Bitcoin Forum

What, exactly is happening?
Right now Mt. Gox keeps US and Canadian customer funds in Japan and Europe, mostly. CoinLab is going to take over servicing those accounts, and move them to Silicon Valley Bank in the US.

When that happens, if your'e a Mt. Gox customer, you will be transitioned to CoinLab as your primary exchange relationship. We'll provide the liquidity for your US or Canadian-based business.

What if I don't want to be a CoinLab customer? Can I stay with Mt. Gox if I'm in the US or Canada?
We'll miss you, but you can always leave us. If you are in the US/Canada, you can't stick with Mt. Gox, though. Part of our agreement with Mt. Gox is super-strict about locale: Mt. Gox really wants to be 100% out of the US/Canada market.

What if I'm in Europe and want to be a CoinLab customer?
Awww, how sweet! While we can offer storage, consulting and super-compute services to you, we can't offer exchange or liquidity services -- but you can always sign up with Mt. Gox and get access to the same liquidity pool.

How secure is your setup?
It's pretty secure; it beats, by a significant margin, all other known US bitcoin security practices. Mt. Gox has also reviewed the procedures and indicated they are comfortable with them. Before we launch, we'll detail what we're doing on the security side so you can check in, but you can read a bit about at storage right now.

Mt. Gox really wants to be 100% out of the US/Canada market.

CoinLab is going to take over servicing those accounts, and move them to Silicon Valley Bank in the US.

Coinlab Bringing Bitcoin to Wall Street with MtGox Deal

http://bitcoinmagazine.com/wp-content/uploads/2013/02/Wallstreet-Bull-700x325.jpg

A venture capitalist backed Bitcoin company wants to make it safe for U.S. and Canadian investors to do large block trades of Bitcoins and keep them ultra-secure from loss. Coinlab has worked for a year to sign an exclusive long term deal with Bitcoin exchange Mt.Gox. The Silicon Valley-based company will take over exchange transactions for all U.S. and Canada clients meaning your money will get moved to a U.S. bank and Coinlab will now be the clearing pool for all peer-to-peer transaction on the Mt.Gox exchange. The safeguards they have set up is a move to drive more U.S. volume in Bitcoins along with paving a way for institutional investors and high net-worth individuals to buy and hold large amounts of the digital currency.

“80 percent of Mt.Gox traffic already comes from this area. We are essentially buying their book of traffic,” Peter Vessenes told Bitcoin Magazine in an interview.  The goal is to move customers’ money from overseas to Silicon Valley Bank by March 22nd. This should cut down on the fees, currently around $60, that clients pay Mt.Gox for international wire transfers to their U.S. bank.

Coinlab was the first Bitcoin company to get venture capital money, over $500,000, last year. They were known as providing games paid for with Bitcoins but this move into mass retail transaction service takes the firm into a whole new sphere.

Right now an average Mt.Gox customer pays .6% per transaction, volume over 10,000 pays only .3%. These tier two customers will now get live phone help via Coinlab experts. Vessenes says large transactions will still have to get reported to FinCEN as Coinlab wants to be observant of U.S. money laundering rules.  There could be a know-your-customer (KYC) process to opening an account but Coinlab is still working on protecting anonymity.

Vessenes told Bitcoin Magazine in previous interviews last year that whoever can figure out how to store Bitcoins – in 250,000 to 500,000 blocks – and make the client feel like they are safely in a bank vault will really help make the digital currency accessible to big money investors.

The process Coinlab came up with for safety feels like a James Bond transaction with private and public keys, and they’ve gone old school storing a Rubik’s cube set of private key data in hard safes. The private keys will be split into three parts with only two needed to unlock your transaction. They won’t be stored in a computer database but printed and placed in a vault. Who can open the vault will be divided up; meaning a red team vault opener won’t be able to open the blue team’s vault.

The folks at Coinlab are also working to get your data insured for loss. Lloyds of London does these kinds of transactions but Coinlab has yet to finalize an insurance agreement. Of course they’d likely have to make sure there is a plan to make sure that the vault openers don’t get kidnapped. If they can get storage insurance they’ve just jumped the fence into Main Street’s arms.

