Bitcoin Forum

Most recent update, they unlocked the account. Thanks for the support.



Original post follows.




Yesterday I got my mt gox acc locked. I thought it was strange since I barely use the service and put a few hundred a month through it. I wasn't passing any limits or moving any amount of money that matters. Well today I got a reply to my support ticket, here it is.


This is the first time BTC has entered my acc since the linode hacks. It was less than $150 and it was payments from customers all over the world. So of course there might be some tainted coins in there but I suspect the percent of them would be very low. I also bet any of you that have accepted payments in the last few weeks will have the same small percent of taint. Of course Mt gox sees this is a great opportunity to shit on the community when it's down, and steal from us. It's obvious they are using this as an excuse to lock accounts based on the chance they won't verify, then profit. Nice business practices there.

Are they even allowed to do this? I'm sure their EULA says they can, right after they sacrifice your firstborn and empty your bank account because of a typo, but legally? They think they can say what coins are good or bad? How could merchants accept payments if this is the case? It's the same as a charge back just through different means.

They may or may not be able to do that legally however it will take a lawsuit to find out.  So far any seizures they have done haven't been worth the effort for anyone to contest them.  The fact that they are in Japan and most of their customers are not in Japan hasn't helped.

Eventually I would suspect they will be sued and if found in violation hopefully get slammed with some massive punitive damages on top of actual damages. 

I can't see how even the most forced reading of KYC or AML laws requires them to track tainted coins and if they did what is "tainted"?  Did Bitcoinica file a police report?  If not then based on what due process are they even considering the coins stolen?  Because an anonymous person (no offense Zou) on an anonymous message board said their anonymous funds were stolen.

Mt Gox.  I had 783901237129037289312701389 coins stolen 9 seconds ago.  I will send you some addresses please comply with "the law" and block all the tainted coinz and stuff.

Complying with the law is one thing, being the Bitcoin Police is another.  Someday I expect a lawsuit but it likely won't happen until they fuck over the wrong person (someone with both the means and opportunity to strike back).

I'm pretty sure they are looking to get everyone verified at any cost, thus the constant stream of AML docs required for petty things like this. Although I find it useful that they are bothering to even look into where the coins came from, it could be as simple as locking the account and asking the user that deposited them and then unlocking it again, no AML bs needed.

This is ridiculous. MtGox is turning into Microsoft.

MS stole your tainted money?

I'm only dealing with Intersango now, though I'd like to know of their stance about this to be honest.

MtGox can go fuck themselves.

I don't have either tainted money or MS, but if you'd stop beating your wife for five minutes you'd notice MS also uses their customer's resources to promote their boneheaded take on politics.

This is turning insane. MtGox is shooting his foot because everybody who has accepted some payment in March can have tainted coins in a low percent. So the more topics starting with "MTGox has frozen my account", the less people will use that changer.


Dear MtGox workers:

- How many "tainted" coins make my address open to freeze? Is it a percentage or more than a number of coins?

- Are you going to increase the crimes that involve Bitcoins in order to taint them? Please, take a look at the next transaction:

http://blockexplorer.com/tx/9d170708462dbeac1d4fedc849c1fa91f0da52e6f2d2dae1baf2d797cc9a12d6#i4791420

I think this transaction proves that "Lupus" payed some coins for a sexual service from a user called "TrAnnY", so please taint them too.

By the way, they were fine with me selling off my "tainted" BTC on their market, so they get their commission. My account only got frozen after I exchanged the coins for USD and tried to withdrawal so good luck to whoever bought my coins!

Mt Gox sells tainted coins then locks your account for having them.

If I don't verify the acc how much do you think bitcoinica will get of those funds? I mean that's why they're doing this right? Like my jokes? I'll be here all night.

I think people need to leave Gox.  A while ago they shut down my account without any warning and stole the 25 cents I had in there (at least I assume that's what happened as no combination of email/password worked, and attempts to recover my password were hopelessly in vain).  I never even found out this had happened until I tried logging back in one day.  

Now, I don't care about the 25 cents (although, this was USD not BTC).  I've never done heavy trading on Gox and never will -- the 25 cents was a test.  But seriously, Gox easily trumps almost every other exchange in terms of horrible customer service and shadiness based upon the dozens of threads I've seen flaming them.  And, I believe they stole from me -- a quarter.  A fucking quarter.  Seriously?  Are their profit margins so slim that they 1) can't hire extra customer support staff and 2) need to steal quarters from the other side of the globe?

To me, their business appears as ugly as Karpeles's face.  And goddamn is it ugly.

Lol. You don't even know what their stance on it is but you're so sure to associate yourself with them?


https://i.imgur.com/vCWiU.jpg

No that I'm protecting MtGox but are you sure it was all about tainted coins and not something else?

+1

They don't block tainted coins. They block suspicious people.

So far no records of this kind of policy.

Wish they came forward and explicitly say that they won't do any MtGoxing.

This is the attitude they love and thrive on.

Did you read the quote from them in my first post. I mean even if you were right isn't they reply they gave me pretty shady considering as you say, they don't block tainted coins? (hint: they do)

How suspicious is a US based account moving three digits a month from same ip (Time Warner)

No matter what I say people with your mentality will think I was the problem. It's ok I thought exactly the same way until it happened to me.

Au contrare. I have been the greatest publicly vocal Mt Gox detractor. In a situation where coins were stolen from Linode and they want to find out who did it though, I support them.

It sounds noble sure.

From where I'm sitting I can see how ridiculous the claim is that I have anything to do with linode stuff. Too bad I don't really have a way to prove that to the community here. Though I probably wouldn't be here posting all this from my home IP (same one I use at mt gox, theymos can see it's a Time Warner IP from the states) You can read my posts here and gather I'm probably not smart enough to pull it off. I accepted payment (from many different people) so it's possible I have some percent of stolen coins but I can't control that. The whole point of BTC was this couldn't happen. My customers paying in stolen funds then screwing me over, that is.

Watch out, big baller trying to Launder $150 here... I mean if I was trying to cash out some bigger number with a high percent of taint maybe I could understand, but not this.

Let's not argue the MtGox issues since they are ripe with shadiness. Let's argue the Linode hack. Do you support finding out who hacked it?

Not this way.

The people give the authority to investigate crimes to the Police.  They still must abide by due process.  An entity simply making themselves final arbiter without due process is tyranny. 

