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Author Topic: CoinPal beta - Buying bitcoins with PayPal  (Read 144137 times)
mndrix
Michael Hendricks
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January 25, 2011, 03:07:40 PM
 #61

Could you, please, publish the addresses where the bitcoins from the fraudulent transactions were sent?

For those who are curious, here's a sample of addresses to which bitcoins were sent based on fraudulent PayPal payments.  It'd be a fun project to see where the "dirty" coins go.  Presumably, they're laundered rapidly:

  • 1FH274XRPhbiiSnT6hJXaqHnJwvWtsgWDU
  • 16WRE4GjnwEv35ZAvJ87MKQV86GJxyDips
  • 19ppPM6Vu4DNPbqtvDT5fUvKB1MwmQu7aB
  • 1CqRu4kwsTB7MgT9t25qt8eSDnRDVxpZL3

I won't publish the full list.
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January 25, 2011, 03:14:56 PM
 #62

You got that many scammers? I expected just a few. I wish we could at least find one or two of them and teach them a lesson.

I don't think tracing the coins will be relevant, they could have just sold them on mtgox or somewhere to someone who didn't have a clue where they originated from. :/

Bitalo.com coming soon!

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January 26, 2011, 08:45:39 AM
 #63

At least anyone saying bitcoin is not anonymous enough can try to prove it.

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January 26, 2011, 10:50:39 AM
 #64

At least anyone saying bitcoin is not anonymous enough can try to prove it.
i think "pseudo anonymity" describes it pretty well.
anyone who did her homework can access bitcoin network in a way that protects her true IP and identity
+ paypal fraud included most probably stolen id information + account into.

all that we can find out is barely patterns how the dirty bitcoins moved until they they were laundered.
assume IP addresses are found -> unusable if i2p or tor were used or a zombie botnet pc was used as exit point
assume we trace bitcoins through a chain of addresses -> they end up in a laundry / pool and become untraceable



I don't think all of those scammers would be smart enough to go through Tor or i2p - perhaps they just cracked someone's password for their email and used their paypal account (which, knowing some people's level of security awareness, had identical password to the email account password).

On a side note, it's just pathetic that they are ruining the good service for the sake of 40 BTC. Gordon Gekko would laugh hard. Smiley

Bitalo.com coming soon!

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January 26, 2011, 11:01:28 AM
 #65

At least anyone saying bitcoin is not anonymous enough can try to prove it.
i think "pseudo anonymity" describes it pretty well.
anyone who did her homework can access bitcoin network in a way that protects her true IP and identity
+ paypal fraud included most probably stolen id information + account into.

all that we can find out is barely patterns how the dirty bitcoins moved until they they were laundered.
assume IP addresses are found -> unusable if i2p or tor were used or a zombie botnet pc was used as exit point
assume we trace bitcoins through a chain of addresses -> they end up in a laundry / pool and become untraceable



I don't think all of those scammers would be smart enough to go through Tor or i2p - perhaps they just cracked someone's password for their email and used their paypal account (which, knowing some people's level of security awareness, had identical password to the email account password).

On a side note, it's just pathetic that they are ruining the good service for the sake of 40 BTC. Gordon Gekko would laugh hard. Smiley

It is pathetic, but they didn't ruin the service, as mndrix said he was expecting and is going to learn from it. There will be a better service in the end.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
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January 26, 2011, 11:25:41 AM
 #66

It is pathetic, but they didn't ruin the service, as mndrix said he was expecting and is going to learn from it. There will be a better service in the end.

Yeah, what I meant was they're causing some (hopefully minor) hassle.

Bitalo.com coming soon!

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January 26, 2011, 03:44:12 PM
 #67

At least anyone saying bitcoin is not anonymous enough can try to prove it.
i think "pseudo anonymity" describes it pretty well.
anyone who did her homework can access bitcoin network in a way that protects her true IP and identity
+ paypal fraud included most probably stolen id information + account into.

all that we can find out is barely patterns how the dirty bitcoins moved until they they were laundered.
assume IP addresses are found -> unusable if i2p or tor were used or a zombie botnet pc was used as exit point
assume we trace bitcoins through a chain of addresses -> they end up in a laundry / pool and become untraceable



I don't think all of those scammers would be smart enough to go through Tor or i2p - perhaps they just cracked someone's password for their email and used their paypal account (which, knowing some people's level of security awareness, had identical password to the email account password).

On a side note, it's just pathetic that they are ruining the good service for the sake of 40 BTC. Gordon Gekko would laugh hard. Smiley

You think someone willing to commit credit card fraud/identity theft to buy Bitcoins isn't familiar with Tor or i2p?? That's being a bit naive imo
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January 26, 2011, 03:57:35 PM
 #68

You think someone willing to commit credit card fraud/identity theft to buy Bitcoins isn't familiar with Tor or i2p?? That's being a bit naive imo

You're probably right there... I would just love to be able to catch at least one of these f*ckers.

Bitalo.com coming soon!

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mndrix
Michael Hendricks
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January 26, 2011, 10:45:53 PM
 #69

The service is open again for those few beta testers with privately increased purchase limits.  Our current inventory is reserved for them, so anyone else will see the out of stock page when placing an order.

