anyone else views my responses as any kind of flame war, or anything like that.
Coinbase have done plenty of suspect, shady, and downright illegal things in the past, and yet continue to have no problem attracting and retaining customers. Everything from selling user data to insider trading, hiring human rights abusers to seizing customers' coins, attacking bitcoin itself to creating their own blockchain analysis subsidiary. The loss of a court case would add very little to that rap sheet, especially not a court case for only $1000. Most users simply wouldn't care.
I think a lot of what you describe are failures to implement procedures/policies properly, to have proper controls, etc. I think if Coinbase had a procedure to intentionally confiscate property in small amounts for reasons they knew were invalid, they would have difficulty retaining customers. I know you disagree with my conclusion, but I believe the reason there are no court cases whose resolution is to provide their customer with access to their funds that were frozen is because coinbase is not denying access to funds by their customers for reasons that are not consistent with the law. I think if this was not the case, there would be at least a handful of cases in which a competent lawyer would take the case on a pro-bono basis.
I think the risk to Coinbase loosing a case when they took $1000 is more reputational than anything. If they were to lose this type of case, they would have trouble attracting and retaining customers.
I think simply we fundamentally disagree on this point, which we have discussed before: https://bitcointalksearch.org/topic/m.60068274Coinbase have done plenty of suspect, shady, and downright illegal things in the past, and yet continue to have no problem attracting and retaining customers. Everything from selling user data to insider trading, hiring human rights abusers to seizing customers' coins, attacking bitcoin itself to creating their own blockchain analysis subsidiary. The loss of a court case would add very little to that rap sheet, especially not a court case for only $1000. Most users simply wouldn't care.
The "insurance" claims are often not much more than marketing gimmicks, and often after reading the fine print, the insurance coverage is often very narrow, and covers things that have not frequently ultimately resulted in exchange customers loosing their money.
But even things that happen often, like losing money following a hacking incident of the exchange wouldn't require the service provider to refund their customers. They surely consider such events as events they can't influence and hence are not bound by the TOS agreement to compensate the damages to the clients.
Sorry, I just saw this post due to Pmalek's bump.
Probably not very high, although if Coinbase were to do this on any kind of regular basis, I am sure that there will be a number of lawyers willing to accept their case Pro Bono, and lawyers may be willing to accept the case Pro Bono even if it is an isolated incident. I think the risk to Coinbase loosing a case when they took $1000 is more reputational than anything. If they were to lose this type of case, they would have trouble attracting and retaining customers.
The relationship between exchanges and their customers should be more clear. I suspect exchanges haven't done this in the past because of the hysteria surrounding Coinbase making this disclosure.
The "insurance" claims are often not much more than marketing gimmicks, and often after reading the fine print, the insurance coverage is often very narrow, and covers things that have not frequently ultimately resulted in exchange customers loosing their money.
A good lawyer/legal team will only help at the margins. If an exchange has a loosing case, a competent legal team will tell the exchange to return the money/coin.
And not to pick on any person or country in particular, but how do you think a citizen of a third world African country (for example) with less than $1000 to their name is going to fare trying to sue Coinbase, even if they have a winning case?I also don't think the fact that exchange customers being unsecured creditors of said exchange is anything new. This is exactly what happened when Gox failed years ago.
Yes, but it is helpful to see it in writing, especially when exchanges keep pushing their "Funds are safu" and "You deposits are insured" and other such nonsense to fool people in to thinking they aren't putting everything at risk by deposit their coins to such exchanges.The "insurance" claims are often not much more than marketing gimmicks, and often after reading the fine print, the insurance coverage is often very narrow, and covers things that have not frequently ultimately resulted in exchange customers loosing their money.
Yes, but it is helpful to see it in writing...
