Bitcoin Forum

Coinbase's compliance office is seeking to acquire operational information from bitcoin mining companies in a process that some of the sector's businesses are framing as an infringement on their trade secrets.

MegaBigPower (MBP) and Bitmain report that Coinbase has asked for detailed information regarding their mining facilities, requesting time-stamped photographs and videos of mining facilities and details about the origin of the hardware the companies operate.

READ HERE: http://www.coindesk.com/coinbase-seeks-details-us-bitcoin-mining/

Simplest solution I see is stop using CoinBase and shift to direct trading exchanges like www.LocalBitcoins.com or www.100bit.co.in.

+1

The more regulations try to hinder normal businesses, the more people will shift to these direct trading exchanges.

I don't know. Everytime I read sentences like :"The reason we ask for this information is for consumer protection."
my alarm bells start to ring.

The U.S. government is shutting down localbitcoins with sting operations and now it's demanding U.S. based exchanges find out info on large mining operations. What's the next step, all U.S. ISPs must use promiscuous mode packet sniffers to identify Bitcoin nodes? Give them enough time and America can figure out a way to fuck up a wet dream.

You say sting operations, are you implying that local bitcoin trading is unauthorised, at least in the us?

Well they're putting people in prison for it, so yeah, I guess it's unauthorized.

See: https://bitcointalk.org/index.php?topic=934268.0

And: https://bitcointalk.org/index.php?topic=462846.0

Shocking: A financial business is requesting information about their customers

Like seriously: What do you expect? Even without AML/KYC laws: there's something called financial risk management which involves gathering information about customers and closing accounts of high risk customers.

From what i understand, it only impacts people trading over $5k (money laundering) or deliberately accepting an exchange with groups who will continue to commit crybercrimes. Well, I thought it applied to everyone

Well then please enumerate those risks not associated with violating AML/KYC rules that an exchange could face from not knowing it's customers' source of funds. My bank did not even ask those kinds of questions when I opened a business account for a shell LLC that I set up for myself.

Fraud / Defaulting. If you know your customer has funds in a high risk business you just shut him down.

I am a little older and I remember the days when financial institutions did not care about the source of funds as long as their own interests were adequately protected. Think of Swiss banks up to the 70's or early 80's. There is no reason to shut down a "high risk" customer, such as a drug kingpin, if you were not forced to by the government.

1. Coinbase is a startup - they don't have billions to cover potential losses

2. You had to actually visit the bank - even if you had a numbered bank account your face was filmed every single time - on the internet it's more difficult to know who you are dealing with. Especially in Bitcoin it's important to know about your trading partners.

"High risk" in whose eyes and by what measures? What a moral quagmire!

Whatever happened to "the customer is always right" as a business mantra? Sellers should have no "shut him down" leverage over buyers in a free market, imho.

Demanding payment before delivery is the time-honoured way to avoid seller risk. Nothing wrong with that, I suggest, especially if the customer can deal with a competitor if he finds the terms too onerous.

So you believe the guys at Coinbase got a wild idea to start fucking with their customers and said one day, hey let's make every mining farm customer send us photos of their setup with detailed information or we close their account and never exchange anymore Bitcoin for them? 

The government must have demanded the information. Most Bitcoin users I know would never ask for that kind of info and would have told the government to fuck off unless they were threatened. AML/KYC doesn't mean you need your customers cock size. It means you need to have verified their identity. 

QuestionAuthority: http://www.wikihow.com/Deal-With-Your-Paranoia

Stupid answer!

His posts indicate serious issues. What exactly is stupid about suggesting to seek help?

Dude can't you see the reason for the government wanting to see the equipment. Is not paranoid, it's as plainly visible as the nose on your face.

Let's say one of these mining farms are turning in $2 million dollars a month for exchange to fiat. Coinbase has a reporting requirement so they notify the government. The little poorly paid agent functionary wants to know if they are turning in the proceeds of drug sales to convert or if they actually have the equipment to mine $2 million a month in Bitcoins. He notifies Coinbase to send a letter to them requesting a detailed inventory of equipment to verify the ability to mine that much. Coinbase says, I'm not doing that, that's your job mr. agent. Mr. Agent says, so your tired of having a business license. Ok, I can fix that and remove your license.

If the mining farms are smart and honestly turning in mined Bitcoins they would comply after making Coinbase sign a confidentiality agreement to not make their special mining system public. If they are criminals selling I'll gotten gains they will fight it until guys in blue wind breakers bust down their front door.

Many people criticize politicians, but your posts are telling me that you're assuming that your government is always evil - completely ignoring the fact that all of them are humans just like you.  That's what paranoia is: trust issues. Of course you don't believe me that you could need help, because you don't trust me either.

Sorry for this off-topic discussion.

You can make it about me if you like but why don't you read this whole thread before you do. https://bitcointalk.org/index.php?topic=934268.0

I don't have to trust the government. It's their job to catch drug dealers and they pressure people to achieve the end goal.

Maybe he was a nice guy  (I don't know), but he should've checked the requirements for Money Transmission Business. I'm not going to read all those pages now.