If you want to want to buy large amounts of bitcoins without using your own cash you’ll still have to find a lender to give you leverage though — Coinlab isn’t a bank – or regulated by any US or Canadian securities or banking regulators.  But there is a hint in their new deal that shows they are working to find a way to get liquidity to Forex broker dealers or private wealth managers to help high net-worth individuals invest long-term in bitcoins.

Vessenes told Bitcoin Magazine, “Our deal with Mt.Gox means we just picked a retail customer but I care very much about the needs of the institutional investors.”
Coinlab’s strategy page has a nifty live action chart of Bitcoin liquidity which will feature a buy and sell button. The company will also work on alerts to their customers about big price swings.

“Coinlab’s deal with Mt.Gox is great for Bitcoin liquidity in the US and Canada.  It’s nice to see more formalized channels emerging here for Bitcoin FX.  This is the start of many terrific things for Coinlab and the global FX market is $4 trillion but we still have a long way to go,” Joel Yarmon of Draper Associates, who invested in Coinlab, told Bitcoin Magazine.

Jay Walker, a forex prop trader, said he’d jump to any forex broker deal that would allow him to do currency pair trades and get paid out in bitcoins. This is something the Bitcoin exchanges could do by signing deals with forex broker deals – assuming they get through each country’s regulatory process. Walker also said he’d love the opportunity to short Bitcoins. Of course to short Bitcoins some smart entrepreneur would have to come up with a credit or Bitcoin borrow system to make that happen but it’s clear the players in this field are thinking about the market demand for it.

How can you WANT to be OUT of the BIGGEST market, as a business?

Future news article: 'US Government seizes $100 million from CoinLab's bank account.'

Mostly trying to not deal with the US shiatty policy of making all the "citizens" indentured servants in perpetuity and harassing them out of the international banking scene.

Future news article: 'US Government seizes $100 million from CoinLab's bank account.'

This is exactly what I want to know.  There has to be more going on behind the scenes that we are not being told.  The only reason I can think of that they would want out of the US and Canadian markets is if they are being pressured by regulators in the US.  Bye, Bye Mt. Gox.

You don't think it's possible that one guy running a business may feel in over his head with an exponential growth in volume and workload and perhaps wants his life back?

I'm not him, and I've never met him, but this doesn't sound ridiculous to me.  He seems to have technical skills, not necessarily business skills, despite having done incredibly well so far.  Delegating the business end of running a business seems like a wise and prudent thing to do if you feel that a heavy workload is only going to get heavier.

How about hiring someboy?

Bye, Bye Mt. Gox.

i never verified my account and currently have no balance in my account, so I plan to abandon it.

if they are bringing over accounts automatically, i am presuming this will include the account history.

i wonder how many people will be filing amended tax returns as a result.

Yeah...depends on who you are.

If you're well connected and went to a big name school and this is your fifth business venture, then finding the talented somebody is much easier than if you're a computer guy who started a business with your own code and your own hands and still trying to get over the fact that you're holding millions and soon to be tens or hundreds of millions of dollars of somebody else's money you never dreamed you'd be doing so soon.  It's not like you just place an ad on monster.com and suddenly talented trustworthy people show up and self-identify at your door - learning how to pick candidates worth hiring to fill jobs dealing with lots of real money is an acquired skill that takes years.

If you can't handle a business as the sole proprietor and employee, then hire people who can help handle the workload. If you are incapable of doing that, then you shouldn't be a business owner in the first place IMO.

Cross-posted from the other thread:

You shouldn't own a business without first being prepared for success.

If you can't handle a business as the sole proprietor and employee, then hire people who can help handle the workload. If you are incapable of doing that, then you shouldn't be a business owner in the first place IMO.

if they are bringing over accounts automatically, i am presuming this will include the account history.

i wonder how many people will be filing amended tax returns as a result.

Lots of corporations use the "bubble" model of hiving off successful divisions into entities which are separate from the parent.  It's a legitimate way to manage risk.  Having a US-based entity deal with US regulatory issues is an alternative to MtGox always looking over it's shoulder and having its non-US operations at risk.  MtGox looked into setting up a US presence themselves last year and the regulatory requirements would have made it enormously expensive.  This way, MtGox gets some benefits while someone else shoulders most of the risk.

Not every business desires to become a mega-corporation.  It's possible that all of these small businesses which have common players may eventually be brought together under a single corporate umbrella, though.

Right, just like the Wright Bros should have never attempted powered flight without first acquiring the means and the tools to manufacture a 747.