It is, but I also don't think it's going to make much of a difference. Most people aren't really reading the Terms and Conditions anyways. Writing and talking about it on crypto news outlets, social media, and forums like this one will draw more attention to the problem. People aren't concerned with house fires until their kitchen appliances go up in flames. When that happens, it's already too late. A good lawyer/legal team will only help at the margins. If an exchange has a loosing case, a competent legal team will tell the exchange to return the money/coin.
And not to pick on any person or country in particular, but how do you think a citizen of a third world African country (for example) with less than $1000 to their name is going to fare trying to sue Coinbase, even if they have a winning case?I also don't think the fact that exchange customers being unsecured creditors of said exchange is anything new. This is exactly what happened when Gox failed years ago.
Yes, but it is helpful to see it in writing, especially when exchanges keep pushing their "Funds are safu" and "You deposits are insured" and other such nonsense to fool people in to thinking they aren't putting everything at risk by deposit their coins to such exchanges. Anyone can complain online, and tell a slanted version of their side of the story, but if courts are not granting judgements against exchanges for seizing coin, one might reasonably conclude that exchanges are not seizing property that lawfully belongs to their customers.
One might also reasonably conclude that a multinational exchange with billions in the bank have a better legal team than someone who has had 0.1 bitcoin stolen from them.There is also the argument that nothing you hold on an exchange is legally yours in the first place. As we saw in the recent Coinbase filings with the SEC, anything you deposit to Coinbase is legally theirs, and you are an "unsecured creditor".
I also don't think the fact that exchange customers being unsecured creditors of said exchange is anything new. This is exactly what happened when Gox failed years ago.
There is a part that says that in case of bankruptcy, anything held with an exchange is considered to be the possession of that exchange.
Exactly this:Moreover, because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.
Anything you deposit to Coinbase (or any centralized exchange, for that matter) are legally considered to be the property of that exchange. If Coinbase mess up, then your coins (or more accurately, Coinbase's coins which you think are yours) will be used to pay off their secured creditors, which will be the large financial institutions they partner with. Average users will get nothing.
There is also the argument that nothing you hold on an exchange is legally yours in the first place. As we saw in the recent Coinbase filings with the SEC, anything you deposit to Coinbase is legally theirs, and you are an "unsecured creditor".
Are you talking about the new SEC requirement where cryptocurrency exchanges are required to warn investors about the dangers of storing crypto in their accounts? There is a part that says that in case of bankruptcy, anything held with an exchange is considered to be the possession of that exchange. It seems like it was always like that, the only difference now is that SEC wants the platforms to make that absolutely clear to their users through their TOS. Anyone can complain online, and tell a slanted version of their side of the story, but if courts are not granting judgements against exchanges for seizing coin, one might reasonably conclude that exchanges are not seizing property that lawfully belongs to their customers.
One might also reasonably conclude that a multinational exchange with billions in the bank have a better legal team than someone who has had 0.1 bitcoin stolen from them.There is also the argument that nothing you hold on an exchange is legally yours in the first place. As we saw in the recent Coinbase filings with the SEC, anything you deposit to Coinbase is legally theirs, and you are an "unsecured creditor".
If I am not mistaken, most exchanges have TOS that direct people to only deposit their own coin onto their exchange account.
And if I have sold you some good, service, altcoin, whatever, and you choose to pay me directly from your casino account, then legally speaking those coins you are sending me as payment are mine. And even if you send from your casino account to my own wallet, and then I send from my own wallet to an exchange, many exchanges will still take issue with that. As I said above, as soon as any transaction has taken place then you can no longer say that those coins have not changed hands, which makes taint analysis pointless.Regardless of what is in any TOS, there is no legal basis for an exchange to "freeze" an account indefinitely without a court order. If an exchange were to do this, the customer should take the exchange to court.
Depends on your jurisdiction. If some government forces some hardline KYC requirements, then your account will absolutely be frozen unless you comply with them. And as I said in another thread:Maybe you know otherwise, but I am unaware of literally any successful cases by an individual user against a major exchange which locked their account or seized their coins.
