[2018-12-30] Paxos Hassling Traders Trying to Redeem Stablecoin PAX for Dollars

[gentlemand]

https://www.ccn.com/paxos-standard-hassling-ethereum-traders-trying-to-redeem-stablecoin-pax-for-dollars/

An interesting but unsurprising tale.

I dunno why anyone bothers with stablecoins. You may as well stick with real money where you have to deal with professional penises rather than unprofessional ones, but on a seemingly far less regular basis.

[squatter]

It's not surprising. Exchanges are using stablecoins to offload AML/KYC responsibilities on stablecoin issuers. I always assumed the second generation of stablecoins (USDC, PAX, GUSD) would be far more compliance-minded than Tether. I like the idea of secondary markets for fiat-backed tokens but it sounds like a regulatory nightmare. If you're doing it to avoid KYC, it's probably going to backfire at some point when you get your funds frozen.

There's not enough info here for me to immediately side with the affected traders though. Regarding the first report: Depositing to Binance and then immediately withdrawing the full amount to Paxos for redemption? What legitimate reason is there for that? And on the second report, they affirmatively state the customer misrepresented to Huobi the ownership of funds, so it seems there's more to the story than Paxos merely closing his account for nothing.

We never get the whole story from these reports.

[gentlemand]

It's not surprising.

They're going to be hyper, hyper paranoid about KYC stuff and as you rightly point out it could get proper messy. They may get so onerous to use that people may head back to Tether for the sake of a quiet life. I can imagine they're going to be by far the worst in terms of nosiness.

This bit stinks 'They did request that the redeemer “wait a week or so” to withdraw. They said it would be “bad for their business” to do so immediately. We interpret this to mean they didn’t want to take the loss in market capitalization. Their marketing message very much pushes the narrative that their market cap is nothing but growing.'

I just want dollars or whatever. I don't my user experience screwed with to help them look good.