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Author Topic: Using Liberty Reserve? READ THIS NOW!  (Read 21561 times)
The Madhatter
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February 04, 2011, 11:20:40 PM
 #1

Please read the following:

http://article.gmane.org/gmane.comp.finance.gold-silver-crypto/22354
http://article.gmane.org/gmane.comp.finance.gold-silver-crypto/22355

Entire thread: http://news.gmane.org/gmane.comp.finance.gold-silver-crypto
Subject: "Watch out for changes at LR!"

My recommendation is to NOT use Liberty Reserve. If you have funds in it, dump them NOW.

I had posted warnings about LR on this forum around a year ago.

https://www.bitcoin.org/smf/index.php?topic=39.msg299#msg299

I also advised lots of people in PMs to not hold their money with LR. I hope people paid attention.

I am also starting to think that the recent demand for Bitcoin in the past few days have to do with the changes that are going on over at Liberty Reserve.

"Banking secrecy" is an oxymoron.
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February 04, 2011, 11:37:11 PM
 #2

Thank you. I am glad I had withheld from buying Bitcoins with them a couple of days ago.
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February 05, 2011, 12:17:18 AM
 #3

If Paypal and LibertyReserve sucks, where do we go?  Undecided

Anonymous
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February 05, 2011, 12:21:26 AM
 #4

If Paypal and LibertyReserve sucks, where do we go?  Undecided
We could start selling physical notes with scratch-and-reveal Bitcoin keys. Paypal won't mind that.
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February 05, 2011, 01:07:29 AM
 #5

I see no links supporting his claims? Also at the end he finishes advertising his own service so that makes him lose credibility in my mind.
The Madhatter
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February 05, 2011, 02:49:19 AM
 #6

Why would there be links? Costa Rica's banking laws are published. Use Google.

The advertisement you are referring to is an email signature. Bitcoin is mentioned as an alternative too.

Have you logged into your LR account lately? See the beginnings of the AML/KYC stuff yet? Wink

On the bright side: this is good news for Bitcoin. As more and more of these centralized payment processors fail; people will turn to decentralized systems. Smiley
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February 05, 2011, 08:06:23 PM
 #7

We could start selling physical notes with scratch-and-reveal Bitcoin keys. Paypal won't mind that.

Great idea.

Buying/selling Bitcoins to private individuals in person would be good too.

Perhaps people should start using craigslist/kijiji and advertise that they do trades in person for cash.
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February 05, 2011, 10:49:21 PM
 #8

It's true LR is turning into WMZ and will be seizing/holding accounts now for verification, already happened to numerous people I know. Costa Rica is not a viable place to run a currency anymore, they should move to the Seychelles or Azerbaijan.

HDmoney so far is biz as usual. Mt Gox should switch over to them or the other big exchangers

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February 05, 2011, 11:37:23 PM
 #9

http://artmind-etcetera.blogspot.com/2009/05/how-to-make-scratch-off-lottery-tickets.html


 Cheesy
The Madhatter
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February 06, 2011, 03:03:24 AM
 #10

It's true LR is turning into WMZ and will be seizing/holding accounts now for verification, already happened to numerous people I know. Costa Rica is not a viable place to run a currency anymore, they should move to the Seychelles or Azerbaijan.

There are blogs out there with piles of people complaining that their Liberty Reserve account was frozen. The outlook isn't good folks.

I've noticed that a lot of people are moving their operations to Belize now.

HDmoney so far is biz as usual. Mt Gox should switch over to them or the other big exchangers

I'm not too familiar with HD Money. However, I have heard of it.

I hope that Jed doesn't end up with a pile of Liberty Reserve that he can't get back out as dollars. (I PM'd him about this thread already.) If a run happens (I suspect one started on the 1st), Liberty Reserve will collapse. It's unaudited and many suspect it is fractional reserve. The running joke is "NO Liberty NO Reserve" (CR's new bank laws / fractional reserve, unaudited).

A run will provoke them into freezing accounts faster and faster to try to stay afloat. That will only piss more and more people off. These pissed off people will spout out on blogs and forums. (Already starting to happen.) The panic will spread and accelerate the run.

The Liberty Reserve exchangers will start hiking the rates to exchange into fiat, because the risk of default will rise. Some exchangers will just quit immediately because they'll remember the e-gold panic.

... and that's the Madhatter forecast. Tongue This concludes our broadcast day. *click*
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February 06, 2011, 04:27:43 PM
 #11

Bumped, because although I don't use LR this needs to be seen.
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February 06, 2011, 08:00:20 PM
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It seems important for us to know what the status of LR held with MtGox and bitcoin-central. I get the impression that $ held on MtGox can be cashed out via LR or wire or check, but will that hold if LR goes bad? And is it an option at bitcoin-central at all?

