Yep. And regardless of what they do now (like registering and moving operations to another jurisdiction), it can't erase the past several years of operation in the US, and serving US customers. It sucks to be a US resident right now if you haven't been paying your taxes (can't send those coins to regulated exchanges). Also sucks to be Kraken, Bitfinex, Poloniex, Bittrex..... but especially the former two, because they've been processing fiat withdrawals as well for years.

Exactly. Unverified US users (a large percentage of their userbase) may not even need to do anything if they already indicated last year that they are not US residents (even if their IP address suggested they were). If anything, US users will just start using VPNs if Bitfinex introduces IP restrictions.

I still don't think this will shield them from US government action given that they've been processing deposits and withdrawals for years to US residents. It's clearly a CYA move, but I don't think it is necessarily good enough...

The restrictions on US customers trading ERC20/ICO tokens could definitely be linked to the SEC decision linked in their blog post. However, I think withdrawing entirely from the United States market is a much bigger story that has to do with Bitfinex lacking any licensing in the US and the recent action against the BTC-e exchange. I think that's also why they are openly stating that US customers are a tiny portion of their business (probably not true), as a feeble attempt to cover their ass regarding future claims about them operating as an MSB.

Unfortunately for them, pulling out of the US market at this point does not repair the past several years of operating unlicensed.

I think there's a good chance this is why verification would be enforced. But that doesn't address the fundamental problem: who wants to send their ID to this exchange now and be linked to funds that the US government considers to be illicit proceeds? KYC in this situation raises the odds of a honeypot by a good percentage, too.

That explanation worked for the first month or two. But Bitfinex announced months ago that they moved nearly all of their fiat money outside of Taiwan. Why are they still unable to process outgoing bank wires to their clients? The reason for that is -- at a minimum -- being blacklisted by Wells Fargo and all its correspondent banks (virtually the entire USD banking system). One has to wonder whether this was done at the behest of the US government.

Someone above suggested that US federal agencies may be up to something regarding Bitfinex. The conspiracy theorist in me thinks that the BTC-e indictment (filed in January 2017) and Bitfinex being cut off from the banking system (March 2017) are part of a larger operation targeting unregulated exchanges.

Better yet, just use your own local wallet. And take it a step further, moving most of your coins offline completely. Blockchain.info definitely has security vulnerabilities; you don't control the software that's broadcasting transactions signed by your private keys. If their service is compromised, you could be tricked into signing transactions that steal your coins.

Blockchain.info gives you more security and control over your funds than Coinbase, but it's not ideal. I'd suggest Electrum for a simple, lightweight wallet. I think its UI is superior to Blockchain.info anyway.

Over time, my risk appetite has lessened and I've lessened my exposure to short term trading. It feels good to have funds tucked away in cold storage while seeing the ecosystem grow so much at once.

We're also in a new era of regulated exchanges, and it's becoming increasingly dangerous to store funds on unregulated exchanges. The BTC-e takedown must have been an eye-opener for many.

I think they are talking about reconciling the balance sheets / transferring the assets to this supposed investment company. They are insolvent with regard to customer balances due to frozen bank accounts (and possibly some seized crypto). I believe they are saying that their reserves (past profits) are being used to improve the balance sheets.


What if you were holding all bitcoin, and they had 45% of their bitcoins hacked? Would you prefer that they treat customers equally, or debit your account for 45% of the bitcoins? Exchange hacks are much more common than seizures, too.

That's one of the strangest things about this. But the authorities did seize the website. We know this because the DNS was pointed at Shadowserver (proxy for law enforcement). And they did unseal an indictment against the exchange. So, I figured the lack of announcement about seized funds meant one of three things:

1) Something went wrong and they didn't seize much (and/or Mayzus didn't have access to much). This means that the exchange is giving users back less than what was lost. This may be reasonable if it means securing the capital from investors that is required to relaunch.

2) They are trying to trick the BTC-e owners into exposing themselves, or putting themselves in a position to be arrested.

3) Alexander Vinnik really was an owner, had access to private keys for much of the funds, and the "new site" will be a honeypot, run by a US federal agency...

At a glance, it seems like good news, but I agree that this is puzzling and worrisome. Surely the launch of any new brand will have the same target on its back. I'm guessing the reason for KYC is to deter some darknet participants from claiming any funds, thus improving their balance sheets. I suppose this might already be priced into any proposed investment deal.

But handing over documents in this situation (even with completely legitimate funds from trading only) doesn't feel very good...

