Dwolla reversing transactions?

[oneforall]

Does anyone know any more details of this? i just heard about it from 'K' in the onlyonetv thread(http://forum.bitcoin.org/index.php?topic=5952.160), apparently wagner is interviewing TH right now about it, but it is too choppy for me so i cant watch.. anyone know who they screwed by reversing transactions? did they do it once or a bunch? there is no mention of it on tradehills blog..

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[k]

copying post from the Bitcoin show thread

hopefully have my facts straight:

tradehill have identified ~$37k of dwolla transfers that have been reversed after being credited, I think they managed to block ~$20k of that.
other exchanges unknown.
dwolla being cagey and changing terms of service on their website.

[Keyur @ Camp BX]

Dwolla scandal update: Camp BX is not affected by this, and every dollar is accounted for.

Hoping the same for other Bitcoin sites!

Thank you,
     Keyur

[Jered Kenna (TradeHill)]

To clarify the name shown on that onlyonetv.com  video was a confirmed scammer by Dwolla.
We haven't released anyone else's information.

[Donald_Norman]

Intersango.us the USD site which is the free exchange accepting Dwolla (run by the same guys as the long time no problems website Britcoin) has not been affected by this and all the money is there.

[Serge]

Jared, some screening must be put in place to try to prevent this from happening in the future, and whoever effectively reverses transaction put on a blacklist and shared among other exchanges. then people think twice before trying to pull these scams

[bbit]

Thanks CampBX & intersango for the update to of the exchanges I'm going with

[Jered Kenna (TradeHill)]

Jared, some screening must be put in place to try to prevent this from happening in the future, and whoever effectively reverses transaction put on a blacklist and shared among other exchanges. then people think twice before trying to pull these scams

We have and we've almost eliminated it completely.
We're willing to work with the other exchanges on this.

Jered

[elements]

Although the exchanges are competitors there should be a "board" of all exchanges which agrees to share info like this in emergency cases (like one person per exchange as "interexchange-contact").

(Like the red phones in the Bond movies)

Think this might be necessary for the sake of Bitcoin.

[Trader Steve]

Although the exchanges are competitors there should be a "board" of all exchanges which agrees to share info like this in emergency cases (like one person per exchange as "interexchange-contact").

(Like the red phones in the Bond movies)

Think this might be necessary for the sake of Bitcoin.

The better solution is to actively seek out and partake in decentralized exchanges by exchanging locally, and in person. Every user an exchanger.

Use services like:

http://www.btcnearme.com, http://www.tradebitcoin.com, http://www.ubitex.com, and http://www.bitcoinlocator.com

[cypherdoc]

copying post from the Bitcoin show thread

hopefully have my facts straight:

tradehill have identified ~$37k of dwolla transfers that have been reversed after being credited, I think they managed to block ~$20k of that.
other exchanges unknown.
dwolla being cagey and changing terms of service on their website.

"reversed" by who and why?  Dwolla or a hacker or a customer?

"they" meaning who?

[Trader Steve]

copying post from the Bitcoin show thread

hopefully have my facts straight:

tradehill have identified ~$37k of dwolla transfers that have been reversed after being credited, I think they managed to block ~$20k of that.
other exchanges unknown.
dwolla being cagey and changing terms of service on their website.

"reversed" by who and why?  Dwolla or a hacker or a customer?

"they" meaning who?

dwolla is reversing transactions

[cypherdoc]

copying post from the Bitcoin show thread

hopefully have my facts straight:

tradehill have identified ~$37k of dwolla transfers that have been reversed after being credited, I think they managed to block ~$20k of that.
other exchanges unknown.
dwolla being cagey and changing terms of service on their website.

"reversed" by who and why?  Dwolla or a hacker or a customer?

"they" meaning who?

dwolla is reversing transactions

why are they doing that?

[netrin]

Hi Jered, As a TradeHill customer I have generally appreciated your openness in the past. As for what ever is going on regarding Dwolla, I'm not cool with your stance to let Bruce Wagner speak on your behalf (whether you are on the show or not). I believe we deserve clear, immediate information in writing on your site from the horses mouth. I hope you will agree.

[elements]

Although the exchanges are competitors there should be a "board" of all exchanges which agrees to share info like this in emergency cases (like one person per exchange as "interexchange-contact").

