CoinGator

[pstudart]

Hello everyone,

My names Patrick Studart, I am Co-creator of CoinGator.com with my partner Greg Matthews.
We buy Bitcoin at competitive prices and pay out with Paypal.

I just wanted to introduce everyone to our site, also I want to say what a pleasure it was to meet
so many of you at the Bitcoin Conference.

Regards,
Patrick Studart
pstudart@coingator.com

[Matthew N. Wright]

Welcome! That business model sounds like a wonderful one where lots of people will set themselves up for having their money reversed back into your account up to 1 year later! Count me out.

Good luck!

[pstudart]

We will be adding other forms of payment besides paypal in the near future.

Regards,
Patrick Studart

[wolverine.ks]

If you take that money out of your PayPal account,  how could it be reversed? Or if you spend it?

Do they just send you a bill or does law enforcement get involved?

[BitCoinUser123]

If you take that money out of your PayPal account,  how could it be reversed? Or if you spend it?

Do they just send you a bill or does law enforcement get involved?

I'm not sure I understand your question?

You are exchanging bitcoins for Paypal. The system creates a unique receiving address for each customer. After the first confirmation the system prompts us to make payment to the customer. The payment is then manually sent to the customer from the company account.

I think the question was: "Assuming you sell BTC in exchange for fiat currency via PayPal, and you then remove those funds from your PayPal account, and THEN the buyer reverses the PayPal transaction through a chargeback or other means, you would be left with a negative balance in your PayPal account. If this happens, what method if any would PayPal use to reclaim their money from you?"

Assuming I've got the question right, my understanding (based on personal experience) is that they will reverse the transaction leaving you with a negative balance in your PayPal account.  If you have a linked bank account or credit card, then I believe PayPal can bill that after a set period of time.  In my personal experience, they just sent me a couple of notices that a payment had been reversed and I had a negative balance - the next time I received a payment, they ate enough of it to offset the negative balance automatically.

I don`t know what PayPal`s specific policy would be, but most likely collections would become involved rather than LE.  It`s going to be a civil matter unless they were somehow able that you were perpetrating a fraud or something.  In any case it`d be inconvenient and they would certainly shut down your account in rather short order if you`ve pulled your money and sit there with a negative balance for an extended period of time.

I`m pretty sure there are others with more extensive personal experience on this who can tell you exactly what PayPal`s Standard Operating Procedure is on this one.  I would also guess it varies from jurisdiction to jurisdiction.  My specific example is for UK / US which seems to be basically the same on this matter.

[Matthew N. Wright]

If you take that money out of your PayPal account,  how could it be reversed? Or if you spend it?

Do they just send you a bill or does law enforcement get involved?

I'm not sure I understand your question?

You are exchanging bitcoins for Paypal. The system creates a unique receiving address for each customer. After the first confirmation the system prompts us to make payment to the customer. The payment is then manually sent to the customer from the company account.

I think the question was: "Assuming you sell BTC in exchange for fiat currency via PayPal, and you then remove those funds from your PayPal account, and THEN the buyer reverses the PayPal transaction through a chargeback or other means, you would be left with a negative balance in your PayPal account. If this happens, what method if any would PayPal use to reclaim their money from you?"

Assuming I've got the question right, my understanding (based on personal experience) is that they will reverse the transaction leaving you with a negative balance in your PayPal account.  If you have a linked bank account or credit card, then I believe PayPal can bill that after a set period of time.  In my personal experience, they just sent me a couple of notices that a payment had been reversed and I had a negative balance - the next time I received a payment, they ate enough of it to offset the negative balance automatically.

I don`t know what PayPal`s specific policy would be, but most likely collections would become involved rather than LE.  It`s going to be a civil matter unless they were somehow able that you were perpetrating a fraud or something.  In any case it`d be inconvenient and they would certainly shut down your account in rather short order if you`ve pulled your money and sit there with a negative balance for an extended period of time.

I`m pretty sure there are others with more extensive personal experience on this who can tell you exactly what PayPal`s Standard Operating Procedure is on this one.  I would also guess it varies from jurisdiction to jurisdiction.  My specific example is for UK / US which seems to be basically the same on this matter.

Exactly this.

