Bitcoin Forum

I received the following email from Dwolla today:

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Dear Dwolla Account Holder,

As you know, Dwolla does not sell, accept, mine, value, take possession of, or hold Bitcoin or any other virtual currency product, and none of Dwolla’s users transact business with Dwolla using Bitcoin or any other virtual currency product. However, recent interest involving virtual currency and its exchanges has created uncertainty and confusion around virtual currency, and Dwolla's relationship with a small number of its exchanges. This has forced Dwolla to reassign resources, funds, and services.

As Dwolla gears up for a new stage of growth, we recognize that we can no longer sustain this merchant base (.1 percent of Dwolla merchants) and its unique needs, and that attempting to do so jeopardizes both of our communities' starkly different, but similarly ambitious, vision for improving payments.

Effective October 28, 2013 at 4pm CT, Dwolla will be withdrawing its service offerings to virtual currency exchanges and virtual currency related services.

What does this mean?
•   Your account, and its functionality, will remain unaffected. However, you can deactivate your account from within your Dwolla dashboard, if you so choose.
•   Dwolla aims to provide its users and the few affected merchants with the guidance necessary to ensure a smooth transition. To do that, we encourage users to over-communicate with our support team, report any suspicious activity, and revisit our terms of service to ensure uninterrupted services.
What is the timeline of events?
1.   October 10: Only existing users with a 30-day history with Dwolla will be able to send funds to merchants affected by this change.
2.   October 15: Affected merchants will be limited to sending money only, and will no longer be able to receive funds from customers. They will be able to issue refunds to customers at this time.
3.   October 28: Affected merchants’ accounts will be suspended. No further activity will be provided.
4.   October 29: Provided no security or fraud concerns, Dwolla will transfer any of the remaining funds inside the affected merchant's Dwolla account to its linked bank account.
The decision to remove anyone from the network -- no matter the circumstances -- is not something Dwolla takes lightly. We are grateful for the opportunity to service and learn from these users. We wish the community and its pioneers the best.

Sincerely,
Dwolla Support

Just received this email as well.

Yes I just got this email and that is bad bad bad for me, because I use Dwolla with CampBX all the time...damn.

The War on Bitcoin continues...

I can confirm that I also received the same email.

This is yet another restricting factor on Bitcoin's liquidity.

I used the same method, and I'm sure plenty of other people did as well.  I guess we're down to USPS money orders now.

So a lesser used system, on the brink of disappearing into the unknown (especially when compared to Bitcoin) drops the usage of allowing people to convert into BTC? Sounds like a suicide attempt. Honestly, nobody knows what Dwolla is, its a niche system, and we should move on and leave them die without dignity.

It just means that they are taking bitcoin away from the "little hands" so that it can "safely" go onto the "real" exchanges aka nyse, nasdaq etc. I expect that we will experience some serious volatility very soon and then quiet and then some seriously good news. If you have the balls to hold or purchase through the dips that are sure to come then you should come out alright.

Go deactivate your account and email them to let them know why.

Dwolla isn't going anywhere, they seem to be doing quite well actually.

Yes I'm going to deactivate my account out of principle, if nothing else.

considering i only used this service to send money to campbx, I'll be deactivating. Also won't be using campbx anymore.

Anybody see an easy 1 click way to deactivate your dwolla account? It is quite possible that I missed the link or button...

I think this is going to hurt CampBX much more than it will Dwolla, and it for Bitcoin it is only a matter of wounded pride.  Now the only way to get money to them is by using postal mail via money orders or personal checks.  No wire transfers, no ACH.

I probably should cancel my Dwolla account out of protest, but I also may keep it for my own self interest, just in case Dwolla changes their mind.

My average revenue-generating Dwolla transaction was probably $1,500 - $2,000, so I can see the $0.25 fee not being worth it to them.  And forget about any interest, most of my transactions passed into and out of Dwolla within minutes.

Agreed. Why send a MO when you can sell for cash on localbitcoins?
CampBX, I'm sorry but your days are numbered.

I got this message from them on Tuesday. They are about to introduce new features and I think they see Bitcoin as competition. They don't want to support the development of their competor.

   
Reserve your seat.
We’ve been working on something we’re pretty excited about, something that will:
Allow you to buy the things you love, immediately
Introduce a new level of convenience to the community
Carry the same low transaction fee
Introduce some new friends to the platform
Open up the network to new ideas and possibilities

It is not the war, it is ignoring. Crypto coin adopters are freaking negligible number of people, and this number is not going to grow in observable future. Who would bother about 0.1% of customers?