It isn't illegal. While I do agree that they are going about it in a somewhat heavy handed manner (requiring verification/AML) and generally botching the process, I support the effort to trace back where the coins came from.

It is obvious that the perp is doing a very good job of disposing of his  the stolen coins effectively, but all criminals slip up somewhere, and maybe the gox will be the one to point out who it is.

Of course I would support them finding out who hacked it. I use bitcoinica as well (now even more since I'm never touching gox again) and I want them to stick around.

But you can't lock accs on people trying to spend the coins. Having the coins isn't proof of anything.  Especially only $150 worth. (that would be 100% of my customers paid in stolen coins, highly unlikely)  Ironically the only reason I even bothered to start accepting BTC is chargebacks (which for all intents and purposes, this is) can't happen with btc. _{*unless you use Mt Gox}

I feel your pain, I really do. Since they are not denying you anything and simply asking for verification, there is not much energy I can spend on defending you though.

MtGox is quickly becoming the Paypal that brought most of us to Bitcoin in the first place, but let's wait a bit until they start locking accounts cold instead of just asking for verification. When they hold your money and never let it go, give me a call.

No, clue what's going on... But Matthew N. Wright your fucking profile pic is hilarious.

Here you are our official answer (See Reddit) on this matter :

--------------------------------------
The word "frozen" is inadequate.

Our automatic system tracked coins we suspect stolen from another point, which means we are likely to get a request from law enforcement to identify you (only within the scope of a current and valid investigation). If we don't have your ID on file, we require one.

We are not to decide if you are allowed or not to sell the coins you deposit on MtGox. This is your own responsibility, taken on your own name. This is another reason we need to have an ID on file that matches your account in this specific case.

As soon as you submit the required documents for verification, you can do whatever you want with the funds on your account. Note that not submitting an ID doesn't mean nothing will happen. If a criminal investigation is indeed in progress, we won't be able to deny access to other identifying records such as IP address and others. This doesn't mean either we will provide private details to just any court either.

--------------------------------------

We understand your position and we even have a solution for you, so please do not hesitate to send us your AML document as soon as possible. We are sure that you are an honest person doing honest business and that the "tainted" coins arrived in your hands without you noticing they were stolen. Our goal here is not to bother you, our goal is to track down who stole these coins and make sure to help people to recover their coins and prevent others to have their coins stolen.

I'm not sending any scanned documents because frankly I do not trust you with them. You have demonstrated incompetence in securing customer data in the past. Now I feel as though you are extorting me for information. The reasons given by Tux are highly suspicious as well. With no proof of any investigation or need for IDs. If you do not want to do business with unverified accounts don't let them make accounts or deposit.

It is a legal obligation for us, or anyone else for that matter to report crimes when one has been committed, I am not talking about you here I am just referring to the "Linode" case. Since this crime has been reported here in Japan we are not authorized to publicly talk about the details of the investigation, however we have all the proper paperwork done here and ready to show once we are allowed too.
Like everyone now who's trading on Mt.Gox you have agreed to our TOS and if you do not want to comply with them and our AML policy so be it, it is your choice, but you will have to understand that legally speaking until your account has not been clear we cannot do much.


It seems that you do not understand the basic of a verified account and its needs. Here you are the details of AML and its needs https://bitcointalk.org/index.php?topic=60074.msg716220#msg716220
In a perfect world, people do not need to be AML verified to use Mt.Gox exchange, however in order to protect you/our customer assets we need to check for "strange" behaviors and prevent people to have their assets stolen.

You are opening Pandora's box.

There isn't an easy way of following every coin you have in the wallet and is almost impossible to prove that the tainted coins you are holding weren't stolen by yourself.

So everybody who has bought coins in March can have his account frozen in MtGox and you are not giving us an easy way to prevent this. Not tainted list, neither an easy way to review the path followed by the coins. You are only offering the risk of being persecuted and your coins seized if we use MtGox service.

So I claim here don't use MtGox.

It's still a serious flaw if you are performing any checks at all beyond a direct transaction of *allegedly* stolen bitcoins.

There is no way someone would inform you that coins at a certain address were stolen. Your addresses are largely private. The only way you can ever know that is by actively performing checks yourselves.

Seriously considering bitcoin's viability at all at this point, after seeing that the community consensus about morality and the way bitcoin works make it an inviable couple.

You are making a very good point here, and I will check with my colleagues here what can be done and hopefully we could come with something.

How about coming with the money and giving it back to his owner? especially as you've already been selling his coins.

That's actually stealing.

Is this seriously the first time you geniuses thought about this problem? And you think it's ok to lock people's accounts without notification and then hold their money hostage until they comply with your every whim, even though NOTHING you're doing can ever be used to prove someone stole coins?

I have a lot of faith in the fundamentals of bitcoin, but it's certainly possible that irresponsible actions and tyrannical bullying from an exchange with too much market-share could indeed kill it. I was hoping you guys were smarter than that, seeing as how you supposedly have a large bitcoin investment yourself. But it looks like I was wrong.

I really don't care if you check anything. Your company has become all what we fight against when some of us adopted Bitcoins. As a 80% exchanging transaction controller you have turned into a slow-big-fat-ass target for governments and hackers.

What do you expect will happen when your company officially announce that not all coins have the same value?

You, my sir, are attacking and potentially a risk to the best freedom currency I know.
And that is why I wish your extinction.

What do you mean by one of your addresses? that someone would transfer their stolen stash to addresses you give when creating an intersango account?

If that's the condition I doubt it will ever happen. It's pretty safe to assume that someone wouldn't transfer stolen coins to an address of an exchange, to which they have no private keys. Especially someone with the capability to perform the Linode attack.

Otherwise, if it's sent through a hoop it's safe to assume he was innocent or guilty and very stupid. If in doubt, what do you do?

You can also have people intentionally tainting random addresses. There are no private active addresses, as you surely know. Any address with any number of transactions is in the blockchain.

Because of these reasons there is no such thing as obviously stolen coins. The best you have is "likely stolen coins."

Your required by law to freeze accounts based on someone saying something on a forum.

In that case MtGox stole 800,000 coins from me.  I will get you the addresses in a few minutes.  Please freeze any account which have funds coming from one of "my" stolen addresses.

Thank you for your assistance.

