Bitcoin Forum

Yesterday evening we received the email below.

tl;dr Paxum suspended our account at moments notice.

EDIT: From this post it seems like any accounts Bitcoin related are being closed https://bitcointalk.org/index.php?topic=63431
We're working with Paxum to get this up asap.

EDIT 2:
I wanted to point out one more thing:

An executive at Paxum has been working with me since this happend. They have been more surprised at this than we were. Not only that, but they have been super responsive and extremely helpful in this matter.
I harbor no bad feelings toward them. Licensing takes years to obtain but can take minutes to lose.

More and more information is coming to light and although I cannot go into details *yet* alot of what has been said above is not accurate.

Paxum and I have a few conference calls with their partners set up for this week and if all goes well, we can have this resolved and back online in 1-2 weeks

-Charlie

---------- Forwarded message ----------
From: Removed
Date: Fri, Feb 10, 2012 at 6:21 PM
Subject: Bitcoin termination
To: charlie@bitinstant.com

Dear client,

Effective immediately; Paxum Inc can no longer accept any accounts related to Bitcoin or Bitcoin Exchange. All current Bitcoin accounts have been closed and may no longer perform any transaction. Account holders will be able to withdraw their funds via wire transfer.
 
Best regards,

<Removed>
<Removed>
www.paxum.com
---------- End of message ----------

Notice how the "Subject: Bitcoin termination" and not 'Bitinstant Termination'

A few more emails went back and forth and Paxum told us ".....suspend your account due to new bank regulations."
They also said "We wish to impress upon you the fact that we are constrained to act in this manner, and we will do everything in our power to reinstate your account as soon as soon as it will be possible to do so."

I just booked a flight to Paxum HQ in Canada for next week, and I hope to have it reinstated in the coming weeks.

What we don't know is, whoever is behind this new 'bank regulations' is attacking Bitcoin or related.

-Charlie

Charlie I hope you can get to the bottom of this.  Your business should not be affected since you don't handle any bitcoins.  You strictly move USD around and have a licensed partner to do so.

Although once you get your account reinstated, I don't know why you would need it, because all the exchanges that you would link to won't be with Paxum anymore :/

I know, thats what pisses me off the most.

People really don't know how to read and it astonishes me how some incompetent fools can be in such high positions. 
They assume 'bitinstant' means bitcoin.

Never the less, I will get to the bottom of this.

I wish you all the luck in the world man. This is totally bogus! But even if the exchanges won't deal with Paxum anymore that doesn't mean you have to eliminate it from your business model. You are merely a go between that allows funds to get into the exchanges. The funds go from Paxum to BitInstant and then to MtGox, etc. I see no reason, that if you wanted to, you couldn't have 100 different payment options for people to fund their exchange accounts even if they are not supported by that exchange. I mean, you even offer cash deposits! Am I correct in my logic here?

All Best,

Michael

Unfortunately we find a lot of potential payment providers do misunderstand our business repeatedly, even after having months of communication with us.
Even though a quick visit to our website will show we only transfer USD around, we still get this common misunderstanding and it has caused us a whole pile of problems.

It's totally, utterly ridiculous! I suppose they don't even know how to read!

Go get 'em, Charlie!

...and I was just yesterday thinking about signing up to paxum. Glad I didn't!!

This would be quite newsworthy information.

Official statements:
http://gfy.com/showpost.php?p=18753403&postcount=1
http://gfy.com/showpost.php?p=18753657&postcount=22

What could they be afraid of?  ;D

Part of it I don't understand, because the banks for CryptoXchange and others still take face-to-face deposits at US banks and those are known cash deposits for bitcoin. In Canada, I think it's a soft warning from regulators because of what the Paxum banking partners may think they'll be encountering in the near future. My analysis is here: http://themonetaryfuture.blogspot.com/2012/02/paxum-exits-from-bitcoin-business.html

Sorry to hear that.

Now that Dwolla has $5 million in funding from wall street, will they decide they no longer need the bitcoin business either?

source:  http://www.americanbanker.com/issues/177_26/dwolla-raises-5-million-venture-funding-1046408-1.html

"We had been in discussions with our banking partners, Mastercard and our auditors for the last couple of weeks, and on Friday our banking partners ended the discussions with us and stated that it was too much of a potential risk to continue doing business with Bitcoin and Bitcoin Exchangers and instructed us to close all Bitcoin-related accounts." --RuthB of Paxum

Yes, the potential risk is to MasterCard's business model.   ;D

It's kinda funny. My dad was involved with the development of Master Charge. He commented that Bitcoin seems to be the next and very much needed change in money generation.