Obviously there is no easy solution for the exchange operators they either need to hold it in LR for easy withdraw and risk an LR run or keep it elsewhere and risk making people wait.
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February 06, 2011, 10:36:09 PM
 #13

It seems important for us to know what the status of LR held with MtGox and bitcoin-central. I get the impression that $ held on MtGox can be cashed out via LR or wire or check, but will that hold if LR goes bad?

I doubt it. If MtGox can't convert Liberty Reserve into a bank wire to one of their bank accounts (assuming a run/or they go broke) MtGox won't be able to disperse dollars to their clients with other payment methods.

He only accepts Liberty Reserve to fund MtGox accounts, so he has to convert Liberty Reserve into a bank wire somewhere along the line. If his account were suddenly frozen by Liberty Reserve he'd go broke. Assuming he left a significant portion of customer's funds in Liberty Reserve, of course.

Obviously there is no easy solution for the exchange operators they either need to hold it in LR for easy withdraw and risk an LR run or keep it elsewhere and risk making people wait.

If MtGox accepted bank wires directly that would alleviate the risk of Liberty Reserve going broke. He should also let clients move dollars between accounts for free. He could run his own Liberty Reserve-like system inside of MtGox.

Here's an example: Say a bank wire costs $50 to transmit. You wouldn't wire $100 to MtGox. It's not cost effective. If I wired $10,000 (and paid the $50 fee.. it's peanuts on a $10K wire) to MtGox and then sold $100 GoxDollars to you for 0.5% it is a far better option.

Anyway, my point is that MtGox could change their system a bit and do away with Liberty Reserve completely.
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February 06, 2011, 10:57:28 PM
 #14

I doubt it. If MtGox can't convert Liberty Reserve into a bank wire to one of their bank accounts (assuming a run/or they go broke) MtGox won't be able to disperse dollars to their clients with other payment methods.

He only accepts Liberty Reserve to fund MtGox accounts, so he has to convert Liberty Reserve into a bank wire somewhere along the line. If his account were suddenly frozen by Liberty Reserve he'd go broke. Assuming he left a significant portion of customer's funds in Liberty Reserve, of course
It all boils down to MtGox printing the mtusd currency, and backing it with a basket of other currencies, one of them being LR.
That's one of the things I disliked in his way of doing things, not saying it's wrong in its essence, just that it has a little fractional reserve smell to me.

As far as bitcoin central is concerned, the sum of all LR balances is 100% covered and my balances are public, I've used my real name and address for the account, there's not much more I can do.

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February 06, 2011, 11:32:16 PM
 #15

Thanks for the warning, I never dared to keep much money in liberty reserve due to the fact that it always seemed high risk to me. Especially considering how e-gold got totally destroyed by the US government. It's a shame all these great currencies ends up with the same sad destiny, but at the same time I guess that's great news for bitcoin Smiley It's almost like if Bitcoin was a huge company using government regulations to shut down competition Tongue

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If MtGox accepted bank wires directly that would alleviate the risk of Liberty Reserve going broke. He should also let clients move dollars between accounts for free. He could run his own Liberty Reserve-like system inside of MtGox.
Maybe I misunderstood this, but I sent MtGox a bank wire a few days ago? And even though LR might be very risky now, even the bank account is at risk, who knows when it will be suspended? I assume mtgox doesn't possess any license to do this kind of business, so it's all a grey zone.

A solution to this could possible be that he create some kind of exchange market between LRUSD and the USD Finland Bank to allow investors to decide where they can take risk. Or even better, create bank accounts in different countries to hedge against the political climate in any given country. Well, the best thing would obviously be to find a country where you can actually run a legitimate exchange, if anyone know of such place please do let me know. And if you have to pay a million dollar license fee it's out of the question.

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February 06, 2011, 11:36:51 PM
 #16

And if you have to pay a million dollar license fee it's out of the question.
I'm actually starting to wonder Smiley

The Madhatter
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February 06, 2011, 11:52:40 PM
 #17

It all boils down to MtGox printing the mtusd currency, and backing it with a basket of other currencies, one of them being LR.

Sure. That's what I was getting at.

As far as bitcoin central is concerned, the sum of all LR balances is 100% covered and my balances are public, I've used my real name and address for the account, there's not much more I can do.

I haven't had a chance to try Bitcoin Central out. I'll take a look at it tonight. Smiley

Cheers!
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February 06, 2011, 11:56:09 PM
 #18

Thanks for the warning, I never dared to keep much money in liberty reserve due to the fact that it always seemed high risk to me. Especially considering how e-gold got totally destroyed by the US government. It's a shame all these great currencies ends up with the same sad destiny, but at the same time I guess that's great news for bitcoin Smiley It's almost like if Bitcoin was a huge company using government regulations to shut down competition Tongue

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If MtGox accepted bank wires directly that would alleviate the risk of Liberty Reserve going broke. He should also let clients move dollars between accounts for free. He could run his own Liberty Reserve-like system inside of MtGox.
Maybe I misunderstood this, but I sent MtGox a bank wire a few days ago? And even though LR might be very risky now, even the bank account is at risk, who knows when it will be suspended? I assume mtgox doesn't possess any license to do this kind of business, so it's all a grey zone.