Bullshit. You are only hurting innocent people.

Look, I don't have programming skills. I don't have too much money. I don't live in a high end tecnological country. But I do love freedom and have determination.

So I can assure both of you that the same day the tainted coins list is published I will be starting a bounty searching for someone to develope a mining software whose only purpose will be melting the block reward with the huge fees from a fake transaction with a mix of good and tainted coins.

The shitty future you are going to have tainting is:

- Donation addresses shotgun-spreaded with tainted coins.
- P2pool miners receiving some tainted coins as transaction fees and getting their GOX-intersango accounts seized.
- Deepbit exceeding the 50% of mining network.
- Mistery miner 0Tx-blocking.
- Mixinglaundry services.
- Coinmelting companies with the new developed "meltmining" software.

Please supply a reference to the law to which you refer.

All countries have the same law? Who would have thought it.

And what do you mean by "an address that happens to be in your system"?

Nefario - as pointed out by the above poster, your legal claims sound pretty outlandish. But I am disappointed you do not see the larger issues with adopting this policy.

1) The person contacting you can never prove their claim is true.
2) The person who transferred money into your system is likely unaware - and proving otherwise is impossible for you. How would an innocent person who received a bitcoin transfer into one of their addresses (something they have NO control over) even know this had happened? Users have NO INFORMATION about which coins you guys are deciding to outlaw.
3) The entire concept of "tainted coins" can destroy the value of bitcoin. Exchanges continuing down this path are reprehensible.

Today they replied to my second support ticket and demands that they release my funds:



As expected an "upload your docs or go fuck yourself" Of course "suspicious activity" is left undefined and completely up to them. They also ignore all inquires about what percent of the coins were "tainted."

I also love the mt gox support reply in this thread linking to why they require verification, yet I was completely within their guidelines for unverified accounts according to the link they posted here. https://bitcointalk.org/index.php?topic=60074.msg716220#msg716220


I want to thank the community for the support in this thread. Even though gox has a lawyered response for everything you guys see though it and for what it really is. I appreciate it.

I think they are probably targeting people from certain places and making them verify right after the deposit. Knowing there's a decent chance they won't bother thus forfeiting the account. I wouldn't be surprised if they had algorithms in place to do this all automatically. Then yes verifying accounts does turn into a profit. My case is a good example of it.

Assuming there's legal precedent to treat bitcoin the same as physical goods which can be stolen (which there isn't as of yet), you still have NO PROOF that those bitcoins were stolen.

Likewise, the person transferring into your accounts cannot provide proof they don't have stolen coins. People may have plenty of completely legitimate reasons for not wanting to give you all kinds of personal ID, though.

This guy was NOT VIOLATING AML REGULATIONS, and his money is being held hostage. He has not done anything "suspicious" - he's merely been using bitcoin as it was meant to be used, as digital cash.

Bottom line - users have to trust the exchanges not to pull this kind of shenanigans - and if you agree with Mt.Gox's shady behaviour here, you can't be trusted either. Which is very disappointing - because we need alternatives to MtGox when they start with this incredibly misguided nonsense.

Exactly. Bitcoins aren't physical goods. They aren't even digital goods (data). They are more like points in a game, existing only in the minds of the participants. The rules of this game say that whoever can provide a valid, signed transaction controls the bitcoins. Within the rules of the bitcoin system, there is no such thing as stolen bitcoins. If you have the private key, however it may have been obtained, you are a legitimate (co-)owner. This is not to say that no crime has occurred, but that crime--unauthorized access to the computer holding the private key--is independent of the bitcoin system.

The real problem is that the "decentralized" bitcoin system can essentially be held hostage to the demands of a single organization (MtGox) involved in over 80% of all bitcoin transactions. We need more diversity. Given a reasonable amount of competition, no exchange could afford to pull stunts like this. More to the point, we need to rely less on exchanging BTC and USD and instead develop a proper market involving only non-monetary goods and BTC. Currency exchange should be on the fringe, not front and center.

Agreed. Unfortunately, there is little chance of this happening.

Yes, to get to this more ideal situation, we will have to survive this intermediate period, in which we will have some dependence on exchanges.

This is the first time I've been seriously worried about Bitcoin's future. I still can't believe exchanges could be so short-sighted as to behave in this manner.

Here's a link to the Theft Act (http://www.legislation.gov.uk/ukpga/1968/60), and here's an excerpt:


Even if Bitcoin is classified as "goods", I don't see anything in the Theft Act that says AML procedures make any difference.

Nefario please drop the strawman.

Nobody is saying Mt.Gox is vioalting their own terms and conditions.  They wrote their own fraking terms and conditions so I would hope they don't violate them ... and if they do they can just change them.  Nobody is also saying Mt.Gox should willfully break the law.

So please please please for the love of Satoshi stop using those two strawmen.

However between willfully breaking the law <-----------------------------------> asinine response to anoymous claims online

there has to be a place where common sense prevails.

Nothing under the law requires this level of scrutiny based on internet forum claims.  Some anonymous person on the internet said that another anonymous person took some digital keys which belong to him.  The coins were then transfered through dozens (actually now hundreds) of accounts and someone with a token amount of coins and likely an even smaller token amount of "tainted coins" to provide personal information because "the law" (as if some generical universal law exists) requires it.

BULL FRAKING CRAP!

Banks don't even do that kind of due diligence on small cash deposits. It is complete and utter nonsense.  Just because Mt.Gox put it in their terms and conditions doesn't make it right.  AML has nothing to do with stolen funds especially not unproven funds back up by nothing more than an internet post (BTW I think Zou is telling the truth but it has no relevence under the law).

Still your nonsensical and onesided defense of the indefensible has saved me the trouble of ever using your exchange.

WRONG. In certain countries they're asking for a notarized form of identification - one user was saying that the cost was $50. However, even if it was free, as pointed out by the OP of this thread, it's not their right to demand it. The AML TOS you're referring to was not the issue here, because the OP was not in violation, as the OP already stated and I already repeated.

Good job ignoring the very important point that your local laws for physical goods and even wire fraud have not ever been shown to apply to bitcoin.

The ethical problem is that they allow the deposits and transactions to occur, THEN lock the account. This "suspicious activity" is, as was already pointed out, completely undefined. As applied it appears that all bitcoin transactions can also be called "suspicious activity."