Of course you don't have to, but your life will be very sad if you keep assuming the worst.

Soon they will tax people on wet dreams as well.

You just don't get it. I'm not assuming the worst. I'm assuming they are going to do what they are being paid to do. If you don't read that back story then you can't understand how vicious the government can be in the pursuit of justice.

I don't see what the big deal is.  Seems like they just want to vet the mining companies they do business with.  If miners don't like it they're free to do business elsewhere.  That's fine with me and I'll continue to use coinbase.

THIS is your first post? You probably work for Coinbase. LOL

Its a shame that coinbase would try and manipulate the bitcoin community itself, in an attempt to try and justify its actions. Why don't they just fully explain the current situation to their consumers? At least it wouldn't cost them their reputation, which may start to decline

Been lurking here for a while.  I don't work for coinbase.  I just think there tends to be a lot of paranoia in the bitcoin community, but coinbase has been pretty trustworthy for a while now.  I keep my coin there.

If you've been lurking, then you should know to keep your coin in your own wallet. You know... the one entirely under your control and not easily accessible from the internet or subject to the whims of hackers.

My interpretation is either they're covering their asses for current or upcoming regulation, or they're being pressured by a third-party.

That's hard to believe but it doesn't matter because Coinbase isn't on trial here. They are doing what they must do as a financial services business. They must report large transactions using a CTR form and an SAR for suspicious transactions. Failure to turn in the forms or notifying the customer about intent to file a form or helping to change transactions is called structuring, and is punishable by federal law against both the customer and the employee. The info they requested could only be used to determine if the large deposits are possible by mining Bitcoins alone. This means they will likely file an SAR with the info they receive from the mining companies. It's odd for companies to initiate an SAR without a very big red flag being discovered or more info being requested by the government. But none of this is the fault of Coinbase. They are doing what Charlie Shrem should have done but didn't - their legally required job duties.

It's hard to believe that I don't work for coinbase or that I keep my coin there?  Seems like you also don't think that this info gathering is shady, so I'm confused.

Completely wrong buddy! If you are really hanging around here for quite some time you would know the best place to keep your coins is your own damn wallet! ;)

I actually think that they all agreed to drop whether your working for coinbase or not. I'm just trying to understand why you would use a cloud wallet to secure your precious bitcoins or why you would try to convince us that you're not related to coinbase in anyway. For one think, your account is freshly created today, 2.5 hrs ago to be precise.

Most people are unable to keep their computer clean - using a service like Coinbase or Xapo might be better for them. Just like most people don't have 10k USD at home.

I guess people are always suspicious of new users if they don't parrot "down with the man" and "use paper wallets or you're an idiot."  I am not some guy who has been in bitcoin for years.  I'm new, coinbase is simple to use, it was recommended to me by a friend I trust, and since they've raised a lot of money they seem safe.

What I think is that you're a shill. You're not even a good shill because you're not following the thrust of the conversation. The governments request for more info is suspicious or the investigative request by Coinbase for more info is suspicious not shady. It's understandable if someone in the reporting chain thinks a mining company is laundering money. I don't believe a company would irritate what has to be a large customer without needing to do it. That leads me to believe the government is requesting more info based on the filing of a CTR.

Now I see why these forums are so robust.  You really roll out the welcome mat for new users and respect people's opinions.

Activate 2-Step Verification (https://www.coinbase.com/settings/security_settings) and put your money in the Coinbase Vault if you don't plan to spend it for a while. Learn how to keep your computer / mobile device secure if you're planning to move the coins to your own wallet.


Just use the Ignore button. Haters gonna hate.

I'll give you the benefit of the doubt. Maybe your very first post was just an untimely accident. Welcome to Bitcoin and please take the advise of the older users and keep your Bitcoins in a wallet you control. I know it seems easy to use online wallets but it's not as safe.

The community respects peoples opinion. Not corporate opinion. I like the guilty tactics though  ;)

Yeah but even if they used an online service, their coins would't be safe. If their computer is compromised, their coins are gone. We need hardware wallets built into mobile phones. That's the way to go.

In many cases Coinbase restored BTC balances of compromised wallets. You don't get that if you manage the keys on your own.


Maybe, but that's not available. The best wallets we have are devices like Trezor.

Ah, I just really dislike Coinbase. I think they are asking too much of users and it kind of defeats the purpose of Bitcoin. I know someone who had their account locked because they deposited "A suspiciously large amount of Bitcoin", and they had to spend hours trying to get their coins unlocked. It honestly kind of defeats the purpose of Bitcoin having a middle man that takes all of your personal information and can lock your funds at any time on a whim.

That's what I did.  All my coins are in the vault, which is fine since I don't spend, sell or trade.  Paper wallets scare me because I could lose it unless I get a safe deposit box.  Keeping a wallet on a usb drive or computer or something also scares me because I'm not tech savy.

Yeah, but you can't just rely on those services to reimburse you. If you messed up your computer and effectively granted an attacker control over your coins, there's no way for Coinbase to know that you didn't actually stole the coins yourself. As to the mobile phone wallets, yeah they're not there - yet. But we just need a secret element embedded into the phones' SoC!