(Like the red phones in the Bond movies)

Think this might be necessary for the sake of Bitcoin.

The better solution is to actively seek out and partake in decentralized exchanges by exchanging locally, and in person. Every user an exchanger.

Use services like:

http://www.btcnearme.com, http://www.tradebitcoin.com, http://www.ubitex.com, and http://www.bitcoinlocator.com

This might be partly true - but only for small amounts.

I most certainly will not meet with someone in a cafe or MacDonalds (WiFi) carrying a suitcase full of money (not that this an issue at the moment but still...)

The most volume will be exchanged on the big exchanges at least for the foreseeable future.
So I am still pro red phone!

[Jered Kenna (TradeHill)]

Hi Jered, As a TradeHill customer I have generally appreciated your openness in the past. As for what ever is going on regarding Dwolla, I'm not cool with your stance to let Bruce Wagner speak on your behalf (whether you are on the show or not). I believe we deserve clear, immediate information in writing on your site from the horses mouth. I hope you will agree.

Working on a blog post right now.
I agree and thank you for your comment.

[Trader Steve]

Although the exchanges are competitors there should be a "board" of all exchanges which agrees to share info like this in emergency cases (like one person per exchange as "interexchange-contact").

(Like the red phones in the Bond movies)

Think this might be necessary for the sake of Bitcoin.

The better solution is to actively seek out and partake in decentralized exchanges by exchanging locally, and in person. Every user an exchanger.

Use services like:

http://www.btcnearme.com, http://www.tradebitcoin.com, http://www.ubitex.com, and http://www.bitcoinlocator.com

This might be partly true - but only for small amounts.

I most certainly will not meet with someone in a cafe or MacDonalds (WiFi) carrying a suitcase full of money (not that this an issue at the moment but still...)

The most volume will be exchanged on the big exchanges at least for the foreseeable future.
So I am still pro red phone!

As mentioned on a previous chat, bullion dealers and pawn shops would be ideal businesses to offer this service. Bitcoin exchanges work like gold - which is something they understand - and these types of business already have all the security measures in place. Pawn shops and bullion dealers are you listening? Here is a great opportunity for you!

[Trader Steve]

copying post from the Bitcoin show thread

hopefully have my facts straight:

tradehill have identified ~$37k of dwolla transfers that have been reversed after being credited, I think they managed to block ~$20k of that.
other exchanges unknown.
dwolla being cagey and changing terms of service on their website.

"reversed" by who and why?  Dwolla or a hacker or a customer?

"they" meaning who?

dwolla is reversing transactions

why are they doing that?

Their business model does not allow for irreversible transactions - they are tied to the banks and are subject to "clawback" provisions of fraudulent transactions. It looks like cash and wire transfer are the most reliable types of transactions. The other problem is that Dwolla has been mis-representing (perhaps unintentionally?) themselves on this issue. There are likely strong legal claims that can be brought against dwolla by merchants and the exchanges who suffer losses.

[Trader Steve]

copying post from the Bitcoin show thread

hopefully have my facts straight:

tradehill have identified ~$37k of dwolla transfers that have been reversed after being credited, I think they managed to block ~$20k of that.
other exchanges unknown.
dwolla being cagey and changing terms of service on their website.

"reversed" by who and why?  Dwolla or a hacker or a customer?

"they" meaning who?

dwolla is reversing transactions

why are they doing that?

Their business model does not allow for irreversible transactions - they are tied to the banks and are subject to "clawback" provisions of fraudulent transactions. It looks like cash and wire transfer are the most reliable types of transactions. The other problem is that Dwolla has been mis-representing themselves on this issue. There are likely strong legal claims that can be brought against dwolla by merchants and the exchanges who suffer losses.

Also, of important note, it would be wise to pull your money out of dwolla as they might be subject to, not only legal claims, but a run on their bank account. If they do not have "dollar for dollar" backing of their accounts then you could be in for a big surprise.

[elements]

Hi Jered, As a TradeHill customer I have generally appreciated your openness in the past. As for what ever is going on regarding Dwolla, I'm not cool with your stance to let Bruce Wagner speak on your behalf (whether you are on the show or not). I believe we deserve clear, immediate information in writing on your site from the horses mouth. I hope you will agree.