Please, continue to argue your head off - you're just making your exchange look bad. You've avoided all the real problems we've pointed out with your arguments, and you clearly think extortion is fine. Great! At least people can see it before they deposit money or BTC with you.

I'm with him.

+1

Imagine walking into a pawn shop; you have a watch to sell, and so you place it on the counter.  The pawn shop owner then confiscates the watch and says, "I don't know, you seem a little fishy to me."  He then asks you for a driver's license and telephone number and tells you that before he can consider letting you pawn the watch, he needs to conduct an investigation to make sure that you aren't a criminal.

At this point, of course, you naturally ask for your watch back as you don't like the glare of scrutiny coming from the pawn shop owner.  The pawn shop owner tells you, "I'm sorry, I can't give the watch back to you either.  After all, you might be a criminal.  Either provide the necessary identification or I retain the right to keep your watch."  By this point, you're trying to argue reasonably with the pawn show owner -- surely he doesn't do this with EVERY customer, does he?  It's your watch and this son of a bitch is telling you that it might not be, or, even if it is, that perhaps you didn't acquire it legally. 

And what evidence does he have to support his claims?  Nothing, zip, nada -- only a personal judgment that the possibility of fraud exists, and that the existence of the possibility alone is enough justification to confiscate your watch.

Wow. You seem to think that a forum is the one and only means of communicating the information, and that that makes it automatically invalid?
The ability to prove that they are his with a signmessage doesn't occur to you, nor the fact that the transaction log is cryptographically irreversible?

Why not? A clear and precise link from the beginning of where the issue started, to wherever they are now is pretty hard  impossible to argue with, I'd say.


OT, why is it taking so damn long for Bitcoin to get its day in court?

Not taking sides, but many times in my life I've had large bills with ink on them like the one pictured below that offers proof that at one time that bill was illegally obtained. I've even had such billes given to me by bank tellers.

http://www.cointalk.com/attachments/155429d1326395017t-005.jpg

Thats crazy, Im in South Africa and they our banks wont even accept notes with small tears in it. Probably why our Banks didnt go belly up with the recent financial crisis ;)

SignMessage doesn't prove anything.

Hint: the thief can SignMessage now also.

Still that is the job of POLICE.  If the POLICE investigated determined the claim was valid and demanded Mt.Gox provide ID of any depositing stolen coins that would be different.  Nothing indicates that is the case.

Not to take sides, but I don't think this particular point is relevant. Courts handle bizarre concepts all the time.

It's not hard to imagine becoming the first test case and losing one's livelihood over it. Would you be willing to pay off any court-ordered fines in the unlikely event of their prosecution?

It does when you sign a message with an uncompromised key from an INPUT that goes to an output that is considered compromised. Take for example MtGox's famous 500K wallet - if the key were stolen, they could prove ownership by signing a message using an uncompromsed key that was previously used to add funds to the big fat wallet.

Now if the addresses were used for customer deposits, this might not be reliable, as anyone could have had a direct input transaction. But if the wallet were used only internally, or if there were other database records that correlated with huge deposits as well as the keys, then I would consider this method reliable. For instance, an archived backup of a database with records of a large internal transaction that went directly to a compromised key.

Who says the POLICE are not asking for the info? MtGox has repeatedly stated that they will comply with investigations of this sort, and just because they don't come right out and say that the cops are currently asking for the info doesn't mean that it isn't happening. Furthermore, the investigators don't know shit about bitcoin, and it is certain that they would just ask for as much evidence as could be mustered in bulk, instead of doing their own gumshoe work. I expect that this will remain the status quo for quite a while yet.

Just get verified, dude, no big deal.

That is the whole point.  We don't know.

If Mt.Gox policy was "we will freeze account and seek account information when facing court order or legislative requirement" we wouldn't even be having this discussion.

there policy is they will freeze accounts which may seem suspicious based on whatever they feel is suspicious and release funds based on whatever they decide is good enough.

The first is called due process, the second is called bullshit.

Say I sold you a video card and you paid me then I said wait these coins are tainted I need to freeze them based on my internal policy of coins looking suspicious and stuff.  I then demand you provide me say photocpies of your ID, your mothers maiden name, your SSN, full address, phone numbers and everything else I need to commit identity fraud.   When you say no well I guess I need to keep those funds frozen.  They Police might want them.  Sorry.

You would be getting me a scammer tag overnight.  However Mt.Gox does the same thing and people fall in line and say "they have to".  Really?

I cede to you that that policy is BS, and should be changed to how you suggest above.

Dear Mt.Gox,

why do you allow unverified people to trade money for BTC, if you're trying to help the cops with "tainted" coins? I think there are a lot of "tainted" coins....

There are not many tainted coins. Except during big events such as the Linode hack, we rarely see any tainted coin hit us at all.

please define term "tainted coin" exactly!
i would love to have a way to check any deposit beforehand.

It is a secret list.   You will find out when your account is frozen.

What could possibly go wrong with unelected third parties using secret internal list to seize the property of others without oversight or accountability? 

Guys, I don’t understand all the fuss about this.

Everybody should know by now what MtGox’s policy is on this. If you are not okay with verifying your account if such a thing happens, you should simply use another exchange.

You know, free market and all. Noone is forcing you to use MtGox.

I hope every customer in the Bitcoin forums see that you have a hidden dark list and that you are using it to seize coins at your will.

- Where can we check that tainted list? --> no answer
- How many % tainted coins makes your account useless? --> no answer
- Where can we download an easy software to check our addresses in order to grant use your exchanger in a secure way --> no answer
- What can a user do if finds some tainted coins in his wallet? --> no answer

You are only spreading fear and moving away new users from you and from our currency.

That's the point of this thread. Everyone does -not- know this. But your conclusion is absolutely correct.

Here's another interesting fact I forgot to bring up that shows what a joke this whole situation is.

The same day I deposited BTC into gox that got my account locked, I deposited the same amount from the same wallet from the same payments/customers to my unverified bitcoinica account. That deposit went through with no problems.

Maybe bitcoinica didn't use the same coins  ???  ;)

btw.: Have fun getting zhoutonged!


+1 - but I think people are ignoring the ToS like EULAs....