PayPal finished switching my account back to the standard fee structure.  That reduces PayPal fees by 10% on a 40 BTC order.  The savings are higher for larger orders.

I'm still working on fraud-related changes to the site as time permits.  It may still be a few days until the site's open to the public again.
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January 27, 2011, 02:38:41 PM
 #70

Could I get in on this as well? I've only got a couple bucks so it'd be a small order but I'd like to build some trust so I can use the service later  Grin (when I finally acquire some monies)
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January 28, 2011, 08:32:37 PM
 #71

Was this your scammer?
Quote
i've got a premier, verified, account with a WaMu checking and a Mastercard attached. i want to clean it out.

i've got access to the email address and the paypal. i'm tempted to find somewhere to buy bitcoins with pp, then send the bitcoins to another account, one more account, then to liberty reserve (through, say, MtGox).

how traceable is this?
  http://www.zoklet.net/bbs/showthread.php?p=2441858

Scary stuff.

mndrix
Michael Hendricks
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January 28, 2011, 09:32:36 PM
 #72

Was this your scammer?

Fascinating.  I don't know if he was involved, but it seems this sort of thing is far more common than I had imagined.  Thanks for sharing.
mndrix
Michael Hendricks
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January 28, 2011, 10:16:17 PM
 #73

CoinPal is open to everyone again for the next hour.  If you've been waiting to buy some Bitcoins with PayPal now's your chance.  I'm about half-way done with anti-fraud changes I want to make to the site and thought it was a good point to open up again for a little while.
mndrix
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January 28, 2011, 11:00:37 PM
 #74

CoinPal is open to everyone again for the next hour.

The test is going well so far.  I'll leave it open until the coins run out.  That'll probably happen later tonight or tomorrow morning, depending on order sizes.
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January 31, 2011, 05:54:26 PM
 #75

I love this service. So much easier than any other way to get BTC.

Suggestion: Have three-tiers of purchasing

Lowest level: Can only purchase a very small number of BTC, using your current structure.

Middle level: Can purchase more once you send them a letter containing a password to their confirmed paypal address. For the cost of a stamp, you can prove that a paypal account is not stolen. This could even be automated using a mailing service like l-mail.com

Highest level: Can purchase large quantities of bitcoins, which are "shipped" to the confirmed address using a password inside a USPS padded envelope (with additional padding to make it is just large enough to qualify for a tracking number). Shipping with a tracking number qualifies the shipper for seller protection in case of fraud. People sell gold all the time using Paypal, so I would imagine that selling BTC should be possible too. Note that you have to get signature verification on shipments worth more than $250.

The biggest risk is that fraud will occur on the highest-level tier, and PayPal will investigate and decide that you are breaking their user agreement somehow and shut you down.

You might be able to get additional protection by doing more of your communication through paypal (for instance, if the buyer gives you their bitcoin address through paypal, you could then prove that you transferred the bitcoins to the address they provided). However, that would rely on the support folks at PayPal not being lazy and incompetent, which may not be a good bet based on some things I have read.

Since you are building a reputation for honesty, you could probably also offer to buy bitcoins using paypal, making it easier for people to sell them as well.

I was saving this idea for possibly using it myself someday, but I decided to give it away to whoever wants it. Hopefully this information won't push up the value of bitcoins too quickly, since I haven't finished buying the ones I want yet. If anyone benefits from this idea, feel free (but not obligated) to tip me here: 19hMEAaRMbEhfSkeU4GT8mgSuyR4t4M6TH

mndrix
Michael Hendricks
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January 31, 2011, 06:23:50 PM
 #76

I love this service. So much easier than any other way to get BTC.

Thanks.

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Suggestion: Have three-tiers of purchasing

Thanks for the suggestions.  I have one beta tester testing an address verification system similar to what you suggest for the middle level.  If testing goes well, this will be available more widely.  I'll definitely consider implementing something like the highest level.
mndrix
Michael Hendricks
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January 31, 2011, 06:27:49 PM
 #77

CoinPal is open to everyone again for the next hour.

The test is going well so far.  I'll leave it open until the coins run out.  That'll probably happen later tonight or tomorrow morning, depending on order sizes.

Brief update: this weekend's tests went well.  They turned up a couple bugs in my new code which I've fixed.  I'll keep working on anti-fraud measures so I can open to the public again.  Thanks for your patience.
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January 31, 2011, 11:26:33 PM
 #78

Middle level: Can purchase more once you send them a letter containing a password to their confirmed paypal address. For the cost of a stamp, you can prove that a paypal account is not stolen. This could even be automated using a mailing service like l-mail.com
Are you suggesting people would email their paypal password to the coinpal maintainer? I doubt you'd find anyone willing to do this.
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January 31, 2011, 11:28:47 PM
 #79

The suggestion was for the seller to mail a password to the buyer who would then communicate it to the seller to receive the bitcoins. That was fairly clear, don't see how you missed that.
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February 01, 2011, 12:30:51 AM
 #80

The reason for mailing something is to get seller protection from paypal, as well as ensure that the paypal account hasn't been hijacked.
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