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Author Topic: Don't give Bitfloor your bank routing numbers!  (Read 3925 times)
Nuro77
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April 19, 2013, 01:38:21 AM
Last edit: April 19, 2013, 02:12:58 AM by Nuro77
 #1

They are (most likely) a folding business now, and have had serious past security issues, and the way they handled this latest mess was to tweet about suspending trading within a few hours of the deadline, and only sending out emails to preferential users (I never got mine and neither did a bunch of other people).

By giving Bitfloor your bank account's routing numbers, you are giving them the ability to withdraw any amount of funds they wish at any time from your bank account, or worse, cause another security incident where hackers end up with your bank details.

This whole mess could have been prevented by simply not accepting new deposits, and NOT suspending trading while allowing everyone to exchange USD to BTC so they can transfer out at ease – they could have limited the sell price to 110% of MtGox's (to prevent price gouging) and everyone (including sellers) would have been happy. Or used an opt-in option where everyone's USD funds could have been used to purchase BTC at market value on MtGox, and dispersing them accordingly. But none of that really matters...

I simply don't trust Bitfloor any more due to it all combined.

Don't put up with this shit by giving Bitfloor more of your personal and business details just so you can end your relationship with them.

Demand that Bitfloor sends you a check by mail. Your USD funds are protected by federal banking laws and regulations, they simply can't demand that bank transfers will be the only method allowed to get your funds out. If they keep your USD funds they are committing serious offenses. Checks are perfectly reasonable and are the default method at all businesses, banks, and institutions. By not allowing this option, this whole thing seems shady as fuck to me. It's quicker to print out a check then it is to verify, secure, and maintain your bank account details.

https://twitter.com/bitfloor/status/324876008719265792

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We will not be converting USD balances to BTC for withdraw. USD must be withdrawn via ACH. International users stay tuned for wire details.

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Bitfloor, Inc. is incorporated in the state of New York and registered with FinCEN

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MOB
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April 19, 2013, 01:53:25 AM
 #2

really.  What a bunch of FUD.
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April 19, 2013, 01:55:15 AM
 #3

...and I liked it!

Nuro77
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April 19, 2013, 01:58:15 AM
 #4

If you think this is FUD, please deconstruct my argument. Show everyone how ACH can't be used to transfer funds out of bank accounts (that it's only 1 way), that Bitfloor never had security issues (thousands of BTC were not stolen), that check-by-mail is an unacceptable and unreasonable method of payment, that everyone got their email about the EX halt (just reference what other users have posted here), etc.
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April 19, 2013, 02:00:01 AM
 #5

ACH takes about 3-5 business days.

When you notice money gone from your account you call your bank and fill out an unathorized ACH form.  The end.  They cancel it and block further ACH from that source.

Check by mail is considerably slower and more work on his part, but perhaps Roman will allow you to do that if you email him and ask nicely.

Yes, his exchange got hacked awhile back.  So did Gox and many other exchanges.  It does not mean Roman is a criminal.
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April 19, 2013, 02:03:31 AM
 #6

Yep, ACH is pretty reversible.

I think Bitfloor is just going down to avoid the payout of their previous hack debt.
Nuro77
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April 19, 2013, 02:03:39 AM
 #7

ACH takes about 3-5 business days.

When you notice money gone from your account you call your bank and fill out an unathorized ACH form.  The end.  They cancel it and block further ACH from that source.

Check by mail is considerably slower and more work on his part, but perhaps Roman will allow you to do that if you email him and ask nicely.

Yes, his exchange got hacked awhile back.  So did Gox and many other exchanges.  It does not mean Roman is a criminal.

I check my bank statements every 30 days. And so do a lot of other people. And if you've ever dealt with debit or check fraud, you'd know it's not as simple and quick of a process as you make it out to be.

You still have not deconstructed anything I've said. But you took the time to post that FUD accusation crap that added nothing to the conversation.
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April 19, 2013, 02:05:01 AM
 #8

If Bitfloor does not steal anything via ACH then this is FUD.  Guess we can let the future decide.
Nuro77
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April 19, 2013, 02:07:07 AM
 #9

Yep, ACH is pretty reversible.