I can remember this also applied to Coinbase...
Coinbase never provided any information about what they consider to be taint when I asked them, but considering they are a US-based centralized exchange, I can only assume they have similar "rules" as does Gemini and Binance.US. If the source of the Bitcoin is a gambling platform, you will probably experience some problems depositing them into a Coinbase account. Off-shore and out-of-state gambling is illegal in certain States in the US, but that's just part of the problem. But that is not what tainted coins are if the gambling site are legal and follow government rules and regulations. Tainted coins are coins that are determined to have been used for illegal purpose before.
Coins used in both legal and illegal ventures can end up in your wallet without you having done anything wrong. The same is true for fiat money. Imagine if someone were to check the history of your €50 bill you take out of your wallet when you are paying for gas and instead of getting into your car, you are called into the owner's office with police to ask questions who you are and where you got that paper bill from? 
Imagine all those signature campaign participants who receive their payments directly in their casino accounts on a weekly basis. There are such campaigns. I remember when I was in the old FJ campaign. The weekly rates were always paid out to your casino account. According to Gemini or Binance.US, those coins are tainted, dirty, and worthless, and will probably by frozen or confiscated if I try to deposit them on those sites. Yet, I did nothing wrong. I provided a service and was paid for it.
I can remember this also applied to Coinbase, it is one of the reasons to read the terms and conditions of any custodial wallet or exchange that you are using, you should know that the exchanges and wallet have the control and not you, they can because of your coins came from gambling site to freeze your coins, send it to noncustododial wallet and you are good or use a centralized exchange that accept coins from gambling sites. But that is not what tainted coins are if the gambling site are legal and follow government rules and regulations. Tainted coins are coins that are determined to have been used for illegal purpose before. If I am not mistaken, most exchanges have TOS that direct people to only deposit their own coin onto their exchange account.
And if I have sold you some good, service, altcoin, whatever, and you choose to pay me directly from your casino account, then legally speaking those coins you are sending me as payment are mine. And even if you send from your casino account to my own wallet, and then I send from my own wallet to an exchange, many exchanges will still take issue with that. As I said above, as soon as any transaction has taken place then you can no longer say that those coins have not changed hands, which makes taint analysis pointless.If I am not mistaken, most exchanges have TOS that direct people to only deposit their own coin onto their exchange account.
And if I have sold you some good, service, altcoin, whatever, and you choose to pay me directly from your casino account, then legally speaking those coins you are sending me as payment are mine. And even if you send from your casino account to my own wallet, and then I send from my own wallet to an exchange, many exchanges will still take issue with that. As I said above, as soon as any transaction has taken place then you can no longer say that those coins have not changed hands, which makes taint analysis pointless.Regardless of what is in any TOS, there is no legal basis for an exchange to "freeze" an account indefinitely without a court order. If an exchange were to do this, the customer should take the exchange to court.
Depends on your jurisdiction. If some government forces some hardline KYC requirements, then your account will absolutely be frozen unless you comply with them. And as I said in another thread:Maybe you know otherwise, but I am unaware of literally any successful cases by an individual user against a major exchange which locked their account or seized their coins.
Exchanges are not going to necessarily to look at "taint" percentages (which are often wildly inaccurate). If the exchange has good reason to believe that you are depositing money from certain prohibited sources (as outlined in their agreement with you), they will reject the deposit and/or close your account.
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I don´t think that they will reject the deposit. At most exchanges cryptocurrency deposits are fully automated.
Therefore the funds will be credited to your exchange account even if they are tainted.
It is more likely that the account will get frozen after the deposit or they will at least ask you
to prove that you obtained the cryptocurrency from a legitimate source.
Exchanges may seek additional information from the customer if it appears a deposit is from a prohibited source.
It is unlikely that exchanges have any legal basis to freeze coin indefinitely without some kind of court order.
The exchange wouldn't know that the coins have changed hands here.
