.

[Benson Samuel]

icoinv, do you have any registered users/ deposits on the site as yet?

If yes, would they be able to recommend your work? This may work better towards building your reputation.

We have registered user, deposit transactions haven't taken place yet. I will try asking the person for feedback anyway.

Now this is interesting... Do you accept cash deposits w/o PAN??

If yes then myself or someone here might deposit.

This question was asked earlier too, i understand the eagerness regarding using the platform, let me clarify that with a small story about jumping ships.
There is a mega fiat-ship and there is small btc-boat, people from the fiat-ship needs to get on btc-boat with a ROPE(which is exchanges\local bitcoins etc).
Problem comes here, many would have objections with the transition. Too many people at once on rope would attract the owner of the mega-ship and would stop others from the transition.
I am sure everyone understand the situation here about the reality. And its a small small world where everyone knows everyone.

Unfortunately its a slow process of transition, we will work towards to improve it.
Hence PAN.

It does seem like you have not yet straightened out your legal bits.
If you have PAN numbers and customer data and if your legal is not rock solid, all your customers WILL suffer.

The forums here are a boiling pot of entrepreneurs, technologists and legal researchers. It also happens to be the place where 99% of Bitcoin related businesses can expect any kind of traction.
Please do not expect an easy entry into this space, especially due to evasive answers and text book customer service responses.

The reason for me to outline this is due to several PM's from India forum members raising doubts about your business.

Everyone wants a Mt Gox for India, but no one in the current ecosystem will move away from trust based providers as yet.

You may get few registrations and maybe even few deposits if you are very lucky.
But I can see that the exchange may not take off for months, until there is a critical mass that trusts your operation.

[subvolatil]

Thank you Benson for clearing  that up,  you have  elegance in your  words. 

[Benson Samuel]

We don't have a duty to help any business grow, we have a duty to make sure that only the right business can grow.

Point taken.

After 3 pages of this banter, I agree that we should work in that direction.

[Benson Samuel]

This question was asked earlier too, i understand the eagerness regarding using the platform, let me clarify that with a small story about jumping ships.
There is a mega fiat-ship and there is small btc-boat, people from the fiat-ship needs to get on btc-boat with a ROPE(which is exchanges\local bitcoins etc).
Problem comes here, many would have objections with the transition. Too many people at once on rope would attract the owner of the mega-ship and would stop others from the transition.
I am sure everyone understand the situation here about the reality. And its a small small world where everyone knows everyone.

This is where you made a big blunder. If you guys really had the legal backing, govt approval, etc, the owner of the mega-ship mentioned in the above post will not matter at all.

You are doing something under the radar which is absolutely fine as something unregulated does not risk anything much. Maybe laws, disclaimers and few inquiries at the most will be the risk to bear.

Now, even though you are aware that your business model is not 100% sound, you are still asking for customer identification data and you even claim to have legal counsel to run an Exchange.

To me, this is very very very fishy.

If you had the legal bits in place, then it makes sense. Unfortunately, we know that is not the case, so consider altering your business model to reflect that.

As of now, most in the community already understand legal implications of exchanging BTC and until the RBI or a similar authority mentions something concrete about 'Bitcoin', it will remain unregulated. But we all understand the madness involved with INR conversions.

There is nothing new in what you have done. I was hoping that there was.

We have done reasonable work on legal issues.
Couple of months we made a communication regarding Bitcoins with appropriate legal channels to the top officials, directors of Govt organization.
Initially they replied with not much information(looked like basically they were dodging). We didnt stop there, we appealed the response with higher officials, they answered saying the questions are "HYPOTHETICAL"!! Any appeal from here is wastage of time. Officials are looking away from reality.

Please outline your accordance with SEBI, FEMA, Prepaid regulations and FERA.

I understand you cannot, because none of these regulators are willing to issue any public statement until there is sufficient time spent understanding Bitcoin.

Please do not consider this criticism, it is honest advice to help you get this kicked off in the right fashion. This is a trust and reputations market that you have entered into. None of that dodgy keynesian stuff for us.

[Benson Samuel]

I NEVER claimed that business had full approval from govt. We have done reasonable We have discussed with CA's, and few legal councellors and taken advice.
We had filed petitions on officials related to FEMA\FERA and Payment\settlement dept(which regulates e-wallets etc), with appropriate legal channels as i mentioned before. As i said the appeals are dismissed by higher officials. And they are considering it as hypothetical as of now. And there are few other petitions filed on other appropriate govt agencies at this point of time.

