Bitcoin Forum

Hello everyone,

My names Patrick Studart, I am Co-creator of CoinGator.com with my partner Greg Matthews.
We buy Bitcoin at competitive prices and pay out with Paypal.

I just wanted to introduce everyone to our site, also I want to say what a pleasure it was to meet
so many of you at the Bitcoin Conference.

Regards,
Patrick Studart
pstudart@coingator.com

Welcome! That business model sounds like a wonderful one where lots of people will set themselves up for having their money reversed back into your account up to 1 year later! Count me out.

Good luck!

We will be adding other forms of payment besides paypal in the near future.

Regards,
Patrick Studart

If you take that money out of your PayPal account,  how could it be reversed? Or if you spend it?

Do they just send you a bill or does law enforcement get involved?

I think the question was: "Assuming you sell BTC in exchange for fiat currency via PayPal, and you then remove those funds from your PayPal account, and THEN the buyer reverses the PayPal transaction through a chargeback or other means, you would be left with a negative balance in your PayPal account. If this happens, what method if any would PayPal use to reclaim their money from you?"

Assuming I've got the question right, my understanding (based on personal experience) is that they will reverse the transaction leaving you with a negative balance in your PayPal account.  If you have a linked bank account or credit card, then I believe PayPal can bill that after a set period of time.  In my personal experience, they just sent me a couple of notices that a payment had been reversed and I had a negative balance - the next time I received a payment, they ate enough of it to offset the negative balance automatically.

I don`t know what PayPal`s specific policy would be, but most likely collections would become involved rather than LE.  It`s going to be a civil matter unless they were somehow able that you were perpetrating a fraud or something.  In any case it`d be inconvenient and they would certainly shut down your account in rather short order if you`ve pulled your money and sit there with a negative balance for an extended period of time.

I`m pretty sure there are others with more extensive personal experience on this who can tell you exactly what PayPal`s Standard Operating Procedure is on this one.  I would also guess it varies from jurisdiction to jurisdiction.  My specific example is for UK / US which seems to be basically the same on this matter.

Exactly this.

Hi. I think you're missing the point. Chargebacks are always an issue. It's Paypal. Let me try to explain simply the way things work for new companies who use paypal and bitcoin together:

• User sends bitcoins to your company
• Your company sends paypal payment
• 6 months later your company reverses the payment
• User is out their bitcoins and paypal balance
• Your company disappears with 6 months worth of "good" feedback based transfer volume. Scam successful.

Then there is the "honest" business. This business is blind to the consequences, and although doesn't steal coins the following happens (and has already happened dozens of documents times):

• User sends bitcoins to your company
• Your company sends paypal payment
• Paypal closes your account for trading a digital currency against TOS
• User's associated account is also limited and they can't touch their funds for 6 months
• Your company disappears despite being honest because it caused so much trouble

This is not 2009. Paypal is not an option for bitcoin. Please take a hint and stop talking about it, it only makes you and the company you represent look worse.

Yes they are still an issue. Bitinstant is a well established company that has a lot to lose if they started chargebacks. Your "company" is so far completely anonymous with no rep. Your website was easily made using bootstrap, and that doesn't help promote confidence.

Basically it comes down to us building trust within the Bitcoin community. We know that,  We will offer other forms of payment till that trust has been built.

We dont expect you to trust us blindly, but we are eager to work towards the goal of earning your trust.

Best Regards

Even a company I did trust loses that trust when they begin offering BTC>Paypal options. If your intention is to *build* trust, you're doing it wrong.

Patrick, I get what you are saying - or at least, I get what you *could* be saying if I give you the benefit of the doubt.  "PayPal is a convenient, easy way to move funds around, and therefore why wouldn't potential customers be happy with us offering it?!"

Fair point.  The issue is that you're exchanging an easily reversible payment system (PayPal) for a definitionally irreversible payment system (BTC).  Which means that no matter what your intentions, somebody is going to get screwed sooner or later.  In addition, PayPal actively refuses to be a part of check-cashing systems and they are specifically inhospitable to transactions in other currencies not offered by them.  There are a bunch of threads about this - basically, one of two things WILL happen. 

1)  You pay out for bitcoins, and at some point you charge back (could be a long time later).
2)  Someone pays YOU for bitcoins, and then they charge back (or it turns out the card info associated with the PayPal account was stolen, etc.)

You are promising not to charge back - cool.  You probably mean that too.  But let's think about a scenario in which you sell off $10k worth of BTC in the first couple of weeks.  In 5 months, #2 happens a whole bunch - initially you say "We're not doing chargebacks, we promised." But then, eventually the losses reach a point that your only option is to recoup those losses somehow - namely by charging back the funds which you paid out in exchange for bitcoins, now that you've lost so much that you can't afford to eat those losses.

Dealing with PayPal gives you access to a legal recourse (in the form of chargebacks) that the seller of bitcoins will not have.  In addition, it opens up the prospect of PayPal closing your account for any number of reasons, and so forth.  It's a lot of extra liability and uncertainty that isn't present with other cash transfer methods. 