"Tainted" means we have received a request for investigation from the Japanese law enforcement (either the CyberPolice, or an international investigation backed by a court). In some cases we may cooperate with other law enforcement around the world on a case by case basis. As of today there is only one active case, and in the past 12 months, we have marked some bitcoins on only 3 occasions.

Anyway, laws in most countries means that any exchange operating legally is required to act upon knowledge of stolen properties, and prevent to the best of their ability resell of such (failure to do so causes the exchange to be considered accomplice and can cause the people running it to face various charges depending on the context). That doesn't mean that just anyone can come and see us asking to get bitcoins marked. We need some proof and law enforcement to be involved.

Because a Bitcoin exchange deals with both the Bitcoin world and the current financial (legacy?) world, we have to comply with rules from both sides. This means we are fated to be hated by both bankers around the world for supporting something that aims at replacing them, and bitcoin supporters for complying with outdated regulations. Our goal is to find the right balance between both worlds and create a kind of bridge to allow for easier adoption of bitcoin (if it was totally impossible to exchange bitcoin against fiat, we'd have some issues finding Bitcoin users).

+1

does this mean that you lock an account as soon as his address has touched a fraudluent address?
at any depth?

does this mean that my coins are returned to the real owner? all? how much of them?.

i am fine that you dont decide this yourself and that you follow the law. but i'd suggest you state your position on your site. including the way you determine a "to-be-locked"-addresses and what happens to the coins itself.

thanks for your answer

We do not lock an account because of tainted coins, however we may require an ID. We may lock an account only if we have evidence the account owner is actually behind the theft, or if law enforcement have reached that conclusion and gets a court to order us to lock the account.

The coins may be returned to the real owner only if we actually caught and locked an account. If you are not the thief and act without knowledge that the coins you have are stolen, then you are "not wrong" (the place where you got the coins from is, and we may ask you where you transferred those coins from so the law enforcement can continue their investigation).
So far we have only been able to lock coins once (in 3 cases), and only a part. We cannot decide to return the coins to the original owner, a court has to decide this for us.

I'll see so we publish whatever we can publish on this next week.

thank you very much for this explanation

That is locking an account because of tainted coins though. You call it "pending review" I guess? But the end result is the same for me, I can't get my money. I didn't trust you with my information so I followed the rules for unverified and still cannot access funds. There was no LE request or proof I was related to the theft. You say "suspicious behavior" which we all know is rubbish, point to the ToS, and use confusing wording to make it seem like I'm under investigation here. It's just unethical and dishonest business practice in my opinion.

+1 we need to take our business elsewhere!  this exchange is way too big already and needs to be listening to what its customers want not the other way around.

Nefario made some comments recently where he went beyond his ability and responsibility to answer such sensitive matters on behalf of Intersango. Account freezes have never happened without an investigation and have been extremely rare. They have only happened when someone flagrantly attempted to steal from us or others using our site in an illegal manner.

Incident 1)
A user was advertising a service telling would be customers of his to send funds to Intersango referencing his personal reference code. Users would make a fraudulent bank payment to our bank. His practices were easily seen to be beyond suspicious. (Having many different people, with many different bank accounts deposit to the same Intersango account is already against our policy).

Incident 2)
A person contacted us stating that his personal bank account was hacked into and a SEPA transfer was sent to our business. He was able to state the exact amount of the transfer and the name of the transfer. These details alone prove that he has privileged information as to the transfer and isn't someone just yelling "tainted coins".

If you need more details you can contact the support. If you do not want to have to give your ID to anyone, you should limit yourself to Bitcoin and never touch USD/EUR/etc, as those kind of money also come with all kinds of regulations, which we are required to follow. We do not have any "rule for unverified", and while usage of our service usually do not require verification (as long as we stay within normal parameters), anything unusual may trigger a ID verification requirement.

Now, you're talking about "suspicious behavior", which can usually be clarified by contacting the support. In those case, we may need to be able to show your ID to law enforcement or (in case of EUR/USD/etc) see the funds taken back by the bank/financial partner/law enforcement, so we cannot allow deposited funds to be withdrawn, at least until we can confirm your ID.

Good to know. Is the two item list exhaustive?

Sounds good to me and I'm not easy to please.

About 2), did you just send the money back (- cost) to the account of origin? looks like a simple solution.

Cheers.

I intended to use Gox tomorrow (Monday 03/26) to exchange some USD for some BTC. Now I am concerned and likely won't use Gox with this recent news unless Mark or Staff can answer how they are blocking accounts...

Gox: Are you blocking incoming BTC (into Gox) at the border and not during trades? I mean, if I execute a trade with someone who has some "taint" do I then become tainted?

I am a Level 0 (non-AML) and intended tomorrow to move a few hundred dollars of USD into Gox (< $400), buy coins and transfer BTC out, do I pose a risk of having my account kiked if I accept a "tainted" coin via a trade? How in the hell would I know if a coin is "tainted" during a trade?

If there is the _SLIGHTEST_ chance that my account could be blocked for such activity, I would cease to use Gox. The second to last time I used Gox and tried to do a BTC withdrawal of just 200 BTC they had a "hiccup" in their system, gave me what appeared to be a valid TX ID but never pushed it onto the network. 36 hours later I found it was their hiccup, not mine...via Mark. Fortunately myself and the recipient of the coins were understanding and brushed it away.

I think it would behoove you (Gox) to explain this a little better so those of us who want nothing to do with "tainted" coins can choose how to conduct ourselves.

Thanks!

IMO, if you deposit USD, and receive coins from Mt.Gox, those coins can't be anything but "good" - you didn't deposit tainted coins.

My account is not verified, and I have moved monies in and out of Mt.Gox several times just fine. I have one outstanding small w/d that was lost in process. I am assured this will be cleared up.

Read this http://www.reddit.com/r/Bitcoin/comments/r8s4x/mt_gox_selling_tainted_coins_then_locking/c43x4yh

@556j
What's the problem in giving mtgox full id card and everything asking for identification?

If you want to remain anonymous you simply need to never touch an (online) exchange again: use only btcs and acquire them only in exchange of cash, hand to hand.

Not all exchanges are necessarily the same.

MtGox is:

- shady as fuck. Basically a scam, with ridiculous ToS to back whatever they want to come up with.
- a proven incompetent shop.

* not all exchanges want your full details/scanned docs.
* not all exchanges have ToS as ridiculous as MtGox.

