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Author Topic: How exchanges steal our money  (Read 337 times)
cryptokwuk
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February 26, 2018, 08:28:13 PM
 #21

Another method i've ran into myself lately and hear about increasingly is freezing withdrawals.

You create an account, get verified, all is cool, you deposit and trade a bit, all is cool.

You decide to withdraw.
Withdrawal gets put on hold.
You'll be asked for additional verification documents and selfies.
Once you provide this they will reply they need to know the exact source of the funds you deposited to them and your intentions of the crypto you're going to withdraw.
They ask this in such detail that it is nearly impossible to provide, screenshots of wallets are demanded, links to every transaction on the blockchain that is related to those funds, you'll be asked to show how you got this crypto in the first place with bank statements or screenshots of mining pools.
It is absolutely ridiculous and criminal.

This scenario happened to me with both Bitstamp and HitBTC.

It's been months and i've been unable to get my funds out after countless email and support tickets.
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HabBear
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February 26, 2018, 08:37:41 PM
 #22

#1 and #2 below are the exact same activity you're accusing the Exchanges of committing - delaying trades.

1. Exchange sees a big sell or buy order entering the system which would fill a lot of orders in the orderbook at prices higher or below the price set by the trader. In this case, exchange can itself sell or buy all these orders first and then fill the entering order at its specific price. The effect is that the exchange earns profit while the trader gets his order filled at maximum or minimum possible price. This method works exceptionally well with market orders filled at the current market price. Guess what price it will be.

2. Exchange can set arbitrary delays while adding new orders. For example, WEX (former Btc-e) officially sets a 2 second delay within which a trader doesn't know what's going on at the exchange. In this case, if exchange sees a big order, it can delay adding it waiting for another big order to arrive. If these orders are offsetting each other, exchange can then fill them itself and put the spread in the pocket. This approach works particularly well with exchanges that have lots of liquidity.

If you know of other dirty tricks that exchanges use, share them here.

I wouldn't call these dirty tricks, it's a benefit of making the market. What keeps these exchanges in check with this activity is the competition coming from other exchanges. If I see a better price on another exchange I'm going to go to the competition.

Exchanges are allowed to make the spread, that's how they make money. By fulfilling Bitcoin (or insert cryptocurrency/investment) buy orders for more than the sell orders. It's not stealing, it's literally how they make money. It's nearly no different than a bank loaning out money at a higher interest rate than they pay for savings.

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February 26, 2018, 08:56:45 PM
 #23

Oh gosh, they make money? !!? I thought it was a service to the good of mankind.  Roll Eyes

So yes, when i buy coin at 0.0341 i might be buying from exchange who brought from someone at 0.0340.  I got my price, he got his price, if we do market orders we dont care about precise price. What exact is the point of this revelation?  We close exchanges?

It may not look like a big deal until you send a really big order and then things get real nasty. And they get even nastier when you send a market order which means that you give the exchange a full leeway to do whatever they want with the price and go at the double where their greed leads them. In short, it is not as innocent as it seems to you. The point is if you are a person with deep pockets, you should be aware and beware of how exchanges want to make money off you in a way that you don't even suspect. Will you be happy to find out that someone is making money at your expense? I don't think you would.
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February 26, 2018, 09:10:21 PM
 #24

Oh gosh, they make money? !!? I thought it was a service to the good of mankind.  Roll Eyes

So yes, when i buy coin at 0.0341 i might be buying from exchange who brought from someone at 0.0340.  I got my price, he got his price, if we do market orders we dont care about precise price. What exact is the point of this revelation?  We close exchanges?

It may not look like a big deal until you send a really big order and then things get real nasty. And they get even nastier when you send a market order which means that you give the exchange a full leeway to do whatever they want with the price and go at the double where their greed leads them. In short, it is not as innocent as it seems to you. The point is if you are a person with deep pockets, you should be aware and beware of how exchanges want to make money off you in a way that you don't even suspect. Will you be happy to find out that someone is making money at your expense? I don't think you would.
I take these words as sarcasm, because any exchange and exchanger has good earnings thanks to users. and I can assure you that the more the user's pocket, the greater the percentage for the Exchange Administration.

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February 27, 2018, 02:21:58 AM
 #25

I take these words as sarcasm, because any exchange and exchanger has good earnings thanks to users. and I can assure you that the more the user's pocket, the greater the percentage for the Exchange Administration.

They probably weren't. We all know service providers charge fees to end users because the world isn't a charity, and everyone gets that. What the OP is describing is that they're making money using your money, without your knowledge. You don't technically lose anything, but it could be considered shady because of the manner in which it was done.

So, are there some exchanges that have actually been caught doing these, or are these just possibilities?

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February 27, 2018, 02:51:12 AM
 #26

Haven't faced any issues with the exchanges, one thing that made me more careful in the cryptocurrency industry was the cheating done by an wallet service. Bit.ac was a wallet service provider, suddenly it went away cheating more users and I've got more than 0.2btc into the wallet.
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February 27, 2018, 07:33:57 AM
 #27

But with nobody regulating them some exchanges can do dirty dealing.  That is the whole point of regulation.  To try and make sure people are not cheated.
But did our governments has good understanding on how cryptocurrencies works and some of them did not have good faith on bitcoin regulations and what we have now is far better than when government start to regulate it. Exchange platform are really making a lot of cheating in dealing with our transaction and I think we should not do thinks that is going to affect cryptocurrencies out of greed and selfishness. Exchange platforms has a lot of saying in the development of cryptocurrencies and there are stakeholders in it.