This is one of the reasons why I argue that taint is completely meaningless. As soon as coins are involved in a transaction - any transaction - then they could have changed hands in a perfectly legal transaction such as the purchase of some goods from a vendor or a peer to peer trade.If the exchange has good reason to believe that you are depositing money from certain prohibited sources (as outlined in their agreement with you), they will reject the deposit and/or close your account.
Those Terms and Conditions are written in such a way that gives them the right to freeze or block your accounts for whatever reasons they think are necessary. After that, they can request from you whatever proof they deem necessary, including KYC. You have a choice to play ball and do what they say, or give them your coins. A third choice is never depositing there in the first place. I would also point out that it is very common for various crypto businesses to ask for KYC when they have what they believe to be stolen property. Multiple reputable casinos have done this in the past to those they have evidence of substantial cheating/hacking.
Regardless of what is in any TOS, there is no legal basis for an exchange to "freeze" an account indefinitely without a court order. If an exchange were to do this, the customer should take the exchange to court.
The exchange wouldn't know that the coins have changed hands here.
This is one of the reasons why I argue that taint is completely meaningless. As soon as coins are involved in a transaction - any transaction - then they could have changed hands in a perfectly legal transaction such as the purchase of some goods from a vendor or a peer to peer trade.If the exchange has good reason to believe that you are depositing money from certain prohibited sources (as outlined in their agreement with you), they will reject the deposit and/or close your account.
Those Terms and Conditions are written in such a way that gives them the right to freeze or block your accounts for whatever reasons they think are necessary. After that, they can request from you whatever proof they deem necessary, including KYC. You have a choice to play ball and do what they say, or give them your coins. A third choice is never depositing there in the first place. Exchanges are not going to necessarily to look at "taint" percentages (which are often wildly inaccurate). If the exchange has good reason to believe that you are depositing money from certain prohibited sources (as outlined in their agreement with you), they will reject the deposit and/or close your account.
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I don´t think that they will reject the deposit. At most exchanges cryptocurrency deposits are fully automated.
Therefore the funds will be credited to your exchange account even if they are tainted.
It is more likely that the account will get frozen after the deposit or they will at least ask you
to prove that you obtained the cryptocurrency from a legitimate source.
Exchanges are not going to necessarily to look at "taint" percentages (which are often wildly inaccurate). If the exchange has good reason to believe that you are depositing money from certain prohibited sources (as outlined in their agreement with you), they will reject the deposit and/or close your account.
The threshold for the above is likely proprietary information and is subject to change. Also, if they gain possession of certain information they would not normally use, they will likely use said information if it is reliable.
The threshold for the above is likely proprietary information and is subject to change. Also, if they gain possession of certain information they would not normally use, they will likely use said information if it is reliable.
I feel like this is not an option for everyone and to the majority. Many will choose having good time registration/trade to a centralized exchange while confidently giving their personal info than struggling to use and cope to a not user/beginner-friendly DEX.
If there is a centralized exchange which serves your country/state/jurisdiction, then there must be enough of demand for it and so there must be a not insignificant number of other bitcoin users in your country/state/jurisdiction, some of whom would be happy to trade peer to peer. And given you can use payment processors such as Cash App, Zelle, Western Union, etc., you can trade peer to peer with people anywhere in the world.Trading peer to peer is obviously different than using a centralized exchange, but I wouldn't argue it is any more complicated per se. And it obviously comes with significant advantages over centralized exchanges which makes it all worth it.
The exchange wouldn't know that the coins have changed hands here.
This is one of the reasons why I argue that taint is completely meaningless. As soon as coins are involved in a transaction - any transaction - then they could have changed hands in a perfectly legal transaction such as the purchase of some goods from a vendor or a peer to peer trade. At that point, claiming that the coins are still tainted is just plain wrong. If we applied this same nonsense to fiat, then every cent in your bank account could be seized on grounds that someone else somewhere once used it at some point for something shady, even if you earned it in a completely legal way, such as from your employer.Waiting x amount of time between transactions does nothing to fool blockchain analysis, neither does simply hopping between addresses. They can still see exactly where your coins came from in both cases. Whether or not enough time or enough hops are enough for an exchange to decide certain tainted coins are no longer tainted is anybody's guess, but given the entire thing is so arbitrary then you can't guarantee it in any way.