LOL! Really? This is just yet another centralized system among, what, 50? Seriously, we dont need Dwolla, Bitcoin has grown bigger than this piece of shit system, and as many others they will realize they will fail at the idea of "we will hold your money safe".

They aren't "ignoring" their bitcoin customers if they are actively going out of their way not to service their accts, and lose business in the future.   

It may not even be Dwolla's fault and probably the US gov't (backed by Bankers) putting the pressure on them.

Why the Only Real Way to Buy Bitcoins Is on the Streets
http://www.wired.com/wiredenterprise/?p=47251

I don't live in the States and so I am not intimately familiar with how Dwolla works, so what makes them special? How are they different from other payment systems like Paypal? Why can't a Bitcoin company replicate their success?

I do not share this conspiracy. IMO, dealing with all this crypto technologies, which are in beta phase at best, cost them too much pain in the ass with too little profit.

They've made a simple calculation that the cost and effort required for the Bitcoin related business is more than the fees it brings in.

They are not special at all. I used Paypal for years, but I learned about Dwolla only few month ago, when I tried to buy some bitcoins.

My understanding is that they operate outside of the traditional banking system – they're essentially in the process of setting up their very own financial payments network. Not sure of the actual nuts and bolts, but part of their mission is to provide super-cheap transactions, because in their most basic form, financial transactions are simply exchanges of data. Anything under $10 is free, and anything over – even millions – is only $.25.

This is really a bummer for those of us in the States. Dwolla rocks.

Suicidal move. One picture worth 1000 words, try it for yourself...

http://puu.sh/4MPn3.png

My dwolla account was useless the moment I could no longer use it to fund my Gox account (with that said, my Gox account was useless on that same day lol)

Oh well!  Localbitcoins hasn't let me down thus far.

Go deactivate your account and email them to let them know why. >:( >:( >:( >:( >:(

See these instructions to deactivate:

http://help.dwolla.com/customer/portal/articles/269223-how-can-i-delete-my-dwolla-account-

what is dwolla anyway?

is that some form of slang for DOLLAR?

:D

go deactivate your account!

GO BITCOIN OR GO HOME!!!

Pfft. I have had scant use for Dwolla for some time, and don't imagine that will change much in the future. Those that were around when they wreaked havoc by reversing payments of thousands upon thousands to TradeHill might have an inkling why.

I recently had an interesting email exchange with Dwolla, prompted by their teaser email to me. It is presented here in reverse chronological email threaded order.

Since my last email to them, they have not replied with answers to my direct questions. I wonder why?


edit: added one more close quote above, to put the following in the proper context

My guess is that they have not answered my last round of direct questions, as it shows them in a very poor light. I have my own opinion of them based upon this event, which dealt a severe blow to an honest exchange that could have possibly given Gox a contest for the title of most meaningful exchange.

Of course they won't respond with anything but boilerplate when what they say may be used against them in court. LOL

First Mt Gox, then BitInstant, now Dwolla. Americans BTC users don't have many options for exchanging local currency.

The email said .1 percent of Dwolla "merchants". I suspect that Bitcoin transactions account for a substantial percentage of their total volume.

Yes that is just "spin" and I'm sure you are right.

Not only that but Bitfunder.com is now closed for USA users. BTCT closed down.

Bitcoin is set to become the World minus USA currency.

Bitcoin has already won.

It must be hard for those centralized services to come to understand that the power they once held by shutting down accounts and freezing assets is now over. We have an alternative, and while they still do not fully grasp that we are mocking them, they are really trying hard to sound professional and in control.

Dwolla is a great example on how users could care less about now that something such as Bitcoin exists. This behavior we will see more and more from centralized services that will close operations, while at the same time thinking they are the greatest achievement to mankind.

Minus Thailand, too, and it's legally iffy in China.

Shrem gave a talk at a Bitcoin conference a few days ago saying BitInstant will be back and ready to tackle regulatory issues (paraphrasing), so there's one thing to look forward to. If you want cash back once you're in the system, though - you'll probably have to do it locally. BTC price will skyrocket!  :P

I thought China had outlawed all types of virtual currencies? Or was that only WoW Gold?

They don't seem to be prosecuting any of the existing services (even when BitcoinChina has done roughly the same volume as BTC-E and Gox in the last 24h, though a fair bit less than BTS). Could be they're ignorant of the services, are giving them tacit approval before they rewrite the laws to make what they're doing legal, or something else.

Why?  It is free to leave your account there, and gives you ability to ACH between bank accounts should you need to do that in the future.

