Bitcoin Forum

I read online that Circle and Coinbase can detect if coins are sent to LBC and will close down your account.

1) How do they know this?

2) What is the best solution to avoid this? (tumble?) (exchange through dice sites?)

Do you have a source for this thing you "read online"?

Blimey, I never knew that but you're right https://support.coinbase.com/customer/portal/articles/1905681-localbitcoins-and-coinbase

1 - bitcoins are their business and they're super twitchy about tripping up legally. If there's a way of finding out your coins are going to a business that's a risk to their 'compliance', they'll go all out to find it and they must stay well on top of tracking the relevant addresses.

2 - Dice sites would be a terrible idea. They hate that even more than localbitcoins probably. There's loads of cases of people being shut down for sending coins directly to gambling sites. Tumbling or an exchange is probably your easiest option.

I knew about the gambling sites but I didn't imagine they'd have a problem with LocalBitcoins too.

Rightfully so. There are way too many scams going on in this community. The biggest bitcoin exchange was worth 10% of bitcoins marketcap for crying out loud and it ended up being a scam, and then there are the illegal security scam altcoins like Darkcoin, now Dash with fraudelent instamines and pump/dump schemes with the Developer. This whole sector is going straight to hell(Adoption wise).

If I owned coinbase and co, I would most definitely not accept any coins from known scammers addresses. Doing so reassures the public that Bitcoin is nothing but a joke and haven for theives and druggies with no consequences whatsoever for scamming/stealing.

So if I buy coins at coinbase and send them to Circle and send it over to LBC, then it should be fine or should I look into tumbling all the coins.

I doubt it. You'd have to put a third option between either of those companies and LBC. They might work together in that aspect or not particularly like people swapping between them either. I dunno.

There are plenty of bitcoin mixers like bitmixer. There are also plenty of exchanges that are very quick to get in and out of. Either of them are practical options. What you need are places that specifically mix or pool large amounts of Bitcoin in one or very few addresses.


LBC is localbitcoins. Thousands of totally legit people use it every day. They're not concerned about scamming, it's about enabling unlicensed money transmitting.

So they do respect your right to trade on LBC... but they won't allow you to do so.

I guess it's volumes that trip it. However there's absolutely no way of knowing how much is too much in their eyes.

So what if I purchase $2,000 worth of BTC every week on the same day to look like I am purchasing it with my paycheck every week?

I'm not sure what their buying limits are and if and when they get arsey if you're pulling out large amounts like clockwork. The key is whether they find out where it's going. They might put in extra effort if they think you're selling it on.

Is their exchange accessible in your state? I doubt the same rules apply as the buying service but I'm not sure.

You do have other options if you're buying big in the US. Secondmarket sell in 25 BTC increments but that might be too much for you.

It shouldnt be too hard to just simply send your coins to another address and then send them to circle.
It's good to know this, I've never used lbc and this coulda get my account closed :O (on circle.com), did not even know that they forbid gambling addresses. Is there any list to the gambling sites that they dont allow you to use directly?

I've been buying 500$ weekly and never had an issue.

Well they can just use a mixing service to hide where the coins came from.

I don't understand how they can track your coins to LBC wallets when addresses on LBC are changed and randomized every so often...

Here are two reddit users who had their accounts closed because coinbase and circle somehow "linked" them with selling coins on LBC.

http://www.reddit.com/r/Bitcoin/comments/2y58x6/coinbase_and_circle_closed_my_account_i_think_due/

http://www.reddit.com/r/Bitcoin/comments/2c63xg/coinbase_is_suspending_my_account_because_they/

I have sent coins all over including dice sites and localbitcoins with no problems. I never sent thousands at one shot but I did send a $100-$200 here and there. I do know they will ban you if they figure out your sending it to the dark market sites though.

Judging by this, there is already some sort of bitcoin addresses "blacklist" that is monitored ? Seams pretty funny, since you can always find a way around,
just deposite here and there , and resend to LCB or where ever you want.. what are they even trying to achieve with this rule is beyond me.

What makes LCB so dark that they would consider it "unlicensed money transmitting" and why not legaly attack LCB itself ? (i dont mean coinbase and circle, but the law behind thats making them do what they do)

cheers

I am guessing it is a way to avoid taxes if you trade so much out through it.

Exactly this. The best way to get around it would be a local wallet, as it would have no ties to anything. You could even create a new wallet every time if you wanted to, to avoid backups. Besides, any company that thinks blocking addresses is a legit way to treat their customers should be avoided in general. This is directly against the fungibility of bitcoin, which is one of its essential properties.

I want to know how would they know exactly? If I purchase some Bitcoins at coinbase and then do this:

Transfer them to My-Wallet >Mixing-Service >My-other-Wallet >LBC

How can they track this? This is really stupid.

They can't if you mix your coins properly.

By the Way What Is LBC, I listened Some where that they Banned If if you use your account in gambling site. if you sent many transaction to the Gambling Site.

It's sad because Coinbase has a lot going for it, but actively analyzing the blockchain and arbitrarily deciding on which TXs are illegal in their book is sort of reason enough for me to boycott using them.

It's their right to monitor your transactions and to close your account for any reason.

LBC is LocalBitcoins.com and I know Coinbase shuts down your account if you send or receive money in your Coinbase wallet from any Gambling site, don't know about Circle though.


Yeah, I don't have a Coinbase but people who do can use Bitmixer.io and they won't be able to track it down.

anyway to go around this? I purchase a lot of bitcoins through them and I don't want to stack up on mixing fees...

I wonder if I put them onto my personal blockchain wallet and send to LBC from there, would that be fine?

coinbase>personal wallet>LBC ?
or
coinbase>mixing service>LBC?

I want to avoid paying the fee because I heard it was like 3%-5%?

Don't know how they link addresses to a person, if you send from coinbase to your personal but not used before wallet, how will they know that it's your own address or someone else's?

In-fact how do they know what addresses are used by LBC? When anytime you deposit to LBC, you're given a new address.

I've sold hundred of dollars on lbc with coin bought directly from coinbase. I think it depends on the customer trend. I have been with them for almost 3 years now so they don't bother me for anything. I also fund my poker gambling or sports with bitcoin from coinbase. No problems at all.

You guys use Coinbase? Looks like MtGox wasn't enough...

I can see the attractiveness of them, after all they are "insured". But yeah I personally don't trust them with my bitcoins either.

well...how else do I purchase coins instantly at or near market price?

LocalBitcoins don't work in your area?

Show me where I can buy without the markups

Not on Coinbase. If you pay and price goes down by the time when you get the coins - you lose money. If you pay and price goes up by the time when you get the coins - Coinbase cancels your transaction and returns dollars.