Must be a great scam to consistently handle 90%+ of traded bitcoins ;)

Fine, just use the exchange that best fits your needs, then.

I suppose every business tends to comply with the regulations: the more they do, the more probability they are still around after some time.

Others can try to be more on the edge and thus better accomodating some users, but that can lead them to be more easily shut down by the autorities if/when some problem arise.

I for one, hope that every kind of exchange will pop up, for every kind of need :)

Agreed.

It certainly is a boss scam.

While on the topic of verification how MT Gox deals with corporate accounts (specifically US based LLCs and C corps)?

While I have heard this many times, and have used Intersango, and understand that they have the respect of well respected members of the community, I have serious concern about
- 1) their repeated discovery of other exchanges security flaws
combined with
- 2) the manner in which they bring this (apparently) to the public attention before alerting their competitor that they have been engaged in #1.

This is one of the first things I saw online about Intersango (in fact it was BTC-e's response to the blog post about their security flaw they sounded pissed). I have seen this at least one other time, very recently.

While this may be completely benevolent, and performed as a service to the community, it raises some red flags. Are they trying to discredit competition? Are they trying to break in? If so, why, and would my information be safe with them?

These are the types of questions that one must ask when one competitor repeatedly discovers security flaws in others. Each repetition makes the behavior more suspect.

As I would like to have an additional exchange that I truly trust, and as there seems to be some relationship (at least in overlapping people) with the GLBSE, I would like to find out the whole story here, so that I might be able to trust Intersango. (because, despite the above, they still seem to have the best rep here!)

MtGox handles ~80% of all exchange trade. When people buy bitcoins on OTC or in person or so forth that doesn't show up as exchange trade. When people buy bitcoins by renting equipment from miners that doesn't show up as exchange trade. These two markets are each larger than the exchange trade, so MtGox handles maybe 20 to 35% of "traded bitcoins", and this mostly because trading bitcoins for actual items is rare and low ticket yet. Somebody was offering to sell a house for bitcoins, and so this third market is probably going to baloon larger than MtGox's in the near future.

In short no, MtGox is not nearly as important as it makes itself out to be, nor does it have much of a future at the current rate of misbehaviour.

I can't see the contradiction. Discrediting MtGox is a service to the community at this point.

Handling ~80% of all exchange trade makes them infrastructural. It would be virtually impossible to introduce a sizeable number of new users at this point without exchanges, and they hold 80% of that capacity.

Also, that 20~35% of BTC trade already is a lot of money. So it is a great scam really.

I wasn't actually referring to Mt.Gox in that paragraph.

What other competition are you talking about?

following & to see Gox's further info re their policy on this, like how much money do they have locked down atm - either because they believe it may once have been stolen or because people have not provided the ID that Gox requested/demanded & what is going to happen to these funds, how much money have they ever returned to those who claimed it stolen from them - if any, when Gox say that you may have to explain the where, why & from whom you received your coins just how can they prove what you say is true in this regard or not, especially if the Internet person (I've both sent & received large quantities of coins from peeps that I have no clue about in rl - just a forum name) you claim to have received the funds from chooses not to cooperate with the inquisition

Rather than just taking an opportunity to fail at discrediting Mt.Gox by quoting my post out of context, maybe you could have read it?

I've read it and I don't see what's the point to be honest.

You don't need to trust Intersango to have your ID, they don't have mine. So what's the point again?

Also, didn't you imply that discrediting MtGox was somehow a bad thing?

No one said it's a scam the most I said was "dishonest and unethical business practices"

The 'conspiracy' I'm suggesting is gox uses some algorithms that looks for accounts with a high chance to not verify then lock the account "pending review". Either the person sends docs and makes it easier for gox on the regulatory side of things or they forfeit the account. It's a win/win for them. You can decide how crazy I am for thinking that way. There's multiple other posters on reddit and other forums where others have also had their accounts locked like this right after deposits.

I'm saying if you use gox and convert to USD (buy or sell) it's not if they will lock the account, it's only a matter of when. I used gox for months before they locked my account so people saying their unverified account made withdrawals without problems will be back here soon posting about their locked accounts.

Most of the things we've discovered we haven't brought to the public's attention. We have become known to be able to investigate and resolve manners much more reliably and have been paid to do penetration tests for other bitcoin exchanges.

For mtgox there were people for over a week specifically complaining that their account was hacked into. After less than 40 seconds of investigating MtGox's security, Patrick Strateman was able to verify a security flaw. We spent hours trying to contact Mark however knowing it might be a week before MtGox replied and that they could potentially have been losing 10s of thousands per hour we made an alert. This almost certainly sparked the price drop exclusive to mtgox as the person exploiting mtgox realized now he or she only had a limited time to deplete as much as they could instead of staying under the radar. We could not have known that there was another mtgox security flaw aside from the CSRF flaw which allowed someone root access.

To this day users like our friend who had their accounts hacked into with the CSRF have not been paid.

In the case of BTC-e someone specifically asked us to check a potential vulnerability. We did attempt to contact BTC-e (just like with mtgox). After being unsuccessful we reported the issue. The person who asked us to investigate was doing so because they had heard from someone else that there was a problem meaning that knowledge of a potential problem was at least wide spread.

We keep security vulnerabilities private unless we feel it is unethical to do so. One exception is when keeping it secret is completely useless as it is already public to the extent that it is likely either already being exploited or someone is actively working on exploiting it.

It is wasn't for Patrick Stratemen alone the value of a Bitcoin would, in my opinion, be at most $2.

 you mean being a real company trying to respect local laws and world AML laws is "dishonest and unethical business practices" ?

 mtgox need to have bank accounts, to have banks accepting to open ( and not close later ) a bank account for a bitcoin exchange is real hard, and you have to respect many laws, including AML laws , which means requiring Id docs for any suspect account.

I explained what I mean like 6 times now. They marked my account nothing to do with AML, suspect linode hacked coins is their excuse. I think MtGox is going above and beyond legal requirements for profit. I think they probably have a system to do this with up to hundreds of different variables to maximize profit by locking accounts most likely to not verify after deposits. That's what I think is dishonest and unethical. You can disagree with my opinion there as I have no evidence of that and never have claimed to.

So far, I would say that your tenacious refusal to submit the required info is suspicious enough to warrant an AML flag.

