===>>>BCM SCAM ALERT<<<===

[dwdollar]

Bitcoin Market is experiencing a deluge of complaints from sellers.  I *think* I have identified several accounts that may be involved, but there may be more "sleeper cell" accounts.  The trades were primarily from PayPal accounts that appear compromised.  Many trades in the last two days will be bogus.  I will issue refunds when I learn more.  If you have an account locked, I'm pretty sure you're a fraud.  But if you can prove otherwise, I'm willing to listen.  I think time will be the best jury.

The market will be closed for the rest of the day.  I'll try to reopen tomorrow, but I'm not taking new registrants until further notice.

Other exchanges are reporting similar behavior.  Beware of the sudden spike in the exchange rate.

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[kiba]

Would this explain the huge volume of exchange in mtgox or is it just a coincidence?

[S3052]

No.

Lets not make false conclusions here.

The MtGox exchange works absolutely perfect. My account is accessible, I can trade (actually did 10min ago).

The volume is very normal for rallies. Many people are buying (in anticipation of higher prices) and many are selling to take profits.

[jgarzik]

Lets not make false conclusions here.

The MtGox exchange works absolutely perfect. My account is accessible, I can trade (actually did 10min ago).

The volume is very normal for rallies. Many people are buying (in anticipation of higher prices) and many are selling to take profits.

mtgox on IRC is seeing problems as well.

Let's not spread false, uninformed conclusions about the absence of scammers.

[kiba]

What is the problem about? Somebody actually trying to scam bitcoiners out of their money?

[wscott]

The mtgox 30day wait should help in this case.

[kiba]

Very interesting that early in bitcoin history, somebody already is trying to do a large scale scam?

[dwdollar]

dwdollar, is what you are saying, a fraudster stole someones paypal account and then used it on BCM to buy btc's from someone?

Yes, that is correct, except more than one PayPal account is involved.

[kiba]

dwdollar, is what you are saying, a fraudster stole someones paypal account and then used it on BCM to buy btc's from someone?

Yes, that is correct, except more than one PayPal account is involved.

How does a person know if the paypal account is a fraud?

[dwdollar]

dwdollar, is what you are saying, a fraudster stole someones paypal account and then used it on BCM to buy btc's from someone?

Yes, that is correct, except more than one PayPal account is involved.

How does a person know if the paypal account is a fraud?

The person receiving the payment will get a notice similar to:

"Recently, PayPal received a notification from a user regarding unauthorized access to his PayPal account. As a result, one of the payments credited to your PayPal account has been placed in a temporary hold while we investigate the claim.  PayPal constantly monitors transactions for unauthorized use of accounts in order to maintain the safety of our users."

[nelisky]

So, what happens if the scam is for real? The exchanges are being paid with transfers, but their accounts get frozen thus they don't have the funds to pay others? Coins being transfered out are transfered out, period, so the scammer buying bitcoins gets to keep them.

What about the rest of us, who have sold? Is bce/mtgox going to get ahold of the US$ in our accounts?

I feel a love song coming...

[TTBit]

I would suggest to MtGox to freeze all outgoing coins if there is a problem and trades can be undone.

maybe thinking irrationally though

[S3052]

I still don't get it for MtGox.

Are we sure that there was any irregularity?

If there were scammers this should be investigated.
But if not, price rallies of this kind happened already in July and this is the way markets work.

Clearly, we should protect any people who are fooled, but at the same time be careful not to cause panic , which could destroy confidence in bitcoin overall.

[kiba]

Mtgox should find a way to make money other than asking people for donation. This is to keep mtgox in business even when a large scale scam hit and Mt Gox couldn't sell the bitcoins at a high price to offset the loss.

I'll go ahead and make a donation to mtgox...

[idev]

This is why its not about using PP, scammers just can't help them self when pp is involved !

[jgarzik]

This is why [PP should be avoided], scammers just can't help them self when pp is involved !

+1

Many other exchanges outside the bitcoin world, such as ExchangeZone.com, have special procedures for PayPal -> e-currency transfers, due to high rates of PayPal-related fraud.

Unfortunately, PayPal enjoys the largest audience.  I'd assume far more legitimate bitcoin purchases have occurred through PayPal, than any other method.

[SmokeTooMuch]

Are there any paypal adresses that are known to be scammers ?
I made a few trades with some guys which seem to be German (paypal names look german).
Should I expect to get ripped off ?

[twobitcoins]

I am one of the sellers affected by fraudulent transactions on Bitcoin Market.  There does seem to be a German connection.  The PayPal payments that were reversed had an email subject of "Sie haben eine Zahlung erhalten."  The address was Gi...hi@aol.com (partially censored to protect the innocent account owner).  I had some other sales that I don't know for sure to be fraudulent yet, but at least one of them was another international transaction from an account with a German sounding name.

[SmokeTooMuch]

Then maybe I'm lucky. No trades with that email.

[dwdollar]

PayPal accounts which are compromised or claiming to be compromised are:

chr...16@in.com
a.k...99@gmx.de
Gio...hi@aol.com

I have cancelled all unconfirmed trades associated with them.  Unfortunately, some trades were already confirmed, and the Bitcoins promptly withdrawn.  I am sorry for that.  Some encouragement though... at least two people have received refunds so far.

Bitcoin Market will be open tomorrow, but new registration will remain closed.

[SmokeTooMuch]

I know that a.k...99@gmx.de ... He always retracted his money, good thing I haven't confirmed the transaction @ bitcoinmarket.

Is jen...se@web.de known to cause any troubles ?

[dwdollar]

I know that a.k...99@gmx.de ... He always retracted his money, good thing I haven't confirmed the transaction @ bitcoinmarket.

Is jen...se@web.de known to cause any troubles ?

I don't have any record of that one.

[kiba]

The scammers are probably going to come in with more frequency and the like. This is going to be a hassle. There gotta be a better way...

[gekko]

The scammers are probably going to come in with more frequency and the like. This is going to be a hassle. There gotta be a better way...

Real ID, reputation and waiting periods should work. Anything less is a pipe dream. The big problem here is that bitcoinmarket doesn't appear to offer any of this. Mt. Gox at least has the waiting period so their exposure is less (losing the difference between buy/sell price of reversed transactions).

[SmokeTooMuch]

Yeah, if we really belive in bitcoin as a good thing, we just have to come up with a good solution for these problems and we better be quick before bad news like this start to mass.

[FreeMoney]

Yeah, if we really belive in bitcoin as a good thing, we just have to come up with a good solution for these problems and we better be quick before bad news like this start to mass.

This is definitely a problem, and I can't wait to see all the solutions that are found.

But it should be clear that it is a problem with PayPal and the ultimate solution will be that people who want a money that can't be yanked back will stop using PayPal (and the many others) that offer this "feature".

[joe]

dwdollar, is what you are saying, a fraudster stole someones paypal account and then used it on BCM to buy btc's from someone?

Yes, that is correct, except more than one PayPal account is involved.

How does a person know if the paypal account is a fraud?

The person receiving the payment will get a notice similar to:

"Recently, PayPal received a notification from a user regarding unauthorized access to his PayPal account. As a result, one of the payments credited to your PayPal account has been placed in a temporary hold while we investigate the claim.  PayPal constantly monitors transactions for unauthorized use of accounts in order to maintain the safety of our users."

This is how paypal goes. Avoid paypal.

As a seller (non-bitcoin-related) I had $1500 pulled back from my account with no recourse since it was an electronic good (software).

The only way to even have a chance against paypal chargebacks is to (1) ship something to the confirmed address of the buyer and show paypal the tracking number. And even then, all the forums are saying paypal will rule in favor of the buyer/scammer if they charged it back from the credit card they used to fund their paypal account. (2) Wait 180 days from date of incoming transaction.

Paypal is nothing more than a credit card and ACH processor with a front to make it look like you have actual money in your account. They push all of their risk onto the seller. If paypal doesn't get paid by the buyer because of a chargeback or complaint, they yank it back from the seller.

A paypal representative admitted to me over the phone that you can not rely on your paypal balance until 180 days have elapsed since its receipt.

The Bitcoin Market is safe-- but paypal is not. The correct thing to do in light of this is open up a Liberty Reserve or other type of account which Bitcoin Market supports.

Also I am sure that established Bitcoin Market accounts with good history that use paypal are safe.

[Anonymous]

dwdollar, is what you are saying, a fraudster stole someones paypal account and then used it on BCM to buy btc's from someone?

Yes, that is correct, except more than one PayPal account is involved.

How does a person know if the paypal account is a fraud?

The person receiving the payment will get a notice similar to:

"Recently, PayPal received a notification from a user regarding unauthorized access to his PayPal account. As a result, one of the payments credited to your PayPal account has been placed in a temporary hold while we investigate the claim.  PayPal constantly monitors transactions for unauthorized use of accounts in order to maintain the safety of our users."

This is how paypal goes. Avoid paypal.

As a seller (non-bitcoin-related) I had $1500 pulled back from my account with no recourse since it was an electronic good (software).

The only way to even have a chance against paypal chargebacks is to (1) ship something to the confirmed address of the buyer and show paypal the tracking number. And even then, all the forums are saying paypal will rule in favor of the buyer/scammer if they charged it back from the credit card they used to fund their paypal account. (2) Wait 180 days from date of incoming transaction.

Paypal is nothing more than a credit card and ACH processor with a front to make it look like you have actual money in your account. They push all of their risk onto the seller. If paypal doesn't get paid by the buyer because of a chargeback or complaint, they yank it back from the seller.

A paypal representative admitted to me over the phone that you can not rely on your paypal balance until 180 days have elapsed since its receipt.

The Bitcoin Market is safe-- but paypal is not. The correct thing to do in light of this is open up a Liberty Reserve or other type of account which Bitcoin Market supports.

Also I am sure that established Bitcoin Market accounts with good history that use paypal are safe.

Maybe mt gox should start using LR instead of paypal. Paypal must be making out like a demon on all these bitcoin transactions.

[FreeMoney]

Maybe mt gox should start using LR instead of paypal. Paypal must be making out like a demon on all these bitcoin transactions.

They probably make more from bitcoinmarket. I've probably done 20x more in trades at GOX and paid 5x more fees at BCM.

[Timo Y]

Paypal is shit. This was bound to happen sooner or later.

Shame none of the exchanges accept Ukash or Paysafecard:

http://www.ukash.com
http://www.paysafecard.com

You can buy the codes for cash at any newsagent, and once you've entered the code the payment is irreversible.

[S3052]

Sorry..

I don't get 100% what the methodolody is for those scammers. How did they do that?

Did they transfer funds from PayPal to ane xchange that wasn't theirs, then bought BTC and then paypal detected the fraud and took back the money?

[caveden]

In what way these alternatives you present here are better than paypal?

[Timo Y]

In what way these alternatives you present here are better than paypal?

They are more similar to bitcoin in that payments are anonymous and irreversible, though still managed by a central authorithy. Once a code is spent it's spent. If someone steals your code and spends it it's your own fault; there's no chargeback. Also, you can get them for cash in newsagents, which would be useful for those of us who don't have a credit card.

[Anonymous]

Ukash

# Undergo the KYC (Know Your Customer) process mandated by the UK Financial Services Authority
# Enter into a contractual agreement to pay in advance for vouchers ordered and that vouchers will only be supplied electronically against acknowledged cleared funds
# Commit to a minimum order of €500 per month
# Pay a €100 set up fee with your first order


Thats for resellers. I sent them a contact to see if they would let someone sell bitcoins for their Ukash vouchers online.

[SmokeTooMuch]

@dwdollar:
Uhm, today, many of my bitcoinmarket transactions were cancelled, even if I already received the money.
Does that mean the buyer was a scammer and the money will be retracted ? Or is it just a mistake ?
It's about the jen...se@web.de address I mentioned yesterday. Trade ID 944.

Feel free to contact me via pm or post in this thread.

[dwdollar]

@dwdollar:
Uhm, today, many of my bitcoinmarket transactions were cancelled, even if I already received the money.
Does that mean the buyer was a scammer and the money will be retracted ? Or is it just a mistake ?
It's about the jen...se@web.de address I mentioned yesterday. Trade ID 944.

Feel free to contact me via pm or post in this thread.

I sent you a PM.

[bitcoinex]

When the scammers was received the first large amount of bitcoin?

We here think they might try to sell that amount on our exchange btcex.com, and this caused a crash (http://bitcointalk.org/index.php?topic=1389.0 )

Also we can try to trace the path of a coins.

[BitcoinFX]

An unfortunate situation, which I hope can be resolved as best as possible.

I used to consider these 'issues' in the early days of New Liberty Standard accepting PayPal etc. Which is why I chose to only use Liberty Reserve.

Seriously, why bother to accept another digital or e-currency that allows for 'charge backs' ( i.e. PayPal / AlertPay ) for one that doesn't ( i.e. Bitcoin ) !

" Be safe from the instability caused by fractional reserve banking and bad policies of central banks."

PayPal is known to 'freeze' customer accounts without warning, not to mention numerous other 'bad policies' which are fundamentally against what Bitcoin stands for. Howerver, if you just want to purchase stuff of ebay its great... Has no one ever heard of the 'pay pal mafia' ? I'd rather use Perfect Money

However, having said this I admire those offering a BTC <> PayPal Service. Its important for Bitcoin and all part of the experiment.

Although, as the old saying goes "You can't have the penny and the bun !"...