Their letter looks like somebody is trying to make a point to somebody else..  sure, it will seriously hurt campBX, but why bother to cancel my account? 

You can't ACH directly from your bank account to another?

Basically they are saying Bitcoin competes with their business model (because who would need Dwolla if Bitcoin takes off?) and thus they wont' support it. I'm not surprised.

and nothing of value was lost

http://help.dwolla.com/customer/portal/articles/1203269-closing-your-dwolla-account (http://help.dwolla.com/customer/portal/articles/1203269-closing-your-dwolla-account)

There is a difference between deactivate and suspend btw.

This is false.

CampBX works fine with ACH.

CampBX recently restated this on Facebook, following the Dwolla shutdown:  https://www.facebook.com/CampBX/posts/665137400165381

Only in one direction.

You still can't add dollars to your CampBX via ACH. When this Dwolla change goes into effect, the only ways to fund a CampBX account with dollars will be Money orders or Checks sent through the mail.

Apparently they are ready to go but are having problems finding banks willing to work with them. It sounded like as soon as they actually got all the licensing required for what they are doing it suddenly got harder, not easier, to find a banking partner.

That's what I thought also. All this press lat week about bitcoin going mainstream must be spooky for them. Bitcoin is nightmare. A competitor who can provide a more secure transfer for less than Dwolla's fixed costs. 

Might want to also tweet @dwolla and @bpmilne (CEO).

There is only CampBx and they seem like they are close to going bankrupt with their moves to keep users money and their policy of not responding to any user problems.

I am sure Dwolla was getting tired of people wanting their money back when CampBx stopped crediting user accounts for transfers.

If I was Dwolla I would have dropped CampBx as well.

That's not how I read it.  I think they're saying Bitcoin is just too big of a pain in the ass with regards to AML/BSA and is such a small part of their business, is not worth getting shut down over.

It's sad to see this, hopefully enough people will contest.

Actually CampBX says you can use wire/ACH now.  See their recent facebook update, or tldr: "Dwolla deposits to CampBX will end Oct 15 and Dwolla withdrawals from CampBX will end Oct 28. Please use money orders and ACH for your trading needs on CampBX."

https://www.facebook.com/CampBX?hc_location=timeline

I can also confirm that this development will sever all ties with Ripple as well. 

ACH transfers can be, and are, routinely reversed in certain situations.

My understanding is they simply couldn't solve the equation of being a middle man between one party using a reversible payment method and a second party using an irreversible payment method.

Dwolla did not have much business with ripple gateways. Only with SnapSwap for several weeks. They will probably switch back to ACH.
 

Here is my email exchange with Dwolla:

Hi,
I've found Dwolla to be an excellent and convenient system. I have primarily used it to get money to bitcoin exchanges. I am quite disheartened to hear that you will no longer be doing any business with bitcoin related companies. I strongly encourage you to change your position and continue to facilitate the movement of money over the internet.

I would at the least appreciate an explanation that doesn't leave everyone wondering what Dwolla's real motivation is. Why this change now?

Thanks, Me
*********************************************
*********************************************
Dwolla Support:

Thank you for your email and feedback, we value you as a Dwolla member in our network. The explanation we received states:
As Dwolla gears up for its next stage of growth and offerings, it’s essential that company resources remain focused on the deadlines, products, partnerships and users that will help grow the company, and that regulators have a firm understanding of our technology and its potential inside existing U.S. financial systems.

I hope you found this information helpful, and please let us know if you have any additional questions regarding this matter.

Sincerely,
Dwolla Support

"we like it, but there's too much red tape to deal with"

Honestly I would just start using Coinbase to Convert BTC to a USD bank deposit (https://coinbase.com/?r=51d4b71669fb7c1d6000004c). Or you can buy BTC through it with your bank account so transactions work in both directions. I've been using it for a few months and have no problems with it.

I would

The fastest way to buy bitcoins so far is through peercover.com. You need to have a ripple wallet. You buy ripples (XRP) with credit card, and then convert them into bitcoins (BTC) through bitcoin bridge. Works in seconds at bitstamp conversion rate.

You have to register on peercover.com to see that is even a feature of the site?

I logged in through my linkedin account. They have also dwolla and facebook as options. You need to have ripple wallet or create it on peercover.

This site is several month old. The original goal was to make p2p insurance using crypto currencies. They are implementing some nice new features. One of the best features is to buy XRP with credit card. You can convert these into bitcoins at bitstamp rate instantly.

Edit: They actually have info about features which you can get without registering. Just follow links on front page.