So a new business offering PayPal could be scamming - or alternatively, they could think it's a really great idea and really convenient for customers, but they may not recognize the extent to which it could mess them up. 

There's a heap of threads dealing with this - I'm not accusing you specifically of being a scammer, but the use of PayPal for bitcoin transactions (from either side) is generally considered a pretty bad idea.

6 months? I thought it was 30days maximum to reverse? I really trust this company...

I don't think that merely offering a service that many other companies offer is a reason not to trust them.  Somewhere along the line, there must be some trust.  Bitinstant is doing all kinds of crazy, nefarious things to delay payment processing (http://"https://bitcointalk.org/index.php?topic=128314.msg2228559#msg2228559").  They also offer BTC to Paypal (via btc-e or mtgox coupon, so it's one step removed), yet they aren't catching as much crap as you guys are giving this company.  At least they haven't yet let anyone down, which seems to be Bitinstant's primary business function.  Maybe they won't go the way of Bitinstant and will be an honorable, trustworthy company.

Your first scenario:

   It's not like there is a "chargeback all transactions as fraudulent" button their company can just push and instantly get their money back. Think Paypal is really this dumb to think that these transactions are all fraud on the 1000s of users' end?  Also, their account is no way going to be receiving any decent amount of cash without going through a pretty thorough check with paypal at some point. If they're going to scam (will be using fake information?), they will be shut down within receiving over $10k or sooner.

Also, the 6 month timeline for a chargeback is only if the payment was made from a credit card.  This is because paypal is at the mercy of the credit card companies with longer chargeback times. These guys will have to be paying from their paypal balance which only has a 45 day window for chargebacks.  Given the amount of time they have already been operating, I would bet they don't intend on scamming.


Second scenario:

 Now this the more likely scenario and I agree with almost all of it except the part where you say user's accounts also get limited.  The only way they would do that is if they think the user's account is owned by the company and is being used to launder money out of the main account. If you have had any established paypal account for awhile, you will be fine.  Your comment "(and has already happened dozens of documents times)" is probably nothing more than people opening up new paypal accounts with fake information trying to get money through their system anonymously.  Then those people come to forums like this and say "paypal froze my account and now my money is gone". You won't ever get the full story...

Bitcoin is based around anonymity, Paypal is based around the exact opposite.

When Paypal Limits your account, they make you submit documents to prove the information on your account is valid. The kicker here is they don't let you see what information is listed in your account once it's limited.  So all these people that thought they could use paypal and bitcoin with full anonymity and opened an account with bogus information are screwed because they can't confirm anything as they don't remember what they put in there or can't prove it.

And for the record, in 2008 I started making $1000s of dollars monthly on eBay/Paypal.  My account was in good standing and was all the sudden "limited" by Paypal with no warnging. However, I submitted all the documents they requested: Photo ID & bank account statement (notarized by bank manager), copy of DBA certification from my state, and my business EIN number.  My account was unfrozen days later; now over 5 years and $150k later, I have had no issues (this includes selling bitcoins).

That being said, the only people at risk here I think is the company itself if it doesn't tread carefully with Paypal...

They're catching *more* crap. Please see the "Scam Accusations" threads about how BitInstant is failing to be, well, instant. As for them using Paypal, I was up against that the first day they announced it.

You're either a scammer trying to spread FUD, or you've never used Paypal extensively as a payments provider like I have.

I've personally proven this wrong numerous times, it's well documented that people have called the solutions technicians directly and had their funds reversed as late as 12 months after.

Paypal's TOS has been the subject of numerous threads here on the forums with the same outcome for everyone. They do not allow the trading of currencies. Trading is both selling and buying. Both accounts get limited. Stop spreading FUD.

If you're so sure of yourself, what is your paypal email? We'll call Paypal, tell them you're selling a digital currency, and see what happens to your account after that. (Pro-tip: The exact same thing that happens to each and every personal and business account who has violated their TOS and tried it over the past 3 years regardless of verifications, documents, etc)


I repeat, you're either a scammer spreading FUD or you're just ignorant to the reality of Paypal. Paypal is a scam enabler and the people running "CoinGator" do not deserve anyone's trust.

Well I guess we just come from two different experiences I suppose...

Fastcash4bitcoins offers this exact service (though they are usually out of money because they are so popular).  Yet I haven't ever seen this kind of vitriol leveled at them.  Calling a service like this a scam before it is even doing any business is out of line IMO.  I don't know if there are conflicts of interest involved on the part of the people making these comments, but these comments are premature at best.  This model can be successful, and at the present time these guys have given no indication that they won't be.

1) No one called them scammers. They are asking for trust in an environment that has never worked well (Paypal for bitcoin).

2) Maybe no one has ever heard of that other site and that's why they aren't receiving the same questioning. Could you link to their thread please? I'd love to see what they promise.

https://bitcointalk.org/index.php?topic=90192.0

As the previous poster said, they've been offering this exact service for almost a year (least on these forums). One would think if Paypal had a problem with it, these guys would of already been shut down. I also went through all 50+ pages and didn't see a single post about someone having their account "limited" due to selling them their bitcoins.