What if they are not your coins anymore? You withdraw your coins from a casino to your private wallet. That's step #1. In step #2, you exchange those coins (or one part of the withdrawn coins) for some other asset and send it to a wallet address provided by the buyer. The exchange wouldn't know that the coins have changed hands here. I assume blockchain analysis companies wouldn't either. Even better if there was a step #3 where the coins move from private wallet to private wallet of the other user before being deposited into an exchange. I feel like this is not an option for everyone and to the majority. Many will choose having good time registration/trade to a centralized exchange while confidently giving their personal info than struggling to use and cope to a not user/beginner-friendly DEX.
I partially agree with your opinion DEX had less volume/trade than CEX, but the rest I have to disagree.DEX is easier and fast to set up rather than CEX, because in CEX you need to complete your KYC; take a selfie, driving license, your ID etc and you need to wait few hours or even few days until they approve. If they think your photo are blurred, you need to go back from the previous step and it's time consuming. While in DEX you don't need to wait the centralized party, all depends on you, if you followed correctly the step, few hours your account already done and you can start to buy Bitcoin.
If you ever did P2P trade on any P2P (custodial or non custodial), then you're completely much understand how it's work. I can vouch Bisq since it's the fully 100% DEX, the next is hodlhodl and localcryptos (not DEX but P2P no KYC). The cons of Bisq is they need small amount Bitcoin before trade for their security deposit, this would be a problem for pure newbie which doesn't have any Bitcoin yet. While the cons of both holdhold and localcryptos we need to create an account, this isn't good for anyone who really had privacy concern. Their services can save our data sent to them from our connections.
There are some guides of those P2P platforms.
1. https://docs.bisq.network/getting-started.html
2. https://bitcoiner.guide/hodlhodl/
3. https://localcryptos.com/#how-to-trade
To be completely safe, stop using exchanges which are anti-bitcoin, anti-privacy, and pro-censorship, by selectively enforcing nonsense metrics with no basis in reality which make bitcoin non-fungible.
I feel like this is not an option for everyone and to the majority. Many will choose having good time registration/trade to a centralized exchange while confidently giving their personal info than struggling to use and cope to a not user/beginner-friendly DEX. To be fairly safe, avoid sending "tainted" coins to any of these exchanges.
To be completely safe, stop using exchanges which are anti-bitcoin, anti-privacy, and pro-censorship, by selectively enforcing nonsense metrics with no basis in reality which make bitcoin non-fungible.I never understand why people's conclusion from the issue of centralized exchanges arbitrary confiscating coins is "Make sure you play by their rules!" rather than far more sensibly "Why in your right mind would you send your coins to an exchange which might steal them?".
So in conclusion, these exchanges that doesn't have any clear response is obviously that they will charge and restrict itss users once caught sending funds from gambling or mixed coins to their platform.
To be fairly safe, avoid sending "tainted" coins to any of these exchanges.
As an often gambling signature participants, what i usually do when the reward is sent to the casino account is
While most of these exchanges are playing trap cards. Even they dont have any specific policy regarding this kind of deposited coins, once they detect their users depositing their so called "tainted" coins, they will just provide you some policy that they have the rights to restrict the account because of etc. and etc.
To be fairly safe, avoid sending "tainted" coins to any of these exchanges.
As an often gambling signature participants, what i usually do when the reward is sent to the casino account is
Casino --> Wallet --> Exchange
While most of these exchanges are playing trap cards. Even they dont have any specific policy regarding this kind of deposited coins, once they detect their users depositing their so called "tainted" coins, they will just provide you some policy that they have the rights to restrict the account because of etc. and etc.