[Matthew N. Wright]

The customer comes to our website and is sending bitcoins. We then send PayPal payment to the customer. The account is used exclusively for this purpose thus chargebacks are not an issue.

Hi. I think you're missing the point. Chargebacks are always an issue. It's Paypal. Let me try to explain simply the way things work for new companies who use paypal and bitcoin together:

• User sends bitcoins to your company
• Your company sends paypal payment
• 6 months later your company reverses the payment
• User is out their bitcoins and paypal balance
• Your company disappears with 6 months worth of "good" feedback based transfer volume. Scam successful.

Then there is the "honest" business. This business is blind to the consequences, and although doesn't steal coins the following happens (and has already happened dozens of documents times):

• User sends bitcoins to your company
• Your company sends paypal payment
• Paypal closes your account for trading a digital currency against TOS
• User's associated account is also limited and they can't touch their funds for 6 months
• Your company disappears despite being honest because it caused so much trouble

This is not 2009. Paypal is not an option for bitcoin. Please take a hint and stop talking about it, it only makes you and the company you represent look worse.

[BIGMERVE]

The customer comes to our website and is sending bitcoins. We then send PayPal payment to the customer. The account is used exclusively for this purpose thus chargebacks are not an issue. Bitinstant offers a similar service.

Yes they are still an issue. Bitinstant is a well established company that has a lot to lose if they started chargebacks. Your "company" is so far completely anonymous with no rep. Your website was easily made using bootstrap, and that doesn't help promote confidence.

[pstudart]

Basically it comes down to us building trust within the Bitcoin community. We know that,  We will offer other forms of payment till that trust has been built.

We dont expect you to trust us blindly, but we are eager to work towards the goal of earning your trust.

Best Regards

[Matthew N. Wright]

Basically it comes down to us building trust within the Bitcoin community. We know that,  We will offer other forms of payment till that trust has been built.

We dont expect you to trust us blindly, but we are eager to work towards the goal of earning your trust.

Best Regards

Even a company I did trust loses that trust when they begin offering BTC>Paypal options. If your intention is to *build* trust, you're doing it wrong.

[BitCoinUser123]

Patrick, I get what you are saying - or at least, I get what you *could* be saying if I give you the benefit of the doubt.  "PayPal is a convenient, easy way to move funds around, and therefore why wouldn't potential customers be happy with us offering it?!"

Fair point.  The issue is that you're exchanging an easily reversible payment system (PayPal) for a definitionally irreversible payment system (BTC).  Which means that no matter what your intentions, somebody is going to get screwed sooner or later.  In addition, PayPal actively refuses to be a part of check-cashing systems and they are specifically inhospitable to transactions in other currencies not offered by them.  There are a bunch of threads about this - basically, one of two things WILL happen. 

1)  You pay out for bitcoins, and at some point you charge back (could be a long time later).
2)  Someone pays YOU for bitcoins, and then they charge back (or it turns out the card info associated with the PayPal account was stolen, etc.)

You are promising not to charge back - cool.  You probably mean that too.  But let's think about a scenario in which you sell off $10k worth of BTC in the first couple of weeks.  In 5 months, #2 happens a whole bunch - initially you say "We're not doing chargebacks, we promised." But then, eventually the losses reach a point that your only option is to recoup those losses somehow - namely by charging back the funds which you paid out in exchange for bitcoins, now that you've lost so much that you can't afford to eat those losses.

Dealing with PayPal gives you access to a legal recourse (in the form of chargebacks) that the seller of bitcoins will not have.  In addition, it opens up the prospect of PayPal closing your account for any number of reasons, and so forth.  It's a lot of extra liability and uncertainty that isn't present with other cash transfer methods. 

So a new business offering PayPal could be scamming - or alternatively, they could think it's a really great idea and really convenient for customers, but they may not recognize the extent to which it could mess them up. 

There's a heap of threads dealing with this - I'm not accusing you specifically of being a scammer, but the use of PayPal for bitcoin transactions (from either side) is generally considered a pretty bad idea.

[ironcross360]

6 months? I thought it was 30days maximum to reverse? I really trust this company...

[crazylikeafox]

Basically it comes down to us building trust within the Bitcoin community. We know that,  We will offer other forms of payment till that trust has been built.

We dont expect you to trust us blindly, but we are eager to work towards the goal of earning your trust.

