I just dont understand what is going on . . . and a question on Chase seizure

[TheBanker]

Removed by Ben Bernanke

[AliceWonder]

Hi,

I bank with Chase. I asked them specifically and the answer I received was that they could not comment on why the alleged accounts were closed or frozen but that my account was not in danger of being closed if all I was doing was transfering money to and from a legal exchange, regardless of what type of commodoties that exchange dealt with.

My suspicion is that the reddit thread is a load of balderdash, that they either were doing something illegal (such as acting as an exchange without the proper paperwork), laundering money, or something else that triggered the accounts to be closed and/or frozen.

reddit is a neat place but it frequently is full of half-truths so take reports there with a lot of salt. Sometimes truth is stretched, sometimes outright lies are told.

[TheBanker]

I also forgot to mention that another reason why I'm confused/concerned about current conditions is because I am once again finding arbitrages across markets. I was able to find arbitrage across markets like Coinbase & CampBX and Coinbase & Tradehill. With the ridiculous fees that Coinbase charge, arbitrages shouldn't even be possible. But they are and that's a little worrisome - efficient markets shouldn't have this large number of arbitrage possible.

[TheBanker]

Removed by Ben Bernanke

[notme]

Hi,

I bank with Chase. I asked them specifically and the answer I received was that they could not comment on why the alleged accounts were closed or frozen but that my account was not in danger of being closed if all I was doing was transfering money to and from a legal exchange, regardless of what type of commodoties that exchange dealt with.

My suspicion is that the reddit thread is a load of balderdash, that they either were doing something illegal (such as acting as an exchange without the proper paperwork), laundering money, or something else that triggered the accounts to be closed and/or frozen.

reddit is a neat place but it frequently is full of half-truths so take reports there with a lot of salt. Sometimes truth is stretched, sometimes outright lies are told.

I appreciate the reply. I don't know you so I dont know what your transaction volume is like. But the reddit caught my eye because I dont get to see too many people who do large BTC volume. I'm not saying I'm the biggest out there, I'm not, but I'm probably not the average Chase customer with 1 or 2 BTC exchange deposits every once in a while. Literally all my deposits are from exchanges and I average about 5-8 deposits every day. I'm sure the reddit people were similar or (more likely) higher than that.

If you are a US citizen and you are not operating under a registered money services provider, you are breaking the law and will have your account closed if someone ever decides to look into your transactions.

[AliceWonder]

If you are selling bitcoins for cash / buying bitcoins for cash as your business then yes, you have to register.
I don't do that which is why I don't have to worry. That's operating as an exchange, transmitter, etc.

That will be the case regardless of where you bank.

[TheBanker]

Removed by Ben Bernanke

[notme]

Hi,

I bank with Chase. I asked them specifically and the answer I received was that they could not comment on why the alleged accounts were closed or frozen but that my account was not in danger of being closed if all I was doing was transfering money to and from a legal exchange, regardless of what type of commodoties that exchange dealt with.

My suspicion is that the reddit thread is a load of balderdash, that they either were doing something illegal (such as acting as an exchange without the proper paperwork), laundering money, or something else that triggered the accounts to be closed and/or frozen.

reddit is a neat place but it frequently is full of half-truths so take reports there with a lot of salt. Sometimes truth is stretched, sometimes outright lies are told.

I appreciate the reply. I don't know you so I dont know what your transaction volume is like. But the reddit caught my eye because I dont get to see too many people who do large BTC volume. I'm not saying I'm the biggest out there, I'm not, but I'm probably not the average Chase customer with 1 or 2 BTC exchange deposits every once in a while. Literally all my deposits are from exchanges and I average about 5-8 deposits every day. I'm sure the reddit people were similar or (more likely) higher than that.

If you are a US citizen and you are not operating under a registered money services provider, you are breaking the law and will have your account closed if someone ever decides to look into your transactions.

Take it easy there, Bernanke . . .

1 - Nowhere did I say that I was not a registered MSB. You are making a ton of assumptions there.

2 - The law only requires registration after 180 days - I have not operated that long. I am in the process of establishing my LLC and will have all FinCen paperwork in place before my 180 days is up.

3 - Even legitimate businesses that ARE registered as MSBs are still getting their accounts seized & shut down.

In conclusion, you don't know what you're talking about . . .

I didn't make assumptions, I added conditions to my statement.... see how it starts with IF.  I just wanted you to be aware since you were asking if your account could potentially be closed.  In conclusion, you are an ass.

[RagnarDanneskjold]

This is hilarious. Thank you all. Best laugh of the day!

[halfawake]

So people selling bitcoins on localbitcoins need to be registered as MSBs too?  I thought it was only exchanges themselves, but maybe volume is a factor.  I was thinking of selling on localbitcoins eventually, so I guess I'll have to look into these laws eventually.

I signed up for Coinbase myself and was reluctant to use them initially because the fees are relatively high compared to the exchanges, but it's so easy to use that I'm willing to put up with a 1% fee.  I was hoping to use bitstamp with their lower fees, but since I don't live in Europe the fees would actually be higher than Coinbase's fees overall since I'd have to pay wire transfer fees or SnapSwap's fees if I went the Ripple route.

My personal theory on why the price is lower on non-MtGox exchanges is because the volume is so much less.  More volume tends to push up prices, so MtGox prices get pushed up and the other exchanges prices tend to stay lower.

[notme]

So people selling bitcoins on localbitcoins need to be registered as MSBs too?  I thought it was only exchanges themselves, but maybe volume is a factor.  I was thinking of selling on localbitcoins eventually, so I guess I'll have to look into these laws eventually.