I agree with you in so far as they should inform all their customers in writing (which I am sure they will do asap).


BUT since this incident affects the whole Bitcoin economy not only TradeHill it was absolutely right from an economical point of view to go on air and inform everyone at the same time.

Since The Bitcoin Show is like THE Bitcoin News at the moment the medium was well chosen!

TradeHill gained a significant amount of points in my cool book!

[netrin]

Hi Jered, As a TradeHill customer I have generally appreciated your openness in the past. As for what ever is going on regarding Dwolla, I'm not cool with your stance to let Bruce Wagner speak on your behalf (whether you are on the show or not). I believe we deserve clear, immediate information in writing on your site from the horses mouth. I hope you will agree.

I agree with you in so far as they should inform all their customers in writing (which I am sure they will do asap).

BUT since this incident affects the whole Bitcoin economy not only TradeHill it was absolutely right from an economical point of view to go on air and inform everyone at the same time.

I am content with Jered's response. I don't mind that Bruce's show is used for announcements. Just that as a customer it should not be "the news" as I can not rely on it as my primary or even tertiary source.

As for Dwolla reversals, this might be very good for Bitcoin, going long. Another 'incident' that is only making bitcoin stronger. In this case, presenting bitcoin's advantage. I hope the exchanges don't suffer losses (I'm still not clear on what exactly happened).

[Trader Steve]

Relevant comments regarding trading for products and services vs. exchanging for national currencies:

(from http://economicsandliberty.wordpress.com/2011/06/07/the-coming-attack-on-bitcoin-and-how-to-survive-it/):

"The safest way to acquire bitcoin is to let people know that you will accept it as payment for your products and services. Do not ever exchange it for national currencies. The point that people miss here is that national currencies are the very problem that freedom-lovers are trying to get away from. Instead, use bitcoin to trade with merchants and individuals who accept it as payment. Offer it as payment to those who are unaware of it and explain the benefits to them. This will help develop the market and create a solid economy outside of national currencies. After the initial attack, bitcoin will likely be one of the most powerful and revolutionary tools to bring about more freedom and liberty to humankind."

[Trader Steve]

Although the exchanges are competitors there should be a "board" of all exchanges which agrees to share info like this in emergency cases (like one person per exchange as "interexchange-contact").

(Like the red phones in the Bond movies)

Think this might be necessary for the sake of Bitcoin.

The better solution is to actively seek out and partake in decentralized exchanges by exchanging locally, and in person. Every user an exchanger.

Use services like:

http://www.btcnearme.com, http://www.tradebitcoin.com, http://www.ubitex.com, and http://www.bitcoinlocator.com

This might be partly true - but only for small amounts.

I most certainly will not meet with someone in a cafe or MacDonalds (WiFi) carrying a suitcase full of money (not that this an issue at the moment but still...)

The most volume will be exchanged on the big exchanges at least for the foreseeable future.
So I am still pro red phone!

As mentioned on a previous chat, bullion dealers and pawn shops would be ideal businesses to offer this service. Bitcoin exchanges work like gold - which is something they understand - and these types of business already have all the security measures in place. Pawn shops and bullion dealers are you listening? Here is a great opportunity for you!

Check-cashing services might also be good candidates to offer bitcoin exchange services.

[Trader Steve]

Although the exchanges are competitors there should be a "board" of all exchanges which agrees to share info like this in emergency cases (like one person per exchange as "interexchange-contact").

(Like the red phones in the Bond movies)

Think this might be necessary for the sake of Bitcoin.

The better solution is to actively seek out and partake in decentralized exchanges by exchanging locally, and in person. Every user an exchanger.

Use services like:

http://www.btcnearme.com, http://www.tradebitcoin.com, http://www.ubitex.com, and http://www.bitcoinlocator.com

This might be partly true - but only for small amounts.

I most certainly will not meet with someone in a cafe or MacDonalds (WiFi) carrying a suitcase full of money (not that this an issue at the moment but still...)

The most volume will be exchanged on the big exchanges at least for the foreseeable future.
So I am still pro red phone!

As mentioned on a previous chat, bullion dealers and pawn shops would be ideal businesses to offer this service. Bitcoin exchanges work like gold - which is something they understand - and these types of business already have all the security measures in place. Pawn shops and bullion dealers are you listening? Here is a great opportunity for you!