The fact is that most people aren't cut out for trading... especially day trading. It's a very stressful endeavor for those that can't handle losses easily. A good trader wins 60% of the time. More than that, and you are either very talented, or very lucky. Trading is all about managing risk, and that involves taking lots of small losses on the path to bigger gains.

It's definitely easier on the psyche if you have some "extra money" to invest in something for the long term. Then you don't feel the day-to-day stress of "losing money." When you consider yourself a trader, your capital is at risk every day.

Sure, lending is the easiest one. There's very little analysis to be done. But it also is never worth the 3rd party exchange risk. The gains from lending are generally paltry compared to the gains you can make from trading. The 10-baggers and whales made in altcoins are the only reason to keep any bitcoins on Poloniex. That exchange is a ticking time bomb. The complaints of missing deposits/withdrawals go back months. If it doesn't go full-on Cryptsy, then it might be in hot water with the US authorities because it isn't licensed as an MSB...

You're right. I misspoke. They charge a miner's fee, but I believe it's a relatively flat fee based on current network fees. In other words, if you send them dozens and dozens of inputs, they'll still charge a standard miner's fee based on standard wallet procedure. They won't take into account how expensive sending a transaction composed of many dozens of inputs really is. If you sent this type of transaction from your own wallet, you'd end up paying a good deal of it in transaction fees. I believe this can be avoided when using Coinbase.

I wish I had your confidence, but the Bitfinex situation was quite different. Bitfinex may have gotten a slap on the wrist from the CFTC, but they don't have the FBI and DOJ's criminal division chasing after the owners. At least as far as we know.

USDT might be tenable but I don't see how BTC-e could accumulate it. Their coins are also at risk of being blacklisted by exchanges (including USDT). If they come back, it will be a very interesting test of fungibility in bitcoin and other crypto. I don't have the greatest feeling about it....

Very interesting development. A .cc domain... the top-level domain for Cocos (Keeling) Islands, an Australian territory. I'm not sure if that's a good idea or not. I was hoping to see a domain from a country that is known for its unfriendliness to the U.S.

I don't put the prospects of a relaunch or repayment very high, but maybe this inches up the odds a bit. If they come back after all this, BTC-e will be truly legendary.

You know, I've been in the Bitcoin game since 2012, trading regularly since 2013. And the dollar-averaging strategy has been tough to beat. Swing trading has been great, but when you take into consideration the risk of exchange closure and capital gains taxes, slowly averaging into a long term Bitcoin position has been very fruitful. I'd say that it will continue to be for a long time.

That's the general feeling. US law enforcement is very active targeting darknet markets; now it seems they are going after unregulated exchanges as well. I honestly didn't expect that.... maybe a hefty FINCEN fine against BTC-e, but I never expected a seizure like that. They must have known that they wouldn't be able to recover most of the crypto, and that this would likely guarantee massive customer losses.

For this reason (even though I don't think the US government views Polo and Bittrex like BTC-e), I am wary of using exchanges that serve US customers without proper licensing in every US state.

If you're using them to collect giveaways and things of that nature, sure. But if we're talking about really insignificant sums of coins (at least in terms of today's value), then I would probably use Coinbase. Coinbase is great for collecting large amounts of small inputs, since you don't need to pay any transaction fees when you want to finally move your coins out. Yes, there is 3rd party risk. But they are a tightly regulated company and we aren't talking about risking very much.

It's not as safe as a desktop wallet, and it's much less safe than cold storage. I've read about potential JS attacks that make blockchain.info vulnerable. The fact is, whether potentially devastating attacks are currently known yet or not, you don't control the software which controls your keys on blockchain.info. That should worry you. I'm certainly not sophisticated enough to understand the potential attacks, but I feel much more secure with my encrypted desktop wallet.

You can add 2FA to an electrum wallet too, if you want. BCI is better than a straight up 3rd party web wallet, but it's definitely not great for holding much value.

The exchange situation has been getting progressively worse for years. Kind of odd, given all the opportunity for exchange operators in the space. Scottrade and E-trade are charging low flat fees per trade, and we chumps are paying a percentage! It's highway robbery when you think about it. To boot, the well-regulated exchanges, Bitstamp and Coinbase, are fairly illiquid and have subpar trading engines and APIs.


I'd really like to think so, especially for Poloniex's sake. The fact is, they could have (and should have) hired zounds of new support staff and engineers to get their system working reliably and to keep their customers happy. Instead, people keep telling me they are waiting for withdrawals for weeks upon weeks. That's scary as hell.