I think Bitfloor is just going down to avoid the payout of their previous hack debt.

How much do you think they still owe?
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April 19, 2013, 02:10:21 AM
 #10

The OP post is mainly FUD. However he does make one good point -

It is indeed true that your funds in Bitfloor are protected by federal banking laws. The money will be returned to you via check if you refuse to ACH.

Everything else was pure FUD. ACH is easily reversible, so Roman trying ACH fraud is just a ridiculous tinfoil-hat assertion. Roman has never shown himself to be irresponsible in dealing with USD funds, and numerous exchanges/BTC sites have been hacked in the past. I doubt Op himself hasn't used any BTC services that haven't been hacked. In addition, there is a good chance that Bitfloor will simply add one or two additional funding options and continue on with business as usual. This takes time. "Indefinite" does not mean "permanent." He already has a functioning exchange, there's no reason to believe he's just going to 'give up' because BofA closed his account.

However, like I said - one good point (I try to see the silver lining with these paranoid FUDtrolls.) If, for whatever reason, you do not wish to use ACH (certainly not the OP's retarded FUD reasons) simply request a check by mail.
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April 19, 2013, 02:19:12 AM
 #11

Yep, ACH is pretty reversible.

I think Bitfloor is just going down to avoid the payout of their previous hack debt.

How much do you think they still owe?

TBH I don't know and can't find lots of info in the subject. Did they even start to pay people?.
Nuro77
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April 19, 2013, 02:23:36 AM
Last edit: April 19, 2013, 02:52:50 AM by Nuro77
 #12

The OP post is mainly FUD. However he does make one good point -

It is indeed true that your funds in Bitfloor are protected by federal banking laws. The money will be returned to you via check if you refuse to ACH.

Everything else was pure FUD. ACH is easily reversible, so Roman trying ACH fraud is just a ridiculous tinfoil-hat assertion. Roman has never shown himself to be irresponsible in dealing with USD funds, and numerous exchanges/BTC sites have been hacked in the past. I doubt Op himself hasn't used any BTC services that haven't been hacked. In addition, there is a good chance that Bitfloor will simply add one or two additional funding options and continue on with business as usual. This takes time. "Indefinite" does not mean "permanent." He already has a functioning exchange, there's no reason to believe he's just going to 'give up' because BofA closed his account.

However, like I said - one good point (I try to see the silver lining with these paranoid FUDtrolls.) If, for whatever reason, you do not wish to use ACH (certainly not the OP's retarded FUD reasons) simply request a check by mail.


> It is indeed true that your funds in Bitfloor are protected by federal banking laws.

Which laws?

FinCEN is about money laundering, not about consumer protection. I was just hoping when I said it (and have seen it stated before), but with the way you have dismissed my points with great confidence and name-calling, you seem to know more exactly. Please, I really would like to know.

Was Bitfloor registered as a bank, as a money exchange, etc? Or was it just a simple LLC, or C-corp or S-corp? If he declares bankruptcy of the business, what stops him from taking our combined unprotected USD funds (if he is not a bank, etc) that are in his business bank account to pay the bad debts (or what if everyone's combinded funds don't match the current balance due to circumstances)... You took the risk of giving money to him for some service or product. Which laws protect you?...

Money on the books get lost all the time in bankruptcies. People and companies pay a failing business, business never delivers product, business declares bankruptcy, that original customer gets nothing, or only a small fraction of the original amount.

> ACH is easily reversible

You really should search "ACH fraud" to get an idea of what you are referencing. It's not as simple as you make it out to be. You can be out of funds for a long time if this happens.

>  so Roman trying ACH fraud is just a ridiculous tinfoil-hat assertion

Right. Because Bitcoins and the criminal element are about as far apart from each other as they can be. As history has shown us. Real tinfoil stuff here.

All I said was that it's not a good idea to give up bank account numbers to a failing business so you can terminate your relationship with them.

Roman Shtylman seems like a stand-up guy, but lets not pretend that things can get over your head and control real quick when shit like this happens.