It's very telling that, even though they have accounts here, they posted that thread there, but not here. I'd respect them more if they would have said that they rejected us to our face, so to speak.

they would rather post on a forum that calls itself gof**kyourself

classy, Paxum, real classy

Paxum does a lot of things that do not make sense. Never liked them, nonsensical business practice and stupid reps. 

I say good riddance. For reasons I mentioned in this thread https://bitcointalk.org/index.php?topic=63521.0 (https://bitcointalk.org/index.php?topic=63521.0) It appears that Paxum is breaking long standing Credit Card rules by funding accounts as a purchase via Credit Card http://m.gfy.com/showthread.php?t=1046879&page=2 (http://m.gfy.com/showthread.php?t=1046879&page=2) and then allowing the withdrawal of said funds as a cash advance via a debit card. https://www.paxum.com/payment/faq.php?view=views/faq.xsl (https://www.paxum.com/payment/faq.php?view=views/faq.xsl)

with all due respect, the board name has nothing to do with it. there are simply more threads and discussion about paxum service among members of that board than it's been here. also by your logic you having account on that board isn't classy too by association. stupid comment.

good point Serge.  i do post there, but I'm really surprised how that crowd is so anti-bitcoin.

They are also very supportive of Paxum on that thread.  Most of the webmasters I know would like to get away from Visa/MC and their stupid rules and fees if they could.

Tony, I think adult biz simply is not ready yet to embrace Bitcoin.

In regard to Paxum news - it's not good news personally for me as it was the most convenient method for me to move funds to bitcoin exchanges, but I do respect their decision or better put, them being pressured by their banking partners to discontinue service related with bitcoin exchanges, it's a loss for Paxum as well for bitcoin community. Hopefully they will be able to overcome their bitcoin hurdles with their banking partners in the future.

They have a natural distrust of payment processors, I understand that whole mess.

But the benefits of being open source should get some attention, you would think?

By the way, we met Steve in Vegas.  nice guy.

I searched the FINTRAC site http://www.fintrac-canafe.gc.ca/intro-eng.asp (http://www.fintrac-canafe.gc.ca/intro-eng.asp) for Bitcoin and found one reference http://www.fintrac-canafe.gc.ca/publications/watch-regard/2011-10-eng.asp (http://www.fintrac-canafe.gc.ca/publications/watch-regard/2011-10-eng.asp) from April - June 2011. The section on Bitcoin starts with

" Bitcoins: a new anonymous digital currency and a potential vehicle for criminals to transfer money: According to investigators, an emerging digital currency named "Bitcoin", intended to allow people to send money without the use of payment processors or other financial institutions, could also be a method used by criminals to make anonymous international transactions. ..."

The question is why now? Since this advisory Paxum started accepting Credit Cards as a funding source in November 2011, and I suspect that latter has a lot more to do with their decision to close Bitcoin related accounts than a 7 month old FINTRAC advisory. It is a lot easier to spread FUD about Bitcoin than to admit they were breaking Credit Card processing rules.

maybe they we're forced to make a deal if they wanted to have that scraped...

I would not be surprised if Paxum had to make more than one deal in order to keep their merchant account.

me thinks the banks have all of us by the balls  :'(

that's what the banks think.  it will just drive more people to hold onto the bitcoins and not sell them.

Not all banks in all countries are the same, some are more open minded than others.
Don't forget about local and community currencies, even many states have started planing their own gold/silver backed currencies....
The train has left the station, they can't stop it.

The fact of the matter is, the larger Bitcoin gets the more of a threat it becomes. The people and institutions that share the most to lose will do everything in their power to stop it.

Wether Paxum decides to fold this early is up to them, and I will do everything in my power to keep them on our side.

....This is war boys, stop wining, strap in and get to work.

I guess it is.

acknowledged, back to the battle stations  :)

If that's all they got, the war will soon be over.

Lots of speculation on this, but it seems simple enough to me.