Point is if something is not regulated, it cannot be deduced clearly as legal or illegal. And we clearly are not doing business without the notices to appropriate govt agencies in advance.
The legal quest does not end here, as it is known it takes lots of time and effort.
Understanding is govt needs a cut through taxes of any business.
Also, i dont want to divulge too much details of our organization strategy on legal approach because it worries me that a competition would follow the same strategy.

I guess, most of the rules made after lobbying. Without some organization need for regulation and asking them for it, if we expect them to make public announcement, the wait would be forever.

Do you now understand why most of us are skeptical about this?

If I deposit 100 BTC into your exchange and if the funds then get frozen, no one will answer for my losses.

Now I understand that people may deposit INR as well, but that is not as big a problem as BTC deposits. INR depositors can always go to the courts. Bitcoiners cannot.

If you do want a clean start, talk to people like buysellbitcoin, his business model is the closest that I have seen to a clean implement with full working knowledge of the law in India.

Keep space open for miners to deposit BTC without a PAN card. Upto 20K INR withdrawals do not need to be reported to the RBI, or is it up to 50K.

Without BTC deposits, INR is useless in an exchange.

Keep the PAN card as an optional requirement. But make it a mandate to provide that information before withdrawing INR.

This will allow for a lot more flexibility and realism in your operation.

There is no lack of technology providers in India. Building a robust exchange system is easy peasy.

Getting the trust of users, most importantly engaging in deposits is where the key problems in Bitcoin lie.

[buysellbitcoin]

I NEVER claimed that business had full approval from govt. We have done reasonable We have discussed with CA's, and few legal councellors and taken advice.
We had filed petitions on officials related to FEMA\FERA and Payment\settlement dept(which regulates e-wallets etc), with appropriate legal channels as i mentioned before. As i said the appeals are dismissed by higher officials. And they are considering it as hypothetical as of now. And there are few other petitions filed on other appropriate govt agencies at this point of time.

Point is if something is not regulated, it cannot be deduced clearly as legal or illegal. And we clearly are not doing business without the notices to appropriate govt agencies in advance.
The legal quest does not end here, as it is known it takes lots of time and effort.
Understanding is govt needs a cut through taxes of any business.
Also, i dont want to divulge too much details of our organization strategy on legal approach because it worries me that a competition would follow the same strategy.

I guess, most of the rules made after lobbying. Without some organization need for regulation and asking them for it, if we expect them to make public announcement, the wait would be forever.

Now I understand that people may deposit INR as well, but that is not as big a problem as BTC deposits. INR depositors can always go to the courts. Bitcoiners cannot.

Bitcoiners cannot go to court, since Bitcoin operates across jursidictions. Best part of Bitcoin is its free operation, not so best part is cannot go to courts(i guess this may happen in future they people indeed may approach courts over bitcoin).
We can operate without PAN, and ask PAN while withdrawal.
There is are inherent problems with that and need input feedback\solution for this in this community:

1) A person deposits >50K and does not operate his account(this may go not reported, since no identity).
2) A person hacks another bank account and transfers money to the exchange account, buys bitcoins and withdraws bitcoins. This is a huge issue.
3) Person deposits >50K without learning there needs to be PAN and while withdrawing, if we demand PAN while withdrawal of INR he might feel cheated. Many of international payment solution does similar to this.

I am sure the above issues attract a competent authority to investigate into matter than trading in BTC.

Ok now we are talking on correct points.

1) A person deposits >50K and does not operate his account(this may go not reported, since no identity).
You must have daily and monthly or overall limit say 20k. If transaction or overall goes above that you need copy of PAN and verification mandatory for the same. If he is not operating his account, you should just carry forward his balance. Its not your issue and as long as money is not withdrawl to some else account, there is nothing to worry about it. Remember if someone deposits some money in your account, its not your money, its still his money as long as its there. Make sure your transaction account is different bank account and it does not involve your daily other business transactions. This account must be used only for exchange transactions that is only deposit and withdrawl. You can have a periodic evaluation period where you transfer profit to your other account from where exchange pays its operation costs.

2) A person hacks another bank account and transfers money to the exchange account, buys bitcoins and withdraws bitcoins. This is a huge issue.
Support only NEFT. NEFT requires user to add payee and mostly have two factor + cooling period enabled. So if transfer is coming from NEFT in 99.99% cases you can prove them user has transferred funds himself. Still want to ensure that user is the actual person to transfer money, for transaction above some value say 20k, ask him to send you notorized affidavit stating that they are going to use X account for transaction to your account. Ask them to provide a physical copy of bank statement obtained from bank branch.