Check-cashing services might also be good candidates to offer bitcoin exchange services.

Also, start building your networks of trusted trading partners within your community.

[Trader Steve]

This is just another example of why bitcoin is a superior currency: no charge-backs and some people will lie, cheat and steal to get some of it. Dwolla has failed as a currency in the aspect that it is subject to charge-backs.

[Smalleyster]

I sincerely hope that Dwolla comes clean on this issue quickly and publicly.

[Jered Kenna (TradeHill)]

I sincerely hope that Dwolla comes clean on this issue quickly and publicly.

So do we. Ignoring your second largest customer when they report $37,000 in fraud and a lot more potentially needs to be addressed.

If possible can we consolidate the Dwolla threads to this one:  http://forum.bitcoin.org/index.php?topic=31753.0 and www.tradehillblog.com

Thanks for all the support.


Jered

[bitcon]

DWOLLA'D

[Seraphim401]

Hi Jered, As a TradeHill customer I have generally appreciated your openness in the past. As for what ever is going on regarding Dwolla, I'm not cool with your stance to let Bruce Wagner speak on your behalf (whether you are on the show or not). I believe we deserve clear, immediate information in writing on your site from the horses mouth. I hope you will agree.

I agree with you in so far as they should inform all their customers in writing (which I am sure they will do asap).


BUT since this incident affects the whole Bitcoin economy not only TradeHill it was absolutely right from an economical point of view to go on air and inform everyone at the same time.

Since The Bitcoin Show is like THE Bitcoin News at the moment the medium was well chosen!

TradeHill gained a significant amount of points in my cool book!

+1

[makomk]

Also, of important note, it would be wise to pull your money out of dwolla as they might be subject to, not only legal claims, but a run on their bank account. If they do not have "dollar for dollar" backing of their accounts then you could be in for a big surprise.

Personally I'd be more worried about this kind of "big surprise" from the exchanges - Dwolla appears to be successfully clawing back the money lost, but the exchanges don't really have that option open to them. In particular Mt Gox is somewhat worrying - they've publicly stated that German phishers trying to funnel stolen money through them is one reason their EU bank account got closed. This would lead to similar reversals of transfers in, and even if they say they haven't lost any money they have a history of lying and covering up about anything that can't be externally verified.

[tvbcof]

Also, of important note, it would be wise to pull your money out of dwolla as they might be subject to, not only legal claims, but a run on their bank account. If they do not have "dollar for dollar" backing of their accounts then you could be in for a big surprise.

Personally I'd be more worried about this kind of "big surprise" from the exchanges - Dwolla appears to be successfully clawing back the money lost,

Heh...'clawing back'?  I'm not sure I would be quite so charitable in my choice of words.  Defrauding someone else to make up for your losses could, I suppose, be characterized as 'clawing back', but I would not label it as 'successful' just yet.  I'll wait to see what comes out of the justice system first.(*)

Seems to me that Dwolla has chosen to be in the business of dealing with private individuals via banking institutions to get a chunk of their money.  Why, and how, would an entity like Tradehill be expected to be involved in the transaction between Dwolla and the end user?  Dwolla needs to figure out how to adjust their business model(**), advertising, and competence to a point where they can do their job or exit the industry, or at least not mis-lead and ignore their customers (imho.)

---

(**)  I've hypothesized that a part of Dwolla's business model may be to collect usage pattern data which is a common one these days.  This incident counts (in my mind) as negative evidence in this hypothesis because I would not expect them to jeopardize their business for a few bucks in this case.

(*) Does Tradehill, having some parts of their operations in Chile, have full access to the US justice system?  I don't know whether I hope so or not.  I choose Tradehill with some hope that the US justice system and it's other organs did not necessarily have full access to Tradehill.  ('Full access' in these days of 'war on terror' being a more encompassing term than it used to be.)

[cypherdoc]

crap, i just paid $60 to cancel an ACH to Dwolla!

[WiseOldOwl]

My exchanges volume is small potatoes compared to TH and MtGox,
But I stand by our industry, and have removed Dwolla as a payment option for our exchange to protect myself and add to the "punishment" of dwolla.
They absolutely must clear up any issues with their 2nd biggest customer, to think any company would do anything but is ludicrous.
Thank you Jered and the TradeHill team for bringing this to our attention, maybe we all (Exchange Heads) do need to stay in touch for when a potentially threatening situation is discovered.