Just look at what this guy has said about the previous incedent...

Quote
I believe there was a 3% payout at one point...but it's been a while.  Of course, given the fact that only "special" users were notified by email of the impending closure, I wouldn't be surprised if some people have had more than 3% released from hold.  I know that I still have quite a few coins "on hold" that are unavailable to me(dammit all).  After this latest fiasco, I'm beginning to fear that they are in fact lost to me forever.

Sounds like everything is fine here.
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April 19, 2013, 02:26:06 AM
 #13

I believe there was a 3% payout at one point...but it's been a while.  Of course, given the fact that only "special" users were notified by email of the impending closure, I wouldn't be surprised if some people have had more than 3% released from hold.  I know that I still have quite a few coins "on hold" that are unavailable to me(dammit all).  After this latest fiasco, I'm beginning to fear that they are in fact lost to me forever.
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April 19, 2013, 04:29:22 PM
 #14

I've been doing more research on this, and USD funds at Bitfloor are in no way protected by FDIC or any federal laws. These are not legitimate bank account fund deposits, they are simply payments you made for a service/product, and are nothing more than an internal credit for you on the books. It's no different than pre-paying a cell-phone with USD, you are not guaranteed anything if the business closes aside from what bankruptcy court or lawsuits will get you.

This whole lying about "federal laws" protecting your USD "deposits" - and that you have nothing to worry about, by people who also seem to constantly post here defending Bitfloor at every opportunity is just one more reason not to trust Bitfloor with your banking details.

FinCEN is about reporting to the gov, it has nothing to do with consumer protection.
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April 19, 2013, 06:38:34 PM
 #15

So far I think I have read that 1 person here was able to cash out and it was a large cast and also relieved an email. I have email their support and have not gotten anything. A statement on how this is being handled would be nice. Right now still looks bogus
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April 19, 2013, 06:46:47 PM
 #16

The OP post is mainly FUD. However he does make one good point -

It is indeed true that your funds in Bitfloor are protected by federal banking laws. The money will be returned to you via check if you refuse to ACH.

Your funds are not protected by laws.   I think a lot of people will think your statement refers to the FDIC which he most certainly DOES NOT pay into the fund and depositors are NOT protected by this at all.  Or else during the first hack, they would have received their money back.

You seem to love to label everyone's concern as spreading "FUD".   You know what destroys "FUD"?   An honest business person making clear comments and keeping his customers informed.   You certainly do not have that here do you?
God, you even have people debating what roman means by "indefinitely".   




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April 19, 2013, 07:27:14 PM
 #17

I have been willing to give BitFloor the benefit of the doubt because I withdrew more than 10K USD and it already hit my bank account.

Granted I did this two days before their accounts got frozen.  However, if someone wants to be a thief, why not steal my money?

Seems like he is just undergoing a legitimate hardship thanks to the bank.  Then end.  No tinfoil hats needed.
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April 19, 2013, 09:04:55 PM
 #18

However, if someone wants to be a thief, why not steal my money?

The fact that (some) people were given (some) warning about what was coming and even those that weren't have been able to get their coins out leads me to believe this wasn't a con-job. Why go for the USD and the ACH route but not take the lowest hanging fruit of all?

The silence and the speculation that this is more than a simple bank issue does raise a few questions, but if all the USD was actually frozen because of a LEO investigation wouldn't they freeze the coins too?
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April 19, 2013, 09:33:22 PM
 #19

However, if someone wants to be a thief, why not steal my money?

The fact that (some) people were given (some) warning about what was coming and even those that weren't have been able to get their coins out leads me to believe this wasn't a con-job. Why go for the USD and the ACH route but not take the lowest hanging fruit of all?

Why go for a few bitcoins and dollars when you can get every-single-person to give up their bank account details and have access to 100x more cash?

No one is saying Roman is going to start a bank fraud operation, just that this is so fucking stupid and you should not trust a folding business with more of your personal info that's going to need to be secured and maintained.
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April 21, 2013, 06:06:41 PM
 #20

Which laws?

FinCEN is about money laundering, not about consumer protection. I [...]