Best Regards

Even a company I did trust loses that trust when they begin offering BTC>Paypal options. If your intention is to *build* trust, you're doing it wrong.

I don't think that merely offering a service that many other companies offer is a reason not to trust them.  Somewhere along the line, there must be some trust.  Bitinstant is doing all kinds of crazy, nefarious things to delay payment processing.  They also offer BTC to Paypal (via btc-e or mtgox coupon, so it's one step removed), yet they aren't catching as much crap as you guys are giving this company.  At least they haven't yet let anyone down, which seems to be Bitinstant's primary business function.  Maybe they won't go the way of Bitinstant and will be an honorable, trustworthy company.

[data_teks]

The customer comes to our website and is sending bitcoins. We then send PayPal payment to the customer. The account is used exclusively for this purpose thus chargebacks are not an issue.

Hi. I think you're missing the point. Chargebacks are always an issue. It's Paypal. Let me try to explain simply the way things work for new companies who use paypal and bitcoin together:

• User sends bitcoins to your company
• Your company sends paypal payment
• 6 months later your company reverses the payment
• User is out their bitcoins and paypal balance
• Your company disappears with 6 months worth of "good" feedback based transfer volume. Scam successful.

Then there is the "honest" business. This business is blind to the consequences, and although doesn't steal coins the following happens (and has already happened dozens of documents times):

• User sends bitcoins to your company
• Your company sends paypal payment
• Paypal closes your account for trading a digital currency against TOS
• User's associated account is also limited and they can't touch their funds for 6 months
• Your company disappears despite being honest because it caused so much trouble

Your first scenario:

   It's not like there is a "chargeback all transactions as fraudulent" button their company can just push and instantly get their money back. Think Paypal is really this dumb to think that these transactions are all fraud on the 1000s of users' end?  Also, their account is no way going to be receiving any decent amount of cash without going through a pretty thorough check with paypal at some point. If they're going to scam (will be using fake information?), they will be shut down within receiving over $10k or sooner.

Also, the 6 month timeline for a chargeback is only if the payment was made from a credit card.  This is because paypal is at the mercy of the credit card companies with longer chargeback times. These guys will have to be paying from their paypal balance which only has a 45 day window for chargebacks.  Given the amount of time they have already been operating, I would bet they don't intend on scamming.


Second scenario:

 Now this the more likely scenario and I agree with almost all of it except the part where you say user's accounts also get limited.  The only way they would do that is if they think the user's account is owned by the company and is being used to launder money out of the main account. If you have had any established paypal account for awhile, you will be fine.  Your comment "(and has already happened dozens of documents times)" is probably nothing more than people opening up new paypal accounts with fake information trying to get money through their system anonymously.  Then those people come to forums like this and say "paypal froze my account and now my money is gone". You won't ever get the full story...

Bitcoin is based around anonymity, Paypal is based around the exact opposite.

When Paypal Limits your account, they make you submit documents to prove the information on your account is valid. The kicker here is they don't let you see what information is listed in your account once it's limited.  So all these people that thought they could use paypal and bitcoin with full anonymity and opened an account with bogus information are screwed because they can't confirm anything as they don't remember what they put in there or can't prove it.

And for the record, in 2008 I started making $1000s of dollars monthly on eBay/Paypal.  My account was in good standing and was all the sudden "limited" by Paypal with no warnging. However, I submitted all the documents they requested: Photo ID & bank account statement (notarized by bank manager), copy of DBA certification from my state, and my business EIN number.  My account was unfrozen days later; now over 5 years and $150k later, I have had no issues (this includes selling bitcoins).

That being said, the only people at risk here I think is the company itself if it doesn't tread carefully with Paypal...

[Matthew N. Wright]

yet they aren't catching as much crap as you guys are giving this company.

They're catching *more* crap. Please see the "Scam Accusations" threads about how BitInstant is failing to be, well, instant. As for them using Paypal, I was up against that the first day they announced it.

It's not like there is a "chargeback all transactions as fraudulent" button their company can just push and instantly get their money back. Think Paypal is really this dumb to think that these transactions are all fraud on the 1000s of users' end? Also, their account is no way going to be receiving any decent amount of cash without going through a pretty thorough check with paypal at some point. If they're going to scam (will be using fake information?), they will be shut down within receiving over $10k or sooner.