I did speak with dwolla when opening my exchange, and their exact words were that transactions between dwolla accounts in regards to virtual currencies were irreversible and couldn't be charged-back. If this was their Policy, then they knew they ran the risk of this happening and basically said they would cover it.
Dwolla, don't alienate your whole customer base. MtGox I'm sure will turn around and leave if they are going to risk losing 10's of thousands of dollars too. Not to mention all us 2nd tier exchanges, and bitcoin users in general.


Thanks again for the Due-Diligence, It is disturbing that a financial company either doesn't understand their own policy, or worse just plain lies about it.
The race is on to figure out a great payment solution again,
For now, MoneyGrams and Western Unions, are King when it comes to safety and that would be an unbelievable pain in the A** for a company like tradehill or mtgox. Good Luck in your ventures!

[makomk]

Heh...'clawing back'?  I'm not sure I would be quite so charitable in my choice of words.  Defrauding someone else to make up for your losses could, I suppose, be characterized as 'clawing back', but I would not label it as 'successful' just yet.  I'll wait to see what comes out of the justice system first.(*)

...

(*) Does Tradehill, having some parts of their operations in Chile, have full access to the US justice system?  I don't know whether I hope so or not.  I choose Tradehill with some hope that the US justice system and it's other organs did not necessarily have full access to Tradehill.  ('Full access' in these days of 'war on terror' being a more encompassing term than it used to be.)

In theory, though the US justice system has a reputation for bias towards US businesses. Tradehill wouldn't be the most sympathetic plaintiff either: a shady-looking foreign company that's been profiting from laundering stolen money suing to try and push the losses from that stolen money being taken back onto someone else?

[tvbcof]

Heh...'clawing back'?  I'm not sure I would be quite so charitable in my choice of words.  Defrauding someone else to make up for your losses could, I suppose, be characterized as 'clawing back', but I would not label it as 'successful' just yet.  I'll wait to see what comes out of the justice system first.(*)

...

(*) Does Tradehill, having some parts of their operations in Chile, have full access to the US justice system?  I don't know whether I hope so or not.  I choose Tradehill with some hope that the US justice system and it's other organs did not necessarily have full access to Tradehill.  ('Full access' in these days of 'war on terror' being a more encompassing term than it used to be.)

In theory, though the US justice system has a reputation for bias towards US businesses. Tradehill wouldn't be the most sympathetic plaintiff either: a shady-looking foreign company that's been profiting from laundering stolen money suing to try and push the losses from that stolen money being taken back onto someone else?

My confidence in the US justice system is very very low and has been since Bush-II was installed.  So ya, it would not surprise me at all if Tradehill did not get a fair shake.

On the other hand, as long as the selection process is not managed carefully by TPTB, it is possible to end up in yet-to-rot parts of our system and have a fair result in spite of the corruption.  More-so than in most countries I would guess.  There would have to be something a lot bigger than a piddly little $37k at stake to warrant a reliably managed miscarriage of justice (and there well could be.)

One invention of my conspiratorial mind is the hypothesis that this is mostly a bait to lure Tradehill into a trap.  Happily, due in large part to their apparently being quite on top of things, justice is more of a nice-to-have than a must-have (if Jered is to be taken at his word.)  A lot of Tradehill's competition seems to have gone through an interesting 'no problem here...er...maybe a little problem...er...<silence>' series of phases.

I won't bother to respond to the more absurd parts of your synthesis of events...95% of the people who look at this situation find your (ilk's) construction laughable, and a fair fraction of the rest display extreme shill-like characteristics (imo.)

[JoelKatz]

In theory, though the US justice system has a reputation for bias towards US businesses. Tradehill wouldn't be the most sympathetic plaintiff either: a shady-looking foreign company that's been profiting from laundering stolen money suing to try and push the losses from that stolen money being taken back onto someone else?

It won't matter, this will never get to a jury. If we assume it goes through the legal process (which I very much doubt, that harms everyone) Dwolla's contract specifies mandatory arbitration, and I see nothing that says that Dwolla can only force that on TradeHill. TradeHill can force that on Dwolla.