Not saying it can't happen, but calling out Coingator as if your going to lose money if you use their service is way premature..

I did a test spend of .10 BTC with coingator a few days ago.  If my account gets limited I will be the first one back here saying I was wrong..

https://bitcointalk.org/index.php?topic=90192.0 - as you can see in the 50+ page thread, no one has had problems and their customers give them rave reviews.

Welp, that's all the evidence I need! If another service has gotten away with breaking Paypal TOS for a year and been lucky, it must mean no one could possibly scam anyone with a similiar service or get their accouts frozen.  ::)

Exactly - I am definitely not calling Patrick and co at CoinGator scammers.  If anything, my issue lies with PayPal and with the fact that this business model does in fact violate their Terms of Service.  I think it's ridiculous that their ToS rules out the trading of currencies and such, but the fact is that it does.  Successful business models that fly in the face of this do not change that basic fact, and this is therefore a significant risk.

I think it's a great business model and I hope that it works out - it's exactly what PayPal could and theoretically *should* be used for, except for the fact that they prohibit it as part of their Terms of Service.  This is partially why a system like Bitcoin stands as a threat to PayPal.  It can serve as equal parts alternative payment system and currency.  It may be weaker as a payment system in some ways, but it has no terms of service or centralized overseer to potentially exercise unaccountable and arbitrary controls over it.

Barring a change in PayPal's Terms of Service, this business model is a risk on both sides irrespective of good intention.  No vitriol here, just a friendly warning.  I'd really like to see CoinGator and other similar services be successful, as it helps out with the 'last mile' problem currently facing Bitcoin.

As far as BitInstant, I haven't used them.  Until now I had no idea that they were even using PayPal.  Therefore I can't speak to that one.  If that's the case, then they face the exact same risks unless they have a special arrangement with PayPal in terms of service.

There is no conflict of interest on my part because I have next to no bitcoins,  I want to see this project succeed for the project and not the profit, and I don't have any involvement in any competing enterprises.  I've also had both good and bad experiences with PayPal, and I have been through their whole verification process as well.  I could easily see it going either way, because their processes are far from perfect or consistent, and would in fact border on arbitrary in my opinion.  My experience is that they will lock down your account at inconvenient times and may or may not unlock it after you comply with their verification demands.  Same thing can happen with banks or other financial services, which is why there's a huge appeal to directly holding your own money.

At any rate, I'd love to see this service work, and I really don't have any trust issue with CoinGator.  But I do have a confidence issue with the use of PayPal for these kinds of transactions  - partly because of my own personal experiences in other arenas and partly because of secondhand stories about the experiences of others with PayPal-Cryptocurrency transactions of any kind.

Very fast service! Exactly what I needed thanks!

I just tried the service. I didn't expect to get it right away because it's late and a weekend. It only took a few minutes after my BTC TX got confirmed to get the money in my PayPal account.

I'm interested to see how you operate. I don't mean that I doubt you operate an honest business, I just mean that (from experience) there is absolutely NO way to safely exchange bitcoins for PayPal and vice-versa.

The feedback seems entirely positive.  I want to echo johnniewalker - it wasn't my intent to criticize the CoinGator folks.  I wish you the very best, and I think it's fantastic that you're working to provide a much-needed service.  I truly hope that it works out well in the long term.

We will see in 180 days. It seems fine now.

Let the record show.

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until any judgement can be made against CoinGator for their *first* of potentially many transactions.

Until then, any and all feedback are absolutely pointless, especially positive feedback.

If those balances are paypal balances, my timer is most accurate.


It's the default size but I can resize it if you'd like. How's this?

https://www.onnit.com/emails/_modules/timer/?end=2013-11-23+7:09:59&dark=1

http://www.reddit.com/r/Bitcoin/comments/1f9ck4/paypal_shut_my_account_down_for_giving_away_free/
http://www.reddit.com/r/Bitcoin/comments/q39gf/i_have_become_a_victim_of_an_ebay_paypal_bitcoin/
http://www.reddit.com/r/Bitcoin/comments/oet8g/selling_bitcoins_for_paypal/

Not a single one of those links points to a story where the end user's account is being shut down.  Looks like Paypal is shutting down a handful of business accounts that were engaged in the business of selling bitcoins due to the predictably high chargeback rate.  However, in this case chargebacks won't be an issue for the end users unless this business is dishonest, and there is no indication that they are at the present time.

I never said they did, I posted some links to warn newbies about trusting strangers with a sketchy reversible payment system. You have a problem with warning newbies about sketchy reversible payment systems? Why would anyone who isn't a sockpuppet shill of the OP have a problem with people practicing safer transactions on the internet with complete strangers when it's been proven that there are now the following days left before we could even *begin* to trust them?

I think the owners would probably verify that I have nothing to do with the site, and I don't know any of the people involved.  I only stumbled across this thread because someone suggested that they might bulk buy some coins from me and I was doing some research on them (they refused the bulk purchase btw - before I ever posted in this thread).  