3) Person deposits >50K without learning there needs to be PAN and while withdrawing, if we demand PAN while withdrawal of INR he might feel cheated. Many of international payment solution does similar to this.
Thats their problem. Make deposit order based. Allow them to book order in your system. Make it very very noticeable in instructions. Dont allow them to even book order if they do not meet your verification requirement.

And on top of all, PLEASE use 100% cold storage. Anything in hot wallet will be stolen, write this on your spects.

Everyone in India wants an exchange. We want it badly because that will allow us to find actual INR price and will save us lot of costs.

Cheers

[Benson Samuel]

Bitcoiners cannot go to court, since Bitcoin operates across jursidictions. Best part of Bitcoin is its free operation, not so best part is cannot go to courts(i guess this may happen in future they people indeed may approach courts over bitcoin).

Or, new decentralized courts will be setup to identify non-jurisdictional crime. This is in the purview of a Libertarians aspect of Private law.

We can operate without PAN, and ask PAN while withdrawal.

Thank you. This will help you move forward for sure.

There is are inherent problems with that and need input feedback\solution for this in this community:

And everyone will help answer to our best ability.

1) A person deposits >50K and does not operate his account(this may go not reported, since no identity).

If INR is deposited over specified limit, then PAN must be provided. This is a simple argument that needs to be coded into your deposit rules function. If BTC is deposited, nothing matters on the deposit as there is no regulation 'yet' (24th May 2013). Accounts can even be anonymous until the person wishes to 'Withdraw in INR'. But allowing anon accounts is a strategy decision and I will not advise on that.
Your withdrawal rules need to use the same identifier from your database as PAN received. If the PAN has been received then Withdrawal/ Deposit of specified amounts may continue. If no PAN card is received, then no withdrawals in INR will be permitted.

So that way, you have no deposits in INR over specified limits and you will not have any Withdrawals from peeps who do not have the required KYC/ AML.

This is a model where you play entirely in unregulated space.

Assuming that your legal strategy was to circulate money and free accounts within the 7 day deposit rule period, then that is not possible. You 'NEED' a quasi banking licence in order to accept INR deposits. I would advice you to look toward forming your own co-operative society bank for this. Co-operative banks have recently been granted further freedoms from the RBI and they look very promising for community/ local space banking and investments.
luckyindia (from our forum) had proposed this model to me some time ago, but the regulations did not look as good as they do now. Please do message him to understand more. He has been a lifetime entrepreneur and loves to help.

2) A person hacks another bank account and transfers money to the exchange account, buys bitcoins and withdraws bitcoins. This is a huge issue.

Thats what you hire Fraud and Risk people to deal with. Of course, you need to partner with few banks as well for this. This is a problem that even Flipkart face, so you need to seek guidance in Fraud and Risk.

3) Person deposits >50K without learning there needs to be PAN and while withdrawing, if we demand PAN while withdrawal of INR he might feel cheated. Many of international payment solution does similar to this.

If you read point 1, then you will see that a single condition in your code can prevent this.

[buysellbitcoin]

Ok one more suggestion :

Try to open a testnet....  Let people register, Give them initial fake balance like 50k INR, and 100 fake BTC.. Let them trade.. Let them use system and know how it works. Let them withdraw fiat balance, let them withdraw fake BTC balance and see how it works...

It will also serve as great testing ground for you. it will also serve as awesome trial for your trading engine.

let people hack it in your testnet and you will know exactly what is the issue before it hurts you.  it will also allow people to understand you, your system and it will build trust for your system at least. You will also be able to test your support channel efficiency and you will realize that its easy to setup a phone support for at least paying customer. If this idea gets viral and its hit, you owe us Pizaa delivered to our places

Once again : Please do not put anything in hot wallet, it will get stolen...Two factor is more important than anything else. Spend all money you can to make sure your DNS is with provider whom you can trust, make sure your mail server is secure like (?) and  has SPF records, I am sure you have dedicated server ( No VPS, dedicated is must with no hosting company management account ) and truecrypt installed there, you have offline backups in encrypted drives and internal messaging in your company is all PGP based, and above all you have death switch which will allow next competent official in your team access to cold wallet.