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Canis Majoris
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February 27, 2018, 08:42:39 AM
 #28

I don't think that exchanges steal our money, because they earning big money on their fee. They have fee when you sell , buy and withdraw money. Some exchange even have fee when you deposit bitcoin , that is really bad in my opinion, so before you open account on exchange first read about Fees.

This is definitely not about fees, which you implicitly accept when you start using an exchange. You know human greed knows no limits, so you wouldn't really expect exchanges to lose 100% bullet-proof opportunities of making money off their clients, even if such practices are universally frowned upon, would you? And still more so if they can walk away completely unscathed, and there is no single entity to unleash justice on the wicked.
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February 27, 2018, 08:43:01 AM
 #29

You forgot #3 - shuts down and runs with all your money

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February 27, 2018, 09:15:19 AM
 #30

This method works exceptionally well with market orders filled at the current market price.

Seriously, if you place large market orders on any exchange, Bitcoin or otherwise, you've got to be a moron.
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February 27, 2018, 11:38:29 AM
 #31

#1 and #2 below are the exact same activity you're accusing the Exchanges of committing - delaying trades.

I don't see what the first method has to do with delays. There are no intentionally added delays when an exchange takes liquidity from the orderbooks. In fact, it is in exchange's best interest to pull off the job as fast as possible. I'm curious where you got this idea from. Care to explain?

Exchanges are allowed to make the spread, that's how they make money. By fulfilling Bitcoin (or insert cryptocurrency/investment) buy orders for more than the sell orders. It's not stealing, it's literally how they make money. It's nearly no different than a bank loaning out money at a higher interest rate than they pay for savings.

Neither I understand what you mean here by "making the spread", but front running is definitely not an allowed practice on regulated exchanges up to a point of causing serious penalties. And there are good reasons for that like providing level playing ground for all market participants.
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February 27, 2018, 09:19:37 PM
 #32

You forgot #3 - shuts down and runs with all your money
This may only happen if that exchange have not gained enough supporter, or if they think they already get a huge amount that will be enough to risk their name and to be followed with lots of chaos from their user. Now that governments were into dealing with exchanges legalities , it will  be hard for them now.

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February 27, 2018, 10:36:50 PM
 #33

You forgot #3 - shuts down and runs with all your money
This may only happen if that exchange have not gained enough supporter, or if they think they already get a huge amount that will be enough to risk their name and to be followed with lots of chaos from their user. Now that governments were into dealing with exchanges legalities , it will  be hard for them now.
It looks like government regulations on crypto exchanger may now needing  to have it. Not for the reason that to regulate the price but to have a certain agency to take dealings with exchanger owners and to know also a legit one.  Because as I've observed, a lot of exchanger is now created and I'm pretty sure that some of them are just scam. 

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March 01, 2018, 05:23:21 AM
 #34

You forgot #3 - shuts down and runs with all your money
This may only happen if that exchange have not gained enough supporter, or if they think they already get a huge amount that will be enough to risk their name and to be followed with lots of chaos from their user. Now that governments were into dealing with exchanges legalities , it will  be hard for them now.
It looks like government regulations on crypto exchanger may now needing  to have it. Not for the reason that to regulate the price but to have a certain agency to take dealings with exchanger owners and to know also a legit one.  Because as I've observed, a lot of exchanger is now created and I'm pretty sure that some of them are just scam. 

Well that's one fact that traders would have to live with. So it really just boils down to being selective about which exchange you're going to use. All these exchanges have issues but they of course wouldn't want too many negative ones to smear their reputation. So stick to those that many users are trusting as well and keep a wallet outside exchanges

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March 04, 2018, 02:00:48 PM
 #35

Yeah there are some exchanger that steal money. Especially hitbtc. My 400$ didnt give back. I been sent them a my token NGC (Naga) 100token. But it only appear in my account is 20ngc.. the 80 ngc was dis appear
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March 04, 2018, 02:54:07 PM
 #36

Recently, we have been experiencing problems with the registration and use of exchanges. Those exchanges that have a reputation for closing anonymous accounts and do not register new users. The requirements for verification are constantly tightened. I think that soon there will be exchanges that allow you to Deposit and withdraw Fiat. There will be only cheaters.
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March 04, 2018, 03:17:10 PM
 #37

Recently, we have been experiencing problems with the registration and use of exchanges. Those exchanges that have a reputation for closing anonymous accounts and do not register new users. The requirements for verification are constantly tightened. I think that soon there will be exchanges that allow you to Deposit and withdraw Fiat. There will be only cheaters.
You need to use other resources to output crypto currency into real money. I think that the exchange should be used only for trade, and not for cashing.
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March 07, 2018, 01:29:31 PM
 #38

I don't understand why you consider this to be theft. Exchanges have always had a difference between buying and selling prices ( the spread ). Banks do it with fiat transactions, and they often charge an additional commission on the trrade.

Yes. It's how market makers make their profit, and without market makers, liquidity would dry up.

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March 07, 2018, 05:35:42 PM
 #39


This is how the exchanges works , in the digital world as well as in the real world .
I agree , that at some point the exchanging and trading process takes way lot of money in the way of the exchange from one coin to another and the rates needs to be revised and standardized as each exchange has different prices .
In the banks too we have to pay some fair amount of money for some exchanges to be done . We ignore it in the name of "tax" that is authorized by the government and is made mandatory.                                                                                     

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jrrsparkles
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Why so serious?


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March 07, 2018, 05:49:32 PM
 #40

I don't think reputed exchanges will involve in these kind of shady activities,the chance of happening this only if we deposited our money in new exchanges,for me it never happened that exchanges steals our money because I never kept huge amount in their wallets. Tongue

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