I don't have a problem with people being cognizant of risks.  I do have a problem with people being unfairly and prematurely attacked - you are trying to smother them before they start.  I guess I just dislike bullies.

That lame excuse doesn't pass the smell test.

1) Difficulty of creating a bitcointalk.org forum account: Instant and easy
2) Difficulty in finding a photo online of some dude in college and saying you are him: Instant and easy.
3) Difficulty in creating an additional account and repeating #1 and #2 and calling said account a "partner": Instant and easy.
4) Difficulty in coming up with a name for a company that isn't registered anywhere in the world and only referenced in posts here: Instant and easy.
5) Difficulty of creating a Paypal account with fake but passable identification: Instant and easy
6) Difficulty in reversing transactions through Paypal: Instant and easy, with a small waiting time to have resolution department confirm violations in TOS for both parties

Benefit to scammer: 100%+ profit with a potential 6 months waiting period on account funds to be released to them
Benefit to consumer: up to -100%

"Smothering" them? Get a clue. They cannot be a legitimate or honest business until after this amount of days has passed:

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P.S. Please stop "smothering" Bitinstant. I just can't stand bullies.  :'(

Again, I guess I just don't like loud-mouthed bullies.  Now you're trying to bully me because I have simply stated that they shouldn't be attacked unless they give a reason to be attacked.  Once a bully, always a bully.

Oh, you're a Bitinstant shill.  Now I get it.  Bitinstant has given plenty of reason for people to attack them.  They deserve to be smothered, because they are a proven ponzi scheme.  They were given a chance, and they have shown themselves to be scammers.  Coingator, as of this moment, has not.

Since you don't understand sarcasm, how can I expect you to understand the concept of "anonymous = trustless"?

If you're actually being serious with this statement, it proves you have no experience working with Paypal and people should not take your seriously.

The last guy I warned on the forums said "blah blah I know more than you matthew blah blah I am legit blah blah". His "business" went out of "business" 2 months later because Paypal closed their account for selling bitcoins. Get a fucking clue. If you're looking to be a reliable and invaluable service to the bitcoin community, stop using Paypal.

Anonymous cannot be trustless, or no one would ever transfer a single bitcoin to anyone else.  So, your argument is false on its face.  No one would ever exchange goods or services, or sell or buy Bitcoins, because either you have to send BTC first, or they have to give you the goods/services/money first.  Either way, there is trust involved. If you use an escrow service, there is trust involved there.  Economies, regardless of the means of exchange, do not exist without trust.  It's obvious that you have chosen not to trust Coingator.  That doesn't mean that you are correct, or that your opinion should be posted all over their thread in the absence of any kind of proof that they should not be trusted.  Again, this is nothing more than old-fashioned bullying.

I didn't mean trustless, I meant untrustable but at 6am my vocabulary is failing me. Anonymous is not trustless, just untrustable, and CoinGator is anonymous (forum avatar pictures and potentially made up business names do not equate to identity).

Time to call it a night before I end up posting the threads of actual businesses here who used Paypal and had to close their operations months later for having their accounts closed and owing people money.

CoinGator, do the right thing and drop Paypal immediately if you're actually legit. There is no shortage of failed businesses and horror stories from people just like you but smarter who tried to do exactly what you're doing. Please understand that your lack of knowledge and continued ignoring of warnings does not make you look better, just more determined to scam or run a business into the ground.

Cheers!


P.S. Here is a similar thread I "bullied" another "smothered" genius business man who thought he knew everything too. Notice the random sockpuppet whitenights for him and the "Matthew is wrong because of *how* he is talking so we can ignore the logic in what he's saying" posts. Spoiler alert: every single thing I said came true and he closed shop in shame and moved on to his next anonymous name. Please keep in mind this was in December 2011 so it's extra disappointing for me to see people still not able to learn these business mistakes after 2 years. In fact, it's so stupid that you kind of assume anyone offering Paypal these days is a scammer.

https://bitcointalk.org/index.php?topic=52625.0

No..... 180 days is how long a PayPal user has, merchant or otherwise, to issue a chargeback. It's not a random number. So far my feedback and experience has been positive. I will let others know within or at 180 days after my transaction if that changes.

Are you guys a registered MSB?

I use another site and their minimum is .3 btc and their maximum is 10 btc. What is your minimum?

ty ty!

Matthew, you have no idea what you're talking about. This business is completely different from the businesses that sell people bitcoins for PayPal, which this business does not do. That being said, this business still needs to register with PayPal's legal department, since the buying or selling of currency is against PayPal's terms of use, even when chargebacks are impossible. Check the fastcash4bitcoin thread for how they did that. You will also want to register with FinCEN as a MSB, as per their guidelines.

You must be confused. No where have I mentioned any companies that sell "Bitcoins for Paypal" (which would not be a risk to anyone but the service owners). They are selling Paypal and receiving bitcoin.