Isn't it retarded? It's only the people who are constantly trying to hide that have something to hide.

They go around preaching their love of anonymity to everyone, then they want to use public services like everyone else and demand that they be allowed by their own rules.

 ::)

+10 on both of the above!

Perhaps you'd like ICBIT better?
  :D

I just love that line :)

Surely anyone who cares about privacy must be a criminal  ::)

Or terrorist.

The sad thing is some people would be like "damn right".  The whole "you shouldn't care unless you got something to hide" nonsense.

Patriot Act = no problem.   You got nothing to hide unless you are terrorist.
Warrantless searches = no problem. You got nothing to hide unless you are a criminal.
Mt.Gox invasion of privacy = no problem.  You got nothing to hide unless you are a money launderer.

Anyone think that maybe some people don't want Mt.Gox to have their ID (likely in a pile of thousands of other ID poorly protected).  That an image which will give any identity thief an erection.  Remember this is the company too stupid to salt user passwords.  I mean it is understandable since per user salting was only invented in 2010 ... er wait no it wasn't it has been around since the 1960s.

We are trying to have the law enforcement agencies contacting us working with the "Bitcoin Police" (which is the most exchange-neutral entity working toward a legal bitcoin), and offload the tainted coin verification to them. It'd work a bit differently (no way for us to know which coins are tainted until they hit us) but it'd also allow other people to be part of the process easily and know they received tainted coins before spreading these.

there is no such thing as tainted coins, there are people who do not take sufficient care of their private keys & their are possible crimes committed by others to access those private keys but all coins are equal, the whole concept of tainted coins is both wrong & unworkable - it is just your (or any other make up your own rules) blacklist of what you may feel like impounding for any reason you happen to decide, all coins are equal & any attempt to second class some will fail, just like a gram of gold that may have been obtained in some manner that you may suspect is dodgy, once it is melted down & mixed with kilos of other gold & moved around in a non regulated market then it can not be blocked - just try & get being an exchange right & leave trying to be the FBI up to what a court that you are under the jurisdiction of orders you to do, if one ever does that is

just my 2c

Ah. No. Definitely not.

I have my questions when someone knows there is a presumed lack of privacy and then objects vehemently when the lack of privacy is experienced. If the rules change after the deal is made, well...I certainly understand objections!

I have my questions in most business transactions when one party wishes to remain anonymous. While in some cases I might do business anonymously, those cases are fewer than those in which I'd like to know whom it is I'm to hold responsible for the other side of the transaction.

If I ran a service that had a big potential for fraud, and I had no other way to protect myself from the other party, I'd have to insist on knowing who they are. I guess the bigger the biz, the more rote and bureaucratic it winds up being. :(


And - MagicalTux: best to have everyone in on policing coins, indeed. best to only act when you have public consensus or governmental compulsion. It's not going to do anyone any good if you police the coins and decide when to lock accounts, certainly not with your apparent marketshare. It's a recipe for bad PR at the least, and lawsuits in due course.

Edit: removed incorrect citation for the quote above

This is possibly the most retarded thing I read on this forum. And just for the record, there is a lot of retarded shit here.

Yep, quite retarded for me too   :-\

sounded like:

http://www.youtube.com/watch?v=dYrlj9VE2fg

Actually, offloading accountability to a third party sounds pretty good to me.

Well, which is more retarded, the community going to, and expecting MtGox to police coins, or MtGox going to the community for policing and telling law enforcement they must do the same?

Seems a no brainer to me.

If i ran Mt.Gox, I'd rather wash my hands of the whole notion. Who in their right mind wants to get any more involved with money laundering investigations than necessary? FFS, the BANKS are the ones who fight those regulations the most. Money laundering is a new (and victimless) crime. Why should an exchange have to be the money cops? That is the retarded shit

Though I don't think the use of the term "retarded shit" lends veritability to your argument, I concur with your thesis.

Not only should MtGox not be responsible for this; they shouldn't attempt to do it either. This is essentially akin to the Eligius scandal when LukeJr killed off an alt-chain. (which I still maintain he should have been banned for) Self-appointed "justiciars" are naught more than somewhat conceited people who, through luck, skill, or otherwise, managed to attain more power than they can deal with. Now, MagicalTux has in general been reasonably responsive and never shown any indication of malevolent intent. Tux and Gox, please, for yourselves and the community, give this ill-fated attempt up now. Climb out of the pit before the hole fills in. There are many other ways to ensure legal compliance than attempting to play law enforcement.

I verily hope you will turn around before the road gets too steep, but if you do not, the community will just find another exchange. Remember back to high school biology - natural selection stills applies. This is not a tolerant climate for mistakes. Like it or not, c'est la vie.

agreed (and you'll notice above, it was not my original term, it was borrowed from a post above)

It depends on what do you consider fail. They've managed to scam a bunch of coins this way, so it's being profitable thus far.

How much this whole policy will damage their business... we will see. So far, it looks like most people don't care.

There is no "Bitcoin Police". Jesus.

Are you people from like, the future?

a future where MtGox isn't the Bitcoin Police and the community comes to a consensus as how we police ourselves - before someone else does.

There already is such a consensus. Bitcoins should be as interchangeable as gold coins. If anything, we need more/better anonymity services, so that even an exchange performing due dilligence can't trace them. Today it's AML, tomorrow who knows.

The consensus is that there is not, never will be and never could be any "Bitcoin Police" and also that the hicks who think in these terms but aren't self-aware enough of their mental issues to stick with fiat currency only should be ostracised.

The "bitcoin police" idea isn't law enforcement, and can't bring anyone to justice. What they do is provide a service to LE and to businesses like mtgox, offloading the responsibility of tracking stolen property to them as a third party, and providing a service to the LE that are too incompetent to do themselves, although this might change eventually. It is a win for all involved parties, and I don't understand your extreme reaction.

The name is somewhat inaccurate, but that could be changed.

Well, call it the Bitcoin Fire Department then, its exactly equally as good a name.

I like that name actually! ;D Maybe you should contact SomeoneWeird and tell him. :P

Hey MPOE-PR, wanna found the first Bitcoin Fire Department?

I think I'm going to save myself for the First Bitcoin Wahmbulance Center.

Bitcoin is so doomed long term. Oh well, there goes my time and money investment.

Bitcoin isn't doomed if it's used only as a debt settlement utility.