I signed up for Coinbase myself and was reluctant to use them initially because the fees are relatively high compared to the exchanges, but it's so easy to use that I'm willing to put up with a 1% fee.  I was hoping to use bitstamp with their lower fees, but since I don't live in Europe the fees would actually be higher than Coinbase's fees overall since I'd have to pay wire transfer fees or SnapSwap's fees if I went the Ripple route.

My personal theory on why the price is lower on non-MtGox exchanges is because the volume is so much less.  More volume tends to push up prices, so MtGox prices get pushed up and the other exchanges prices tend to stay lower.

It depends.  If you are selling because you want to sell bitcoins and buy dollars you should be fine.  If you make it your business to buy and sell for people and take a fee you are a broker and must register.

I've had nothing but good experiences with Coinbase, but obviously you need to make your own assessment of the risks of any business you hold money with.

[halfawake]

So people selling bitcoins on localbitcoins need to be registered as MSBs too?  I thought it was only exchanges themselves, but maybe volume is a factor.  I was thinking of selling on localbitcoins eventually, so I guess I'll have to look into these laws eventually.

I signed up for Coinbase myself and was reluctant to use them initially because the fees are relatively high compared to the exchanges, but it's so easy to use that I'm willing to put up with a 1% fee.  I was hoping to use bitstamp with their lower fees, but since I don't live in Europe the fees would actually be higher than Coinbase's fees overall since I'd have to pay wire transfer fees or SnapSwap's fees if I went the Ripple route.

My personal theory on why the price is lower on non-MtGox exchanges is because the volume is so much less.  More volume tends to push up prices, so MtGox prices get pushed up and the other exchanges prices tend to stay lower.

It depends.  If you are selling because you want to sell bitcoins and buy dollars you should be fine.  If you make it your business to buy and sell for people and take a fee you are a broker and must register.

I've had nothing but good experiences with Coinbase, but obviously you need to make your own assessment of the risks of any business you hold money with.

That makes sense.  Oh, I'm not complaining about Coinbase as a company.  I used them to buy my first bitcoins and the process went very smoothly, the coins arrived when they said they would.  I just like to minimize my fees when buying, that's my reason for being inclined to buy elsewhere.  I'm looking at CampBX now, but I haven't decided for sure if I'll switch yet.

[TheBanker]

Removed by Ben Bernanke

[johnyj]

500:1??? Seems Mtgox are buying all the coins by themselves, is there a japanese bank behind them? Say, this bank would like to support the bitcoin price as much as possible in a ten-years period with some of their spare USD reserve and acquire at least 20% of total coin supply 

[RationalSpeculator]

Great post! Thank you so much for sharing your insights and experiences OP.

[TheBanker]

Removed by Ben Bernanke

[TheBanker]

Removed by Ben Bernanke

[RationalSpeculator]

Great post! Thank you so much for sharing your insights and experiences OP.

You're welcome. Again, I'm not claiming to be the largest out there, but I've done my fair share of BTC trades and this gives me a unique perspective (and problems!) than some (most?) BTC holders on these boards. I'm happy to share that perspective.

Very interesting. In my region you can buy btc 10% below mtgox via localbitcoins if you are able to buy larger amounts above 100 btc, which is very nice indeed. What are the spreads in your region?

[johnyj]

500:1??? Seems Mtgox are buying all the coins by themselves, is there a japanese bank behind them? Say, this bank would like to support the bitcoin price as much as possible in a ten-years period with some of their spare USD reserve and acquire at least 20% of total coin supply 

I dont know if its a bank (or whatever) but sometimes I do wonder about where those Gox BID orders come from. I don't want to derail my own post but (1) I'm often worried about the BID side on Gox because a ton of those orders are usually for 0.1 BTC. Those are small, insignificant orders but they can effectively pump up a price. When a large seller like me comes along, if I act improperly I can collapse the price by a few dollars (2) also, I always have my questions on the utility of BTC - what can you actually do with it. I just don't see why so many people would demand it. Again, my ratio of sellers/buyers is like 10:1 - is Gox THAT much better???

On Point 1 above, ASIC scares me because you have to exercise good judgement when trading large amounts of BTC. I shudder at the thought of an ASIC newbie posting their orders on Gox 

Obviously, I'm not trying to imply any malfeasance on the part of Gox or anyone else (Gox has a ton of positives going for it too) but I will admit that on some days I will cancel a meeting with a BTC seller if I see these types of anomalies on the Gox books and re-schedule for another day.

I think exchange is the most important place to decide a currency's value. Even for a large economy like Japan, their central bank still intervene with large amount of buy/sell to scare the speculators out and keep the exchange rate, unless some fundamentals changed, the exchange price will be relatively stable

A currency's value is mostly decided by a consensus (What can you actually DO with a currency? Exchange for other things), and that consensus typically comes from exchange. Since MTGOX is a very early supporter of bitcoin, I think they have the motivation to support the exchange price and promote public image of bitcoin, similar to FED printing dollars to artificially support the housing price (If amount of houses are more than amount of inhabitant, essentially the extra houses worth nothing: You can't even rent them)

Support the exchange price for bitcoin is relatively easy, since the supply is limited, in worst case you end up buying all the coins, and when demand rises again, even a little bit, there will be shortage of coin supply, the price will skyrocket. So the downside risk is small and upside potential is enormous, just throw in a couple of billion dollars  and the exchange price will be supported. (Currently Bitcoin market capital is really small compared to real world economy, I've seen a single telecom equipment order from a japanese operator larger than 30 billion dollars)

If bitcoin's price rised another 100/1000 times, maybe it becomes difficult to support the bitcoin price, but by that time there will be other larger players, I heard many traders from wall street investment banks are already trading at MTGOX. If each of them are willing to put 1 billion dollars at stake, the downside risk is limited

Your ratio of 10:1 could be a indicator of recent sentiment after price shock in April, how is that ratio before April?

[TheBanker]

Removed by Ben Bernanke