People are sending CoinGator their bitcoins (which they can never get back) and receiving Paypal in exchange for them (which the company can reverse at their will later. What exactly have I said they're doing that's different from that that would cause you to think I "don't know what I'm talking about"? I can only assume you either misunderstood my posts or haven't read their website yet.

It wouldn't matter if they registered with FinCEN or not, what they're doing (and what anyone does who uses Paypal in combination with Bitcoin) is violating section 3.h of the terms of use:


FinCEN has classified Bitcoin as a digital currency. Exchanging it is against Paypal's TOS. Wake the fuck up already, your account is going to be frozen the same as everyone elses' has and I'm going to hate saying "I told you so", but it is apparent to me you don't care at all about your business and are probably a scam. (Any serious business would have done research, read TOS, and listened to the criticisms and not just the "positive support".

EDIT: Also, Gweedo seems to be going overboard with the whole "prison" threat, but actually it's true. Read all about the felony of operating a money transfer business or currency exchange without being licensed in your state first.


Keep in mind, this is all an aside as the main point here is that your business model is unhealthy for you and downright dangerous for anyone trying to sell their bitcoins for paypal (because you can easily rip them off with chargebacks up to 180 days after sending them the payment). I digress:

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hmm...posted (what I thought was) a valid question about 12 hours ago and posts have been made since then but none to answer my (seemingly) simple question. Seems I'm be sticking with my current service... http://coin2pal.info

lol

aka

doing nothing

I feel bad for Matt, hes the one here trying to shine light on to an obvious shady business.
But what can I say, if you're too dumb to realize whats going on here, you deserve to be scammed.

ooo ty ty! Seems odd timing that I post the site I usually use in this thread and suddenly they will be down for maintenance for 2 weeks. Anywho, that prompted me to give your service a go. For the neigh sayers...

Started a transaction around 11:30am Pacific time for 0.1 btc which would result in $12.13 sent to my PayPal account. Roughly 30 minutes after initial start of transaction money was deposited into PayPal. So...so far so good. Guess we'll see how bigger/future transactions go. Anybody else try it out yet?

ty ty btw CoinGator! :D

Now you've only got to wait 180 days to see if they scammed you! :D

It's always hard to trust ventures like this...but if nobody took any risks bitcoins wouldn't be where they are today. I'm ok with getting my feet wet from time to time :D

That's like saying "Cars wouldn't be anywhere where they are today if people didn't take the risk of driving around without a seatbelt."

Yes, that's true. And now there are seatbelts. What's your excuse for not wearing one or excusing a car company that makes a car without one?

There is just as much room for another Paypal>BTC company as there is for a car company that makes family cars without seatbelts (and equally few excuses for it).

You're right...there is plenty of room for other companies...but what is your point? I had even mentioned a few posts back that the usual service I use ( http://coin2pal.info ) is down for maintenance for the next two weeks so basically CoinGator has 2 weeks to convince me to use their service instead of the one I have a long history with. So again...what is your point? Or is CoinGator just another one of your troll targets? Because I've re-read your reply above a few times now and other than getting me to post another reply, hence continuing your pointless trolling, I really see no other point so... Are you a troll bro? ;) Or did you just have charge back issues in your past and will forever be butt hurt by it? Because I really don't see what benefit CoinGater would receive by going through the crazy long and involved process of doing a charge back with my $12.13 ...? :P Or maybe they will pick and choose and only charge back on the big orders? Which they'd only be able to do what? Once? Maybe twice? Before PayPal steps in and goes NOPE and puts a freeze on their account. I've been a business member with PayPal for around 10 years...maybe more. I think my $12.13 is safe so...unless you have something constructive to add like an actual example of these people doing illicit business, why not go elsewhere and let these guys run their business in peace. Just sayin... :D

Your rationalizing the dangers by saying "only $12". Quaint.

Nope...that's just me being poor so I has tiny mining rig and that was all the coin I had. So 'technically' that was a rather large investment for me... ;)

...yet still no examples? Trollololololol :P

If you're looking for examples, use the forum's search function. If you're looking for examples specific to this fresh-out-of-newbie-jail account, come back in

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HAHAHAHAHA...I see what you did there ;) You should go to that one btc betting site and start a wager saying CoinGater will take my $12 in 175 days... ...so I can go bet against ya and make another $12 ;) Or be proven wrong...who knows...either way trolling a thread isn't going to scare people away from a service...it is actually what made me use their service just so I could post a note saying "SEE!". So I'll go ahead and take my $12 to IHop and have myself a nice meal and you can continue to troll other satisfied customers and we'll see what we see in 175 days :D

edit: aww...you changed part of your message so I have to as well. I've seen PLENTY of scams in my time on this board...and all of them were pretty easy to spot right away. This one...doesn't seem like a scam to me so I tried it and what do ya know...so far so good. But I'm trying to figure out why you are so adamantly saying its a scam without showing any other proof other than "check the forums"...? Leave em alone or show proof...simple simple no?

You wouldn't know it's a scam until the timer has run down.