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.
Further, if they tell everyone "This is how we decide what is tainted", and then later change their minds about something and decide something else is tainted, then you can guarantee they would have angry users complaining that their non-tainted coins suddenly became tainted and their accounts were locked.No exchange will every give you a straight answer on this, partly because it is so completely arbitrary and meaningless, partly because they want to be able to change things at any time, and partly because they don't care about you and only care about their own profits.
I guess it's about how you do it and how much time has passed between those transactions.
Waiting x amount of time between transactions does nothing to fool blockchain analysis, neither does simply hopping between addresses. They can still see exactly where your coins came from in both cases. Whether or not enough time or enough hops are enough for an exchange to decide certain tainted coins are no longer tainted is anybody's guess, but given the entire thing is so arbitrary then you can't guarantee it in any way.Don't want to be subjected to taint? Don't use centralized exchanges. Simple.
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).
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.
Chainalysis is the most popular company, we don't know if it's best chain analysis when other company keep a low profile. But i agree 1 hop is unlikely to deceive them if they hire decent chain analysis service.
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).
Not really, based on my friends experience and some users in this forum as regular gambler, they're fine using that method until now. Moreover some people usually directly send their coins to CEX and no faced any problem, they're using big and popular centralized exchanges e.g. Binance and Kucoin. I think these CEX didn't froze gambler funds because the legal law didn't really strict about gambling sources, perhaps in the future we will see a change from those CEX just like how Binance propose mandatory KYC.I'll keep that in mind, but the risk still exist.
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.
I guess it's about how you do it and how much time has passed between those transactions. Let's assume you wanted to transfer $500 worth of Bitcoin from a casino to a CEX and you want to hide the origin of the coins by sending them to one of your wallets first, there are different ways to do it.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.
Withdraw more than you intend to deposit to your own private wallet days/weeks before sending to the CEX. If the two transactions (from the casino to your wallet and from your wallet to the CEX) confirm in a short period of time one after the other (one block between them for example) it might be obvious that it's the same person initiating them. So it's better to wait. It also doesn't look good if the CEX can see that $500 left a casino, landed in some 3rd-party wallet, and then the same amount minus the fees was immediately transferred to the CEX.
Anyway I think "conceal" origin is really complicated since any coins that we get isn't 100% free from high illicit sources. Let's say someone is trading via P2P in this forum and all went smooth, but when you send your coins to Gemini. Gemini froze your funds and accuse your funds come from gambling, the thing is you're not a gambler and realized the guy you traded is using gambling sources. I don't know how far Gemini will track your coins to see you're conceal the origin since I believe most of coins already linked with high illicit sources.
I think in that particular case, you would have to prove to the support that you are not the one who gambled with those coins, you just purchased them from an alleged gambler. You might be required to show proof where and how you purchased them for them to unfreeze your account or allow you to withdraw the "problematic" funds. 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).
Not really, based on my friends experience and some users in this forum as regular gambler, they're fine using that method until now. Moreover some people usually directly send their coins to CEX and no faced any problem, they're using big and popular centralized exchanges e.g. Binance and Kucoin. I think these CEX didn't froze gambler funds because the legal law didn't really strict about gambling sources, perhaps in the future we will see a change from those CEX just like how Binance propose mandatory KYC.Anyway I think "conceal" origin is really complicated since any coins that we get isn't 100% free from high illicit sources. Let's say someone is trading via P2P in this forum and all went smooth, but when you send your coins to Gemini. Gemini froze your funds and accuse your funds come from gambling, the thing is you're not a gambler and realized the guy you traded is using gambling sources. I don't know how far Gemini will track your coins to see you're conceal the origin since I believe most of coins already linked with high illicit sources.
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).
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.
-snip-
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.
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.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.