Cheers

[Benson Samuel]

Cant reserve more 

I accept BTC at 1DZ24R5X4yvmvdAzj7TMnFqWBfv6KPDef5 for the above mentioned advice :p

[drdanishkhan]

Finally some humour.. it was gettin intense..

[buysellbitcoin]

Finally some humour.. it was gettin intense..

nah.. all Benson wants is BTC.. No fun intended

[Benson Samuel]

Finally some humour.. it was gettin intense..

nah.. all Benson wants is BTC.. No fun intended

OMFG.. That was supposed to  be our secret!

[drdanishkhan]

LOL..

Humour plus a friday mini rally.. 

[Benson Samuel]

LOL..

Humour plus a friday mini rally..  

129 and then bust to 109 :p

[Benson Samuel]

I guess, most of the rules made after lobbying. Without some organization need for regulation and asking them for it, if we expect them to make public announcement, the wait would be forever.

Call me on Monday!. I will let ya know 7000 ways that you guys can improve your business model.

[Benson Samuel]

Finally some humour.. it was gettin intense..

nah.. all Benson wants is BTC.. No fun intended

If you were able to speculate on my accumulated BTC wealth, I would be impressed/ Shocked!
Hardly 0.05% of my BTC is in Hard wallets :p, so that would mean that you either sold me BTC to find my ID, which is not the case or you know my cold wallet pub key, which is not the case as well. As I have never sold BTC 'ever' from my income wallets, I can be assured, that no one knows what I own.

I do not need any more money. That sorted itself few years ago.

I want a movement. I want a change. I want real true freedom and peace! I want free market that my children will prosper in; And I do mean better than others!

I am also willing to fight for it like a true Anon! With code, discipline and true passion.

And no, I cannot be traced :p. I may not be a text book lawyer, but I will sure put those bitches to shame ;0

[drdanishkhan]

Finally some humour.. it was gettin intense..

nah.. all Benson wants is BTC.. No fun intended

If you were able to speculate on my accumulated BTC wealth, I would be impressed/ Shocked!
Hardly 0.05% of my BTC is in Hard wallets :p, so that would mean that you either sold me BTC to find my ID, which is not the case or you know my cold wallet pub key, which is not the case as well. As I have never sold BTC 'ever' from my income wallets, I can be assured, that no one knows what I own.

I do not need any more money. That sorted itself few years ago.

I want a movement. I want a change. I want real true freedom and peace! I want free market that my children will prosper in; And I do mean better than others!

I am also willing to fight for it like a true Anon! With code, discipline and true passion.

And no, I cannot be traced :p. I may not be a text book lawyer, but I will sure put those bitches to shame ;0

sorta like a future hitman.. no traces.. whatsoever.. i like.. teach me o master benson 

[Benson Samuel]

Ok one more suggestion :

Try to open a testnet....  Let people register, Give them initial fake balance like 50k INR, and 100 fake BTC.. Let them trade.. Let them use system and know how it works. Let them withdraw fiat balance, let them withdraw fake BTC balance and see how it works...

It will also serve as great testing ground for you. it will also serve as awesome trial for your trading engine.

let people hack it in your testnet and you will know exactly what is the issue before it hurts you.  it will also allow people to understand you, your system and it will build trust for your system at least. You will also be able to test your support channel efficiency and you will realize that its easy to setup a phone support for at least paying customer. If this idea gets viral and its hit, you owe us Pizaa delivered to our places

Once again : Please do not put anything in hot wallet, it will get stolen...Two factor is more important than anything else. Spend all money you can to make sure your DNS is with provider whom you can trust, make sure your mail server is secure like (?) and  has SPF records, I am sure you have dedicated server ( No VPS, dedicated is must with no hosting company management account ) and truecrypt installed there, you have offline backups in encrypted drives and internal messaging in your company is all PGP based, and above all you have death switch which will allow next competent official in your team access to cold wallet.

Cheers

+10 for sharing your competitive advantage!

[subvolatil]

Hey !  icoinv

can i  see  the UI  for your  site. i really love to  see how  it is  and  how  you have  configured the   trading  platform for  sellers and  buyers. after  which i  will  regester  on your  site and  make  a  deposit. would  20,000/- deposit  be  fine  in the beginning. 

[Benson Samuel]

Hey !  icoinv

can i  see  the UI  for your  site. i really love to  see how  it is  and  how  you have  configured the   trading  platform for  sellers and  buyers. after  which i  will  regester  on your  site and  make  a  deposit. would  20,000/- deposit  be  fine  in the beginning. 

Deflection, Answer my Questions first!