Paxum mentioned Mastercard was part of the discussion, as well as "other banking partners." Those people must understand Bitcoin is a threat. Very easy for them to say, "hey Paxum, please don't work with Bitcoin" and Paxum says, "okay." If it was a new government regulation, they would've pointed to it specifically so as to take the blame off themselves. No such specificity was mentioned, meaning its far more likely an internal policy brought about by pressure from their partners.

An open-source, fee-less payment system must scare the shit out of traditional payment network operators. If it doesn't, then they're not paying attention. Logical and reasonable for Paxum, at the behest of its influential partners, to drop Bitcoin.

As Yankee said... strap in and get to work. This is war.

Edit: just closed my account with them. THAT'LL show 'em.

I bet you're right.

Good luck in sorting it out!

As much as it's entertaining to think MasterCard is scared of the competition from Bitcoin, the explanations that it is about the risks involved in allowing the purchase of cash-like things on credit makes sense.  It's basically a way to get a cash advance without immediately incurring interest…people can take advantage of the 1 month billing cycle if it were allowed.  Still, I think as bitcoin grows, it's likely that at least some banks will take a hostile stance toward bitcoin.  They may try to neutralize bitcoin as a competitive threat by cutting it off from the traditional banking system.

I also want to close the account.
What is the procedure?

What happens to the document we submitted during registration?

I wanted to point out one more thing:

An executive at Paxum has been working with me since this happend. They have been more surprised at this than we were. Not only that, but they have been super responsive and extremely helpful in this matter.
I harbor no bad feelings toward them. Licensing takes years to obtain but can take minutes to lose.

More and more information is coming to light and although I cannot go into details *yet* alot of what has been said above is not accurate.

Paxum and I have a few conference calls with their partners set up for this week and if all goes well, we can have this resolved and back online in 1-2 weeks

-Charlie

official statement? on a forum called "GoFuckYourself"? that's hilarious

is paxum so deeply rooted in the adult scene?

or is this a secret message? (wonder whom they address in that case then  :P)

Charlie...... as they say "good luck with that".

I have always supported Paxum, but I doubt that the pipes to BitInstant will be turned on again.

Your doubts are understandable, and trust me...I have them to.

All I'm saying is Paxum wants to have us back more then we want them back.

But Charlie, what if they reinstate your account, but you are the only bitcoin related account open?  It won't do any good if the exchanges cannot get theirs open as well :/

Read over what you just wrote one more time and tell me if you don't see the business benefits in what you just said.

Ill give you some time.........

..........Ok, I couldn't resist: If I'm the only one with a Paxum account, and we're integrated with every exchange, how do you see it play out?

1+1=2 my friend  ;)

Dudes, forget about all this shit. The important part is that banking institutions are afraid of what bitcoin will do to them and are acting pro actively even before governments take actio on it.

And you know why is it that banks/finance are taking action before governments? Because they are the ones that tell the govs' what to do. There's the proof.

This may sound like silly tinfoilhat stuff but it's not, it's reality  >:(

Its true,

The Gov't will let nature take its course, if and when thats over, then they will act.

Charlie

chill dude, we are the ones with the resources making the real money, they are only speculating with it. You slowly leave them aside by not using their services and, i tell you, that really hurts.
My only hope now is that TH guys will opensource their platform someday in the future, you will see exchanges pop all around you  :)

GFY is one of the major adult business forums online.  It is unsuprising that Paxum would make an announcement there, because the adult business is a big deal to Paxum, unlike Bitcoin.   All this talk of conspiracy pressures and whatnot fail to take into account that the portion of Paxum's (or any other mainstream or semi-mainstream financial company's) revenue that comes from Bitcoin is infinitesimal.  No matter what the potential of Bitcoin business in the future, when you're running a business you have to live in the present, and when some nickel-and-dime operation gets a disproportionate amount of the negative press you're reading, the simple answer is just cut it off and see what happens.  

Anybody who was in the digital currency business between say 2002 and 2007 saw this exact script play out with PayPal, Moneybookers and other mainstream institutions against e-gold and other DGCs.  One by one, the mainstream companies just nixed the DGCs, because it was less of a headache, expense and potential liability to not deal with them at all, than to take chances on uncertain legalities and rampant fraud that was a fact of life in that business.

Frank

Chill?? I'm excited, damn it! These are great news, if you know what I mean... ;)