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:
For customers who reside outside the United States of America, United Kingdom, European Economic Area, Japan and Singapore:
Quote from: https://www.coinbase.com/legal/user_agreement/
1. Prohibited Use. You may not use your Coinbase Account to engage in the following categories of activity ("Prohibited Uses"). The specific types of use listed below are representative, but not exhaustive. If you are uncertain as to whether or not your use of Coinbase Services or the Coinbase Platform involves a Prohibited Use or have questions about how these requirements apply to you, please submit a support request at: https://help.coinbase.com.
...(E) Gambling: Lotteries; bidding fee auctions; sports forecasting or odds making; fantasy sports leagues with cash prizes; internet gaming; contests; sweepstakes; games of chance.
...(E) Gambling: Lotteries; bidding fee auctions; sports forecasting or odds making; fantasy sports leagues with cash prizes; internet gaming; contests; sweepstakes; games of chance.
and take note of:
Quote from: https://www.coinbase.com/legal/user_agreement/
3. Conditional Use. Express written consent and approval from Coinbase must be obtained prior to using Coinbase Services for the following categories of business and/or use ("Conditional Uses"). Consent may be requested by contacting us at: https://help.coinbase.com.
...(C) Games of Skill: Games which are not defined as gambling under this Agreement or by law, but which require an entry fee and award a prize; and
...(C) Games of Skill: Games which are not defined as gambling under this Agreement or by law, but which require an entry fee and award a prize; and
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).
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.
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.
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.
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.
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.
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.
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.
Please note: Risky services include P2P exchanges, mixing services, high risk exchanges, and gambling sites. Illicit services include ransomware addresses, sanctioned entities, darknet markets, and addresses associated with scams and stolen funds.
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.
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.
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.
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:
Quote
Hello,
I am a professional poker player and sports gambler interested in Bitcoin. Over the years, I have had a great deal of success with crypto gambling, which has earned me good profits.
I regularly invest in new coins and tokens and would love to register an account with your exchange. However, I prefer to stay anonymous when buying and selling my coins because of my profession and activities.
I am worried about going through KYC, but my biggest worry is that I keep hearing people talk about blockchain “taint” and “tainted” bitcoin. Apparently, some cryptocurrency exchanges block funds that originate from known crypto casinos and sportsbooks. They consider those coins “tainted” or “dirty”, so they confiscate them or freeze them, preventing the users from accessing them or using them on their platform.
I obviously don’t want that to happen to me, that’s why I am informing you about my activities beforehand. I don’t want to go through KYC. I don’t want my Bitcoin to be considered dirty and tainted.
What can you tell me about how you analyze Bitcoin transactions and decide whether or not they are tainted? For example, can Bitcoin originating from gambling and sports be deposited and traded on your exchange without being subjected to seizures, account limitations, etc.? Am I, as a gambler, welcome on your site?
Thanks!
I am a professional poker player and sports gambler interested in Bitcoin. Over the years, I have had a great deal of success with crypto gambling, which has earned me good profits.
I regularly invest in new coins and tokens and would love to register an account with your exchange. However, I prefer to stay anonymous when buying and selling my coins because of my profession and activities.
I am worried about going through KYC, but my biggest worry is that I keep hearing people talk about blockchain “taint” and “tainted” bitcoin. Apparently, some cryptocurrency exchanges block funds that originate from known crypto casinos and sportsbooks. They consider those coins “tainted” or “dirty”, so they confiscate them or freeze them, preventing the users from accessing them or using them on their platform.
I obviously don’t want that to happen to me, that’s why I am informing you about my activities beforehand. I don’t want to go through KYC. I don’t want my Bitcoin to be considered dirty and tainted.
What can you tell me about how you analyze Bitcoin transactions and decide whether or not they are tainted? For example, can Bitcoin originating from gambling and sports be deposited and traded on your exchange without being subjected to seizures, account limitations, etc.? Am I, as a gambler, welcome on your site?
Thanks!
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.
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