Think about it like this: You still use Paypal, but when it comes time to cash out, instead of getting money into your bank account, you withdraw it as Bitcoins. That's the ultimate direction of Bitcoin as I see it.

Right now people have the misconception that it should be used a large-scale micropayments solution across the world and that's it's highly scalable.  ::)

Why would Bitcoin be doomed? You forgot this is a free market? You forgot you can choose any exchange of your liking?

People are acting like MtGox is some kind of central bank while they themselves choose to use it, and then they bitch about it and proclaim the end of Bitcoin instead of boycotting it.

The fuck is wrong with you?

I don't do any business with MtGox. However, the future of bitcoin doesn't depend exclusively on me.

It's not a matter of individual decisions. As a means of exchange it depends on group dynamics, and the truth of the matter is that MtGox has a stronghold powerful enough to steer practices and usage. And they're doing it.

Ever heard of the Tragedy of the Commons?

This is looking pretty bad IMO. Just my personal judgement in the matter. Looks like enough people just can't properly value the importance of fungibility. Enough for the whole project to implode by the looks of it.

Have you seen his other posts? As a fellow frothing retard, I don't typically judge people on their other claims in other threads, but Jesus. I'd be surprised to see that he thought Bitcoin was useful at all.

Grow up.

I'm just giving my honest opinion in the matter.

I think MtGox is shady as fuck and an outright scam. Actually, so do you IIRC. So what?

Hehe. I had you confused with another more verbal person in that thread, I edited my OP immediately after realizing. And yes, I think MtGox IS Bitcoin at this point and it's fucking retarded and the definition of irony when a large group of spergy libertards create and support a decentralized currency only to quickly support the first centralization effort.

People will use it because it has more volume/traffic and maybe some conveniences. This is a social pattern and I really wish the retards in Bitcoin would wake up and realize that they can't change social norms by developing a new product. They'd need to develop a new society entirely.

The future of Bitcoin is more than likely indebted to the same rich asshole scumbag deceptive dictators that they work so hard to get away from. Oh the irony.

This is a joke at best. MtGox is about as important for bitcoin from this perspective as James Bowman Lindsay was for the electric industry. Ever even heard of him? Didn't think so.

MtGox has the simple choice to obey right now or disappear in a few years at a maximum. The impact of either choice to bitcoin itself is comparable to the impact of the Wright character on Global Warming. He gets agitated often and flails arms a lot but how much heat is that going to generate?

Your analogy is flawed.

MtGox won't kill cryptocurrencies, but it can kill this "brand" for good as things stand right now. A couple more massive fiascos and very few people will trust in the system. Don't underestimate the importance of perception.

I generate quite a lot of heat but it's usual local warming that leads to localized wetness.

update


I transfered the money through bitinstant without issue. Updating the first post as well so everyone can see but leaving the thread.

Good thing Zhoutong decided to drop it, or you'd be fucked.

I hope you don't do any more business with MtGox... "scam me once, shame on you."

 
 I think to some degree you overestimate the importance of your perceptions. I guess time will tell either way.

 
You might be a little... off in your perceptions of what exactly happened there.

Wasn't talking about my perceptions, in case you didn't notice.

I'm happy that Mt. Gox has done some serious jobs to protect the benefits of their partners, and risk being misunderstood. They have been actively contacting us throughout the issue.

I apologize for those who accounts were placed on hold for AML because of their protection. We should have told them earlier our attitude that consumers and merchants shouldn't be responsible for tainted coins. We even accept the tainted coins ourselves.

At the same time, I really appreciate what Mt. Gox team has done.

just WOW and +1

That's really classy and also foresighted. Kudos.

My respect and confidence in Zhou keeps going up and up.

+1.

What I've read so far about MtGox on this forum is enough for me to never use that exchange. I am using a free exchange that doesn't collect sensitive information they have proven to be incompetent of protecting (see posts above). There is no point of exchanges working like banks and be trusted with fiat in the first place when all you need is a BTC-escrow for the system to work. As I see it, since there is no actual need for an exchange to deal with the money side of things, there is actually no need for them to deal with AML regulations, either. Furthermore, there is no need for a middleman taking a fee to let me trade with my fellow bitcoin holders, apart from donations to keep the service alive that is. I get the impression MtGox is the Deepbit for exchanges. People use it out of convenience. So, if you continue to use it I see no right in you complaining anymore if they freeze your account or steal your money to comply with "THE LAW". Last time I checked, there were very few internationally agreed-upon, cross-cultural, transnational laws. But even Deepbit went from close to 50% to 34% in less than one year, so...

very glad to hear that your coins have been liberated, I note that Mt. Gox didn't answer many of the questions posed in this thread, as in how many coins do they have locked down atm & how many if any have ever been sequestrated & returned to those who have claimed to have had their private keys stolen & most importantly what is their ongoing policy on this & how is it workable

in future I think that any coins Mt. Gox has on a black list as so called tainted, or freezes, should be regarded as having caught the gox, a nasty unpredictable & highly contagious disease not unlike the pox, often fatal to your coins or anonymity but as we have just seen can be subject to unexpected miraculous cures as well

remember folks, always check first with the bitcoin police & instantly quarantine any coins that they say may show early symptoms of the dreaded gox, ie totally unworkable so pse someone open another exchange or two with strong DKYC policies in force (Don't Know Your Client)

This is why it is important that people communicate such issues over forums like this one. When it happens too often, people can join forces to file a lawsuit which will bring more security (in one way or another) to the whole community.

If you have a way to determine that a certain amount of bitcoins on one of your accounts is stolen and this way of determination is likely to hold in court (which is, to my knowledge, not the case at this point, and furthermore there was no clear statement by which the owners of the victimized accounts could verify the legal relevance of your method), there is still no reason to penalize whole accounts instead of just freezing the exact amount in question upon deposit and immediately informing the account owner so he can take legal steps against the accusation on his own. I understand that the policy you chose creates much more profit for you, but on the other hand you will understand that your policy will make you look rather untrustworthy in the bitcoin community.

Shouldnt you freeze the coins before you take the trading fees from them ? If you claim they are suspicious why then are you obtaining the benefit ?Isn't  this akin to fencing stolen goods  ? :)

The thing is that mt gox doesnt have guns and cant make you use them. So don't, it is really that simple.