Look up "long con" for more answers to your hypothetical excuses.


I'm not sure if English is your first language or not, but I've never said they were a scam nor did I say they were scammers. I gave them opportunities to explain and learn, they've taken that opportunity to spam their broken business model popular among scammers instead. You can draw whatever conclusion you want, my conclusions so far have only been based on fact. Instead of clogging up the thread with your own misconceptions, go back and read the thread again because I feel like I'll only be repeating myself again and again.

For anyone truly concerned about PayPal chargebacks with a system like this, it's relatively simple to avoid.  

1) Create a new PayPal account you use only for interaction with this or any other PayPal-based service you consider to be high risk.  For the truly paranoid, create a virtual machine (I use VMWare) that is only used for accessing this account, and install AOL desktop on that virtual machine.  When you start AOL desktop, the virtual machine will access the internet over your existing connection, but will have an AOL IP address that has nothing to do with your normal IP.  You can even verify that you have an AOL IP by going to http://whatismyipaddress.com .  This makes it impossible for PayPal to tie the account to any other account, regardless of any tracking mechanisms they may use.

2) Buy a reloadable debit card (I prefer netspend).  These come with a virtual checking account - a routing number and checking account number you can use for direct deposit and for paypal transfers.  But, they are only one way - PP can't ever debit these virtual accounts.

3) Verify the virtual checking account with PP, and register the card itself as a credit card on that PP account.

4) When you have money come in, transfer it to your virtual "checking account".  This adds to your card's balance, and then you can take the money off the card via ATM when the money hits.

PP will have no way to clawback the money, even if the transactions go bad.  Though the numerous jailhouse lawyers in here will dispute it, there is nothing illegal about this.  Keeping PayPal at arms length is always a good idea, no matter what you are doing with them.

Now, at about this point, all of the many legal scholars in here will say "but they could sue!".  First, PayPal may very well refuse to process requested chargebacks for a company that all of a sudden tries to dispute every transaction they have conducted months after the fact.  People Like Matthew N. Right don't really get that PayPal is run by people that see this type of behavior every day.  If this happened, the chargebacks would almost certainly be denied and the company referred to law enforcement for attempting to defraud both Paypal and their recipients.  Second, on the off-chance that PP let these abusive chargebacks through, lawyers - the ones with actual degrees (not to be confused with those posting in this thread) - cost $400/hr+. Because of the cost and the potential that rulings in such lawsuits can set precedents that invalidate parts of their user agreement that could cost them millions, Paypal rarely sues over funds owed from transactions that they allowed to be reversed.  Unless the case is a slam-dunk for them and both the amount owed and the resources of the potential defendant were great enough to offset the litigation cost, they won't engage.  On the rare occasions that they have sued, with perhaps one or two exceptions involving very large amounts of money, they have sued the business involved and not the end user.  You have a vastly better chance of being hit by lightning than suffering a loss from a PP transaction where you followed through on your end of the deal if you use the above steps.

Pedantic arguments aside, if you aren't stupid, dealing with this or any other service can be as close to risk-free as dealing with anyone in the real world allows.

So basically your job in this thread is to spread FUD and hope people get tired of repeating the truth. You must not know me very well. Responded to your list for you.

Right, last time I signed up for Paypal, it asked me for my IP only and had no idea what my name, address, phone number, etc was.

You're actually recommending people make a fraudulent account that cannot be verified and risk losing *all* their money. Why would anyone take any advice from you after that point?

This used to work back in 2009 and is thus plastered all over hacker forums as the "scammer solution" (which is probably where you found it). Paypal has actually partnered with NETSPEND (http://www.americanbanker.com/issues/176_212/netspend-paypal-prepaid-card-1043729-1.html) since then, and here is what Paypal has to say about using NETSPEND to verify your accounts:


See above.

Your advice is literally misleading people to create fraudulent accounts and you're here to try and convince me that something isn't a scam. Why don't you stop spreading FUD and just wait like the rest of us for the clock to tick down so we can all see if CoinGator is a scam or not instead of professing that they aren't and misleading people into thinking they can ever, ever be protected from Paypal (the company takes money from bank accounts without permission on a regular basis).

That post wasn't intended to solicit a response from you, but since you took it upon yourself to respond as self-appointed FUD slinger, I thought I would reply.  Enjoy :) .

I don't know you at all.  Based upon your ignorance, general demeanor, and refusal to consider facts that directly contradict many of your statements, I have absolutely no desire to get to know you either.  In fact I can't imagine that anyone would want to know you.

Nobody said anything about creating a fraudulent account.  More ignorance, incorrect assumptions, and lies.

You obviously haven't tried it, it worked as recently as last week with a card from Advance America (issued by Netspend).

Actually, why don't you see above.  Works just fine, at least with the Advance America cards which are Netspend issued.

See above.  Nothing I have said has anything to do with creating a fraudulent account, you just happen to have fraud on your mind 24/7 apparently.  No one is trying to convince you of anything, as you quite clearly live in your own impenetrable alternate reality.