A solution to this could possible be that he create some kind of exchange market between LRUSD and the USD Finland Bank to allow investors to decide where they can take risk. Or even better, create bank accounts in different countries to hedge against the political climate in any given country. Well, the best thing would obviously be to find a country where you can actually run a legitimate exchange, if anyone know of such place please do let me know. And if you have to pay a million dollar license fee it's out of the question.

As soon as mtgox is investigated he will probably be shut down, I am sure there are a lot of laws (stupid laws) that are being broken. There are probably some regulations for this as well. This kind of thing is just not allowed.

The only option is to have an anonymous exchange, anything else will be targeted and shut down by the government.

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February 06, 2011, 11:59:09 PM
 #19

Inside the USA? Good luck with that.

http://pokerati.com/2010/04/17/rogue-payment-processor-arrested-in-las-vegas-accused-of-laundering-full-tilt-pokerstars-ub-money-first-criminal-indictment-for-uigea-violations/

http://www.wsopschedule.com/poker/florida-resident-arrested-for-serving-as-online-poker-payment-processor/

http://gamingzion.com/gamblingnews/legal-online-gambling-in-canada-wont-save-douglas-rennick-1375

http://www.gambling911.com/NETeller-Founders-Arrested-011507.html

http://www.wired.com/politics/law/news/2001/03/42745

http://www.moneymakergroup.com/gold-Owner-Arrested-t214753.html

http://www.dgcmagazine.com/blog/index.php/2008/07/29/pamela-fayed-of-e-bullion-murdered/

http://www.dgcmagazine.com/blog/index.php/2008/08/20/government-seized-24-million-from-e-bullion-and-incorrect-case-facts-saturate-the-internet/

http://www.crowne-gold.com/

http://www.1mdc.com/

http://www.thebullionexchange.com/

http://www.gitgold.com/

http://www.dailytalkforum.com/thread-goldage-partners-arrested-held-on-bond

http://www.icegold.com/

http://www.denvergoldexchange.com/

http://minhagallery.com/content/e-gold-money-seized

http://hyipblog.nobshyip.net/2007/07/19/60-e-gold-exchange-agents-whos-still-alive-you-might-be-surprised/

http://hyipblog.nobshyip.net/2007/04/29/e-gold-indictments-current-situation/

REMEMBER In the USA, online gambling is consider illegal and anyone who touches wagers or winnings is at risk of arrest and confiscation.

Also, any dealings with nationals on the USA hate list, including Iran and Cuba is also considered reason to steal yer shit and jail yer ass.

http://ecommerce-journal.com/news/24457_e-gold-owners-fined-3-million-illegal-ecurrency-accounts-iran

http://www.iran-forex.com/index.asp

And if they can't claim you are gambling, they might dispute your use of words. Jail yer ass and steal yer cash;

http://libertydollararrest.blogspot.com/

http://www.scribd.com/doc/24195021/Liberty-Dollar-Kevin-Innes-Jail-Letter-2009-11-18

The owners of the USA also own the word coin?

http://gata.org/node/5742

Why is Mt. Gox and Bitcoinmarket the ONLY known digital currency exchangers in the whole of the USA?

Naivety?


https://www.nanaimogold.com/ - World's first bitcoin exchange service
The Madhatter
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February 07, 2011, 12:05:54 AM
 #20

Thanks for the warning, I never dared to keep much money in liberty reserve due to the fact that it always seemed high risk to me. Especially considering how e-gold got totally destroyed by the US government.

Well, it wasn't e-gold that was under fire directly. It was actually Omni Pay that brought the hammer of the state down on them.

It's almost like if Bitcoin was a huge company using government regulations to shut down competition Tongue

Haha! Tongue

One other thing to consider: when MtGox attracts the attention of Liberty Reserve's operators (and it will eventually, they might see it as money laundering or some other stupid thing), they may disclose MtGox's information to the Costa Rican government under the AML/KYC regulations.

Not only will MtGox's information be disclosed, but the information of every account that has ever spent or received money with MtGox. Think about that for a second. Did you think that you had privacy by using Liberty Reserve? You were obviously wrong.

Does Liberty Reserve have to tell you that your information was given to the Costa Rican government? NO!

Do they have to tell MtGox that his information and account history was given to the Costa Rican government? NO!

Will Costa Rica cooperate with any US Government (or other governments) inquiries? YES! Look at the MLAT treaty. Costa Rica's banking secrecy is on its last legs.

This whole Liberty Reserve thing just stinks. MtGox should drop it immediately and just accept bank wires. He can sell GoxUSD / GoxEUR or whatever. The exchangers can buy/sell the GoxUSD/GoxEUR directly from MtGox and resell it to the masses.

We don't need Liberty Reserve.
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