You're either a scammer trying to spread FUD, or you've never used Paypal extensively as a payments provider like I have.

Also, the 6 month timeline for a chargeback is only if the payment was made from a credit card.  This is because paypal is at the mercy of the credit card companies with longer chargeback times. These guys will have to be paying from their paypal balance which only has a 45 day window for chargebacks.  Given the amount of time they have already been operating, I would bet they don't intend on scamming.

I've personally proven this wrong numerous times, it's well documented that people have called the solutions technicians directly and had their funds reversed as late as 12 months after.

Now this the more likely scenario and I agree with almost all of it except the part where you say user's accounts also get limited.

Paypal's TOS has been the subject of numerous threads here on the forums with the same outcome for everyone. They do not allow the trading of currencies. Trading is both selling and buying. Both accounts get limited. Stop spreading FUD.

And for the record, in 2008 I started making $1000s of dollars monthly on eBay/Paypal.  My account was in good standing and was all the sudden "limited" by Paypal with no warnging. However, I submitted all the documents they requested: Photo ID & bank account statement (notarized by bank manager), copy of DBA certification from my state, and my business EIN number.  My account was unfrozen days later; now over 5 years and $150k later, I have had no issues (this includes selling bitcoins).

If you're so sure of yourself, what is your paypal email? We'll call Paypal, tell them you're selling a digital currency, and see what happens to your account after that. (Pro-tip: The exact same thing that happens to each and every personal and business account who has violated their TOS and tried it over the past 3 years regardless of verifications, documents, etc)

That being said, the only people at risk here I think is the company itself if it doesn't tread carefully with Paypal...

I repeat, you're either a scammer spreading FUD or you're just ignorant to the reality of Paypal. Paypal is a scam enabler and the people running "CoinGator" do not deserve anyone's trust.

[data_teks]

Well I guess we just come from two different experiences I suppose...

[crazylikeafox]

Fastcash4bitcoins offers this exact service (though they are usually out of money because they are so popular).  Yet I haven't ever seen this kind of vitriol leveled at them.  Calling a service like this a scam before it is even doing any business is out of line IMO.  I don't know if there are conflicts of interest involved on the part of the people making these comments, but these comments are premature at best.  This model can be successful, and at the present time these guys have given no indication that they won't be.

[Matthew N. Wright]

Fastcash4bitcoins offers this exact service (though they are usually out of money because they are so popular).  Yet I haven't ever seen this kind of vitriol leveled at them.  Calling a service like this a scam before it is even doing any business is out of line IMO.  I don't know if there are conflicts of interest involved on the part of the people making these comments, but these comments are premature at best.  This model can be successful, and at the present time these guys have given no indication that they won't be.

1) No one called them scammers. They are asking for trust in an environment that has never worked well (Paypal for bitcoin).

2) Maybe no one has ever heard of that other site and that's why they aren't receiving the same questioning. Could you link to their thread please? I'd love to see what they promise.

[data_teks]

https://bitcointalk.org/index.php?topic=90192.0

As the previous poster said, they've been offering this exact service for almost a year (least on these forums). One would think if Paypal had a problem with it, these guys would of already been shut down. I also went through all 50+ pages and didn't see a single post about someone having their account "limited" due to selling them their bitcoins.

Not saying it can't happen, but calling out Coingator as if your going to lose money if you use their service is way premature..

I did a test spend of .10 BTC with coingator a few days ago.  If my account gets limited I will be the first one back here saying I was wrong..

[crazylikeafox]

Fastcash4bitcoins offers this exact service (though they are usually out of money because they are so popular).  Yet I haven't ever seen this kind of vitriol leveled at them.  Calling a service like this a scam before it is even doing any business is out of line IMO.  I don't know if there are conflicts of interest involved on the part of the people making these comments, but these comments are premature at best.  This model can be successful, and at the present time these guys have given no indication that they won't be.

1) No one called them scammers. They are asking for trust in an environment that has never worked well (Paypal for bitcoin).

2) Maybe no one has ever heard of that other site and that's why they aren't receiving the same questioning. Could you link to their thread please? I'd love to see what they promise.

https://bitcointalk.org/index.php?topic=90192.0 - as you can see in the 50+ page thread, no one has had problems and their customers give them rave reviews.