It is not only possible, but quite easy to keep PayPal at arm's length (see my original post) if you have a modicum of intelligence.  Since you find it so difficult, perhaps you don't meet this requirement.

i love the internet  ::)

I love it, its safe and fast. I used it 3 times /for now :)

Any expectations of being back up before the weekend?

Ruh roh.. CoinGator, what state is your paypal account's address attached to?

*Knock Knock Knock*

CoinGater

*Knock Knock Knock*

CoinGater

*Knock Knock Knock*

CoinGater

...any chances of opening back up before the weekend? ty ty! :D

hmm...alrighty well...how about the state of Washington? Yay or Nay?

Thank you very much for your reply :D

Did Paypal close your account already? Jesus christ that was fast.

Oh well if that's all you're worried about, use a different country's paypal. That's not the least of the problems though.

Yea, the US has built up a pretty nice scam for themselves. They get to keep mom'n'pop shops down, and only allow the people with the most to lose to operate (so that they are nice and complacent). Like I said though, Paypal themselves solved that one by incorporating in Singapore and not serving Singaporean citizens. There are always ways around it, but using Paypal as a way to buy bitcoins is the problem, not the MSB licensing imo. At least now I don't need to bump this thread with timers.

Good luck on any other endeavors here in the community, you might be surprised to see even me supporting a few of them if they have sound business models that don't require trust etc.

Here is a little tidbit from https://new.bitinstant.com/whatwedo:

"BitInstant acts as an agent of its partners in all states in which its partners hold a current money transmitter license. In the limited states where BitInstant's partners do not currently have a required money transmitter license, BitInstant will not act as an agent of it's partners and may rely upon other payment methods to legally fulfill Bitcoin purchase orders."

In other words, they aren't MSB's either.  They are relying on the MSB licenses of Moneygram (via ZipZap) and PayPal.  By that logic, since PayPal is licensed, your business should be fine.  My guess is that BitInstant has better lawyers than CoinGator (and most other fledgling Bitcoin enterprises) so you may want to at least field this argument with a lawyer.

http://www.reddit.com/r/Bitcoin/comments/1g23w2/paypal_email_to_employees_policy_regarding_bitcoin/

Well, somehow they are getting away with it and are not licensed. All I'm saying.

Is there a way to get registered in just one or two states, or is it all or nothing?

You can register state-wide, but then you need to get proof from each customer that they don't live outside that state, and risk losing your license, fines and imprisonment if you're caught doing business with any customers outside the states you're licensed in.


http://www.fincen.gov/financial_institutions/msb/msbstateselector.html

BitInstant is registered as a money services business. https://mega.co.nz/#!E99RzY6B!Mol5t0UtPPLb9epFgbgxrhojhfcrk41W51Bybp0YsXs

That's crazy. They aren't even that strict against casinos. Ex. it's illegal to gamble but you can go to another state to do it, and they even take down all your information and there's nothing done to stop it.

It is crazy, it is a scam, it's designed to keep small businesses (who are not so easily influenced by politicians) out of the mix. It's kind of like what is happening in Bitcoin with all these big shouldered businesses, "foundations", and boys clubs. The US government only cares about you if you can make them a profit, and even then only if you're a pushover to their policies. Just look at recently passed crowd funding legislation if you're in the mood to vomit.

Happen to have a link to a good article/overview of the crowd-funding legislation? The last thing I heard/read was a few weeks ago and it just dealt with making it illegal to do crowd-funding for equity.

Here's a pretty good, up-to-date writeup that explains the gist of it.

http://www.forbes.com/sites/deborahljacobs/2013/04/17/the-trouble-with-crowdfunding/

Thanks Matthew! That's pretty crazy. If you're going to crowd-fund you pretty much have to get an accountant/lawyer involved, o.o. This means you lose a (possibly large) portion of the funds that are raised!

BTW, for anyone else who wants a tl;dr, check out this image below. The second column is the one that matters (and first so you know what it's referring to):

http://b-i.forbesimg.com/deborahljacobs/files/2013/04/CrowdfundingArticlechart_BrianKorn4.jpg

Do they hold individual state licenses as well?  If they did, why would they publish such statements about "acting as agents" of other state licensees?

That is something you'd need to ask BitInstant. I am not affiliated with them.

Thanks for your efforts Matthew. I'm sure there are many newbies that have taken your words of warning seriously, despite not being able to post in this thread.

crazylikeafox is 100% right. PayPal is not a bank in the US. In fact, they fight tooth and nail to NOT be regulated like a bank. They are not a gov't. entity either. Lying to them is totally legal as long as you are not getting the PP debit card involved (because that requires a SSN.) The topic of "stealth accounts" has been extensively studied before in other online communities.

As for what specific vcc's and vba's work, that varies all the time. What worked last year may not work now. Just gotta keep up with the developments.

I wasn't aware of this. It would help explain why they screw over so many people though.