For your account to be brought over to CoinLab, you'll first need to accept CoinLab's ToS.

Is there some way in which users whom do not wish to be clients of CoinLab, and also no longer your client could have all account information and history removed from your systems?

Americans are by far the largest buyers on Mt.Gox. If they are taken out and have to trade with a third party, who sets the price of Bitcoin then?

Take a minute to think about this!

Will their be any changes in fees?

Will US and CAN customers be paying higher fees than customers in other countries?

American/Canadian traders still trade on the same market as before, and will continue to be able to use MtGox.com. What changes is the ToS that will no longer be between you and MtGox Co. Ltd., but between you and CoinLab.

There still is an increase in the delay before money ends on the exchange i would think?

It's also possible that institutional investors/large players would just increase the already ridiculous amount of volatility.  It could mature the market, or it could drive it into the ground quicker.

Either way, it's something which has to happen sooner or later. 

Remember when Bitcoinica was transferred to Intersango?  :'(

FATCA has three main parts:

-It requires foreign banks and financial entities to find any American account holders and disclose their balances, receipts, and withdrawals to the US Internal Revenue Service (IRS), or be subject to a 30% withholding tax on income from US financial assets held by the banks or financial entities.[1][2]

- Owners of these foreign-held assets must report them on a new Form 8938 along with US tax returns if they are worth more than US$50,000; a higher reporting threshold applies to overseas residents.[3] Account holders would be subject to a 40% penalty on understatements of income in an undisclosed foreign financial asset.[1]

- It closes a tax loophole that investors had used to avoid paying any taxes on dividends by converting them into dividend equivalents.[4]
The reporting requirements are in addition to reporting of foreign financial assets to the US Treasury Department,[5] particularly the "Report of Foreign Bank and Financial Accounts" (FBAR) for foreign financial accounts exceeding US$10,000 required under Bank Secrecy Act regulations issued by the Financial Crimes Enforcement Network (FinCEN).[6]

France, Germany, Italy, Spain, and the United Kingdom have consented to cooperate with the U.S. on FATCA implementation,[26][27] as have Switzerland and Japan.[28]

As a result of FATCA, European banks such as Deutsche Bank, Commerzbank, HSBC, ING Group and Credit Suisse have been closing brokerage accounts for all US customers since early 2011, citing "onerous" US regulations, which FATCA will make more complex when it goes into effect in 2013.[12][13]

http://coinlab.com/new-transition (http://coinlab.com/new-transition)


This is bullshit.

People are probably unaware of the requirements the US is placing on foreign banks.


http://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act


It's just too much of a hassle for foreign banks to fuck around with this shit and some of them have decided not to play.

FATCA is likely one of the reasons behind this move. But why bring Canadians into this because of a US law that does not apply to them?

There may be some other trade agreement which sweeps Canada under similar provisions or they may be on the brink of entering this agreement.

From a practical point of view, if you're already establishing a US base of operations it's probably easier to service Canadian customers from there even if there's no compelling legal reason to do so.

I can't decide if this is extremely good or extremely bad.
Either way, I'm going to continue staying the hell away.

This is sketch, but exchanges are sketch. It completely negates the purpose of BTC. All that is happening is new financial institutions are being built.
You guys lap it up. The centralization, the fee's, the BTC banks, whole thing sucks. So much for P2P. I guess people would rather trust institutions than one another. 

A venture capitalist backed Bitcoin company wants to make it safe for U.S. and Canadian investors to do large block trades of Bitcoins and keep them ultra-secure from loss. Coinlab has worked for a year to sign an exclusive long term deal with Bitcoin exchange Mt.Gox. The Silicon Valley-based company will take over exchange transactions for all U.S. and Canada clients meaning your money will get moved to a U.S. bank and Coinlab will now be the clearing pool for all peer-to-peer transaction on the Mt.Gox exchange. The safeguards they have set up is a move to drive more U.S. volume in Bitcoins along with paving a way for institutional investors and high net-worth individuals to buy and hold large amounts of the digital currency.

It's pretty secure; it beats, by a significant margin, all other known US bitcoin security practices.

I get Bitcoin Consultancy vibes all over again. I think Coinlab should tone down their advertising a little bit. It's like a 7-year old boy hopping up and down waiting for ice cream.