[...] If he declares bankruptcy of the business, what stops him from taking our combined unprotected USD funds (if he is not a bank, etc) that are in his business bank account to pay the bad debts (or what if everyone's combinded funds don't match the current balance due to circumstances)... You took the risk of giving money to him for some service or product. Which laws protect you?...


I don't understand what your point is. I said nothing about FinCEN or the FDIC. There is a federal law that says "It is illegal to steal money from people." It has nothing to do with FinCen. It is the "theft is illegal" law. You are merely stating the obvious, that there is a chance that Bitfloor could be financially insolvent and unable to pay out funds. You are only "protected" to the extent that the quantity money is worth suing over and the defendant is actually solvent. And if the defendant is insolvent, it's better to get the money out quickly rather than waiting 30+ days. There is absolutely no route to get your money returned from an insolvent institution, but ACH theft can be reversed, although with significant wait times. So it comes down to a cost/benefit analysis. If you perceive the risk of ACH theft to be significant, and the amount you have stashed in Bitfloor is insignificant, i.e. $25, then waiting 30+ days is the way to go. If you perceive the risk of ACH theft to be insignificant, then getting the money out immediately is the way to go.

Quote
Money on the books get lost all the time in bankruptcies. People and companies pay a failing business, business never delivers product, business declares bankruptcy, that original customer gets nothing, or only a small fraction of the original amount.


So you are telling folks here that, since they are dealing with a company that may end up folding - rather than getting ACH transfer out of there as soon as possible, they should wait 7-10 days after account closure (when the remaining balance is mailed to the account holder) and wait even LONGER for Roman to set up a new bank account, order, print and mail out 5,000+ checks?  That is even MORE risk. You are telling people to INCREASE the risk of having their money fold along with a potentially insolvent institution.
Instead of ACHing out upon receipt of the notice, they should wait potentially up to a month or more to receive money, if your initial premise is that the money might not be there in the first place? What a lousy way to support your initial premise!

Quote
All I said was that it's not a good idea to give up bank account numbers to a failing business so you can terminate your relationship with them.

You're right, if you start with the initial assumption that Bitfloor was doing FRB and doesn't have the USD funds to cover their stated USD customer funds, then the LOGICAL next step is to try to get your money returned in over a month rather than less than a week. Right...

Your funds are not protected by laws.   I think a lot of people will think your statement refers to the FDIC which he most certainly DOES NOT pay into the fund and depositors are NOT protected by this at all.  Or else during the first hack, they would have received their money back.

Again, you are absolutely wrong. I said nothing about FDIC and I did not say the funds were "insured" or "guaranteed." The "lot of people" who will "think" that must be misguided. There is a difference between funds protected by the option of legal action and funds protected by socialist mechanisms such as the FDIC. And, yes, for those who like to state the obvious, funds trusted with an insolvent institution are often never seen again. That's why Nuro77's suggestion is absolutely hilarious, he thinks we should attach as much risk as possible to our money.
No one's given any actual evidence that Bitfloor is financially insolvent. All we have is information that a bank account was closed, and from that we cannot even make any assumptions of insolvency, only that someone (or an algorithm) in Risk Management was not pleased. Sure, the risk of insolvency or at the very least a long wait for thousands of checks to be written is always a possibility. Which is why, again, people with money in Bitfloor should get their money out as fast as possible which is exactly what Roman suggested. Or you could listen to OP and trust them with your money for another 30+ days...
Quote from: Nuro77
No one is saying Roman is going to start a bank fraud operation, just that this is so fucking stupid and you should not trust a folding business with more of your personal info that's going to need to be secured and maintained.


You're right, you should wait a week for the account to actually be closed, 7-10 days for the check to be mailed to Bitfloor, 4-5 days for a new account to be started, 2-4 weeks for thousands of checks to be mailed and printed.
O W8 - to have the checks mailed, you need to give Roman your mailing address. He could send his evil minions out and attack your house! This is perfect, why steal a few million in coins and cash when you could steal a few thousand houses? God, Bitfloor is an evil genius. You folks crack me up. Grin Grin Grin
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