With bounds of class action lawsuits against them, all settled out of court to avoid being shut down. (pro-tip: Don't settle or be a part of a class action suit because it skirts judgements and keeps you from suing them again when they do the same thing in the future)

I haven't seen anything about class actions against them, o.o.

And I don't think that being part of one (or accepting a settlement) allows them to re-commit the crime in the future. The same way you can't use someone's past as, say a scammer, in court against them to prove they are scamming again.

http://paypalsucks.com

I've been to that site before, long ago, but only read articles from others detailing their experience. Just saw the lawsuit page!

http://www.screw-paypal.com/paypal_lawsuits.html

Reading through that... they were somehow found "not guilty" of any of the things they were sued for. I don't see HOW.

What kind of traffic / money did you guys get while you were open?

Why did you close?

Issues with being able to run the business legally in the US (and therefore problems with Paypal). I'm wondering if people outside the US would have the same problems though...?

Depends what is the exact issue with paypal. But probably fine outside US.

The problem is that PayPal says if you trade BTC for fiat or fiat for BTC, you have to register as a money transmitter (which was estimated at $250k earlier in this thread).

I don't think it was PayPal that says you need to register as a money transmitter...its just the general law...that you need to register as a money transmitter...PayPal doesn't really care one way or the other. I thought the $250k was just for the fees to become a 'transmitter'...? But maybe I read it wrong earlier...?

There was a post on Reddit that came from a PP employee showing that they are told to ban/deactivate accounts that are allowing BTC -> fiat -> BTC trades without a proper transmitter license. I don't know where it is off the top of my head but someone else might.

Those "I got an email from.." posts cannot be verified an attempts to do so are ignored usually so take those with a grain of salt and don't assume they are legit.

Oh, it was a scanned document that was supposedly passed down to employees... could still be faked but never know.

ooo ic ic...ty ty!

Sorry to open a 2 week old thread but I actually got a phone call from PayPal about me selling .25 bitcoins and receiving money for it through them.  They said that their policy is against any currency exchange and they see bitcoins as a real currency.  I had to print off a statement and have it notarized and fax it back to them stating that I will never do it again.  And if I did they will deactivate my account.

I'm not sure.  I was just commenting on what the others was saying about PayPal not allowing purchases and trades.

it seems the site is under new management, has anyone tested it?

Hello, I am the new owner of Coin Gator. We have had several new orders since my acquisition. If anyone has any questions, feel free to post in here or send me a message. All payments are processing within 4 hours (as long as its from 6:30AM-11:00PM EST). Im currently developing a system to automatically process payments so it does not have to be done manually.

Old Coin Gator couldn't process orders from Washington state...can you?

Yea, we will process orders in Washington state.

I don't know if this has been discussed in this thread or not.  Why use PayPal instead of Dwolla?  It seems like Dwolla is a much more "friendly" option when it comes to exchanging fiat for BTC.  As an added bonus, it's a lot cheaper as well.

We are currently planning on implementing Dwolla as a payout method among others in the very near future.

We have recently implemented both Dwolla and MoneyPak as payment options!

site down?

Didn't receive my payment 17 hours after my bitcoins sent. Sigh....

Update: Received my payment after 30 hours. Hmm..

We apologize about the late payment, due to the recent price increase our volume has slowed down our processing. We are happy to announce we are caught up and operating at our normal speed. Please accept a discounted exchange rate for your next transaction if you decide to use our service again. Just email our sales email (sales'at'coingator.com) with this link.

Is this CoinGator working now?

We are down for maintenance right now and will be back soon.

Can you update me, when you come back live?

No problem, we will let you know as soon as we are live. Expecting sometime this coming week.

Whats stopping you from making a chargeback and keeping our btc as well as your money?

Nothing. Coingator is a scam.

Makes sense. I heard some good things about CG but im probably never going to use it!

Why do you accuse CoinGator of being a scam? Have you experienced any problems with the service?

Running a honest and trustworthy business is the key to long term success. Why would we chargeback a small amount of money, have a small financial gain and lose all trust with the Bitcoin community while losing all potential future business? Running an honest exchange has limitless future potential, and we have large plans in the works. Please let us know if you have anymore questions.

I think COINGATOR is a scam, at first I invested US$30  then after 2 days it become US$39 and it was successfully transferred to my BTC wallet, Then I tried to invest again just to know if still works I tried to invest again the US$30 and then I tried to withdraw it again but with no success it always comesback to the account balance.Dashboard  and take not I;ve been sending them email about it but the only reply from them was this.   even my referral commission I didn't get. So stay away from this COINGATOR. Why do I need to Re invest $200 just to get my US$41.70?


You have requested to withdraw $41.70.
Request IP address is ,,,,,,


Thank you.
coingator.co
https://coingator.co




admin@coingator.co
Thu, Jul 11, 6:08 PM (11 days ago)
to me

Reinvest 200$ because your account is not in instantly withdrawal and if you do withdrawal once and its return back then .contact us .not repeating it again.

Thanks
Admin@coingator.co
Happy earnings

Thursday, 11 July 2019, 10:56am +01:00 from admin@coingator.co: