I've been very patient with Changelly since August 5th when I submitted my first support ticket on this matter. Now that it's clear to me that Changelly runs a drag-it-out support strategy, it's time to go public.
Is Changelly a scam? You be the judge... please leave your opinion in the comments.
CONTEXTThe transaction (Tx) at issue here is BTC for GBYTE (Byteball).
For those not familiar with Byteball:
Byteball has no mining; its native currency - white bytes (GBYTE) and black bytes (BB) - was created back in December 2016 and has since been distributed, as widely as possible, via ~monthly airdrops. Every full moon since December, a "snapshot" has been taken of the balance of bytes held on each and every Byteball address, and of the balance of every registered BTC address. Shortly thereafter, each address receives new bytes based on the balance at the time of the snapshot.
The last snapshot was August 7, 2017 18:10 UTC (11:10 PDT), and new bytes were distributed as follows:
- For every 1 GBYTE held on any Byteball address, you got 0.2 of new GBYTE
- For every 1 GBYTE held on a linked Byteball address, you got 0.4222 of new BB
One last thing: Byteball's immutable ledger of Txs is stored in a construct called a DAG (Directed Acyclical Graph), analogous in function to bitcoin's blockchain.
WHAT HAPPENED?On August 5, two days before the Byteball snapshot, I initiated a Tx with Changelly to trade 20 BTC for ~105 GBYTE.
Changelly took my BTC, but held on to the GBYTE, collected my Byteball reward, and then sent ~105 GBYTE 4 days after I initiated the Tx. Changelly effectively stole my ByteBall distribution.When hours had passed and still no GBYTE, I sent my first ticket, and support responded:
"It seems that there could be some technical issues either with our wallet or with Gbyte network. We will investigate the matter. We have forwarded your request to the technical department. They will push your transaction through. We will inform you, once your issue is resolved!"
On August 7th, before the snapshot, I submitted two more support tickets. I told Changelly that if they couldn't deliver the GBYTE before the snapshot, I wanted my BTC back. Support responded on August 8th 2:06pm (long after the snapshot):
"Unfortunately, we cannot refund your bitcoins since they have been already converted into GBYTE. But you will receive the same amount since your money has been already exchanged. Please confirm your GBYTE wallet address and we will repeat payout. All the issues seem to be fixed now, so it should work."
I responded, explaining why the only reasonable remedy was for Changelly to refund my BTC. I did not confirm any GBYTE wallet address.
Support ignored me and sent the following on August 9th:
"Good news! We have received the response from the exchange and now everything has been delivered!"
I wrote to Charlie Shrem, an advisor to Changelly, and he forwarded my complaint to Changelly CEO, Konstantin Gladych. I've also emailed Gladych many times directly myself. Zero response.
CIVIL LIABILITYUnder civil law, Changelly has been unjustly enriched and is liable to pay restitution.
Unjust Enrichment. A general equitable principle that no person should be allowed to profit at another's expense without making restitution for the reasonable value of any property, services, or other benefits that have been unfairly received and retained.
This principle is widely recognized and applies to Changelly here regardless of whether they did anything wrong. This is essentially why Coinbase and Poloniex changed course and gave their customers the BCH that was due to them.
CRIMINAL LIABILITYChangelly is clearly liable under civil law.
What about criminal liability?
Using a DAG explorer, we can browse Byteball's immutable ledger of Txs and discover the following:
1) Changelly provided proof of payout. We see 105.306518206 GBYTE sent from address, BRAAXVBQPDBBCUQWHW4BHBIDDKTWJYW3.
https://explorer.byteball.org/#i/f2u2jLUmIRIpVYD+6Sav9xLayb5WpY2gn864RSUrI=2) 8/5 11:28, Changelly and I agree that this is when Changelly received my 20 BTC.
3) 8/5 11:40, 12 minutes later, 105.306518200 GBYTE arrived at Changelly’s pay out address, BRAAXVBQPDBBCUQWHW4BHBIDDKTWJYW3.
https://explorer.byteball.org/#Q2PTWTIHqHDUzDk3suTKtX37VN2ntKmcrUdttUG8oWQ=All Changelly had to do was send it to me. What happened?The GBYTE was diverted to the following addresses, which subsequently received the airdropped GBYTE that rightfully should have gone to me:
- 31,447,997,156 to CBCYP2UY6YX2FJX6OXNDHBQO4VREDUJL
- 51,788,023,285 to QAHP5Z4P6QQV4S3MUVTOJM5D7SJDWPSD
- 21,763,859,830 to 6H5USZBXMOYUAGCYEYF7P3A6QU2EJBCT
- 306,636,259 to QR542JXX7VJ5UJOZDKHTJCXAYWOATID2
The DAG also shows plenty of Tx activity over the relevant time period, also strongly suggesting no technical issues were to blame for Changelly's delayed Tx.
Did you know…?
Under the Czech Republic's Code on Corporate Criminal Liability both Changelly and the individual perpetrator(s) would be criminally liable.
WHAT NEXTChangelly… fix this immediately.Up next we’ll explore…
- how to connect employee identities to the suspicious Byteball addresses
- inner-workings of Changelly
- the Bittrex and Changelly APIs
- behind the scenes of the Changelly-Bittrex connection
- Konstantin Gladych’s relationship with the European Cybercrime Center
- presenting evidence to Czech and U.S. prosecutors
- comments from devs re: Changelly’s technical excuses for failed Txs
- similarities and differences between Changelly and BitInstant
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