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Author Topic: suspicious activity...new security measures on WBX  (Read 2357 times)
Andre Jensen (World Bitcoin Exchange)
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November 16, 2011, 12:38:13 AM
 #1

Dear WBX Users,

As you may be aware we have recently had to freeze trading on the World Bitcoin Exchange on several occasions.  This is a result of recently implemented tightened security measures which have identified some accounts as showing suspicious activity.  We have responded by suspending the accounts in question.

The new security measures have been brought into place at the insistence of a number of banking and policing entities after an increase in the incidence of fraud, phishing attacks and money laundering being carried out using Bitcoins to mask illegal transactions.

Should your account be suspended and you believe this suspension to be in error, we ask that you contact us in order to start the identification process.  Once gathered, the documentation in question is held on a secure data store. Any submitted information will not be shared with any third party under any circumstance, except where WBX is legally obliged to do so.

Please be aware that due to the sudden increase in AML requests, processing of submitted documentation has become slightly delayed. We thank our users for their continued patience and support as we adjust to the requirements which have been obligated upon WBX.

Sincerely,

WBX Support Team
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MysteryMiner
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November 16, 2011, 12:51:54 AM
 #2

Probably You don't understand that one of Bitcoin greatest selling points are anonimity and untraceability, so just as internet is for porn, Bitcoin is for illegal payments.

1LEaxxAh1LKFUvDKYVhiMEVAHRM7K5o7cF
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November 16, 2011, 01:07:10 AM
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I'm hopeful that you and other exchanges will be able to operate profitably under this regime...or simply willing to do so.

It would be hard for me to believe that you could have gotten an exchange service operating without having first recognized the kernel of truth enunciated by MysteryMiner in the preceding discussion entry.

Like I've said on several occasions, though, an exchange could probably make a temporary killing by gathering BTC/Funds from people who will end up being unwilling to incur the risk of coming back for them.  Nebulous and/or non-published terms of service seem to be the norm for Bitcoin related enterprises, so you could probably get away with stating that uncollected assets will be liquidated after arbitrary periods of time.

BTW, does this thread not belong in the economics -> trading discussions bin?


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November 17, 2011, 03:41:59 PM
 #4

My account's suspended for some reason, all i do is deposit 40-50$ every 2 weeks to buy bitcoins, strange that would seem suspicious.  Anyway seeing as I have to identify now to reclaim my bitcoins is an expired drivers license + current bank statement ok?(drivers license doesn't have my current address and utilities aren't in my name)
Andre Jensen (World Bitcoin Exchange)
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November 18, 2011, 10:48:48 AM
 #5

My account's suspended for some reason, all i do is deposit 40-50$ every 2 weeks to buy bitcoins, strange that would seem suspicious.  Anyway seeing as I have to identify now to reclaim my bitcoins is an expired drivers license + current bank statement ok?(drivers license doesn't have my current address and utilities aren't in my name)

We apologise for the incovenience you are experiencing, and would ask if you could forward your details to AML@worldbitcoinexchange.com and we will reply with a decision promptly.

Andre
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November 18, 2011, 11:24:54 AM
 #6

I'm hopeful that you and other exchanges will be able to operate profitably under this regime...or simply willing to do so.

It would be hard for me to believe that you could have gotten an exchange service operating without having first recognized the kernel of truth enunciated by MysteryMiner in the preceding discussion entry.

Like I've said on several occasions, though, an exchange could probably make a temporary killing by gathering BTC/Funds from people who will end up being unwilling to incur the risk of coming back for them.  Nebulous and/or non-published terms of service seem to be the norm for Bitcoin related enterprises, so you could probably get away with stating that uncollected assets will be liquidated after arbitrary periods of time.

BTW, does this thread not belong in the economics -> trading discussions bin?

If you look at the ToS of companies like Paypal Australia and Technocash which do hold Australian Financial Services licences, you'll see that the issue of what happens if a customer's funds can't be released to them because they've failed to verify/identify is addressed.  The funds must ultimately be turned over to one of the various government unclaimed monies funds where it sits waiting for collection by the person who held the account or someone legally empowered to collect it on their behalf.  Businesses can't legally hold onto the funds of unverified/unidentified customers indefinitely.

Terms of Service don't trump the legal obligations of business to comply with the law, no matter how much business operators might wish otherwise.

All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
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November 21, 2011, 06:38:41 AM
 #7

the shady part of these bitcoin exchanges freezing funds of their users is that there is no TOS to "agree to" or read warning new users BEFORE HAND that your bitcoins / currency can be frozen or with held indefinitely without your consent until you prove your identity to them.  And if for some reason you cannot prove your identity, then too bad for you; we've got your money, thanks for playing.  Well, IF i would have known you were going to trap my funds, i wouldn't have signed up with your service to begin with. Its this kind of crap which got me hating centralized banking  - they would freeze my credit card every month for making an online purchase. now it seems bitcoin is headed towards the same fate.  Until the day you can use bitcoins buy or pay for something useful such as land, a house or vehicle payment, bitcoins are going to be completely useless...except as a vehicle for exchanges to defraud their own customers. no wonder the value of BTC is in constant freefall.

Andre Jensen (World Bitcoin Exchange)
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November 21, 2011, 01:03:27 PM
 #8

the shady part of these bitcoin exchanges freezing funds of their users is that there is no TOS to "agree to" or read warning new users BEFORE HAND that your bitcoins / currency can be frozen or with held indefinitely without your consent until you prove your identity to them.  And if for some reason you cannot prove your identity, then too bad for you; we've got your money, thanks for playing.  Well, IF i would have known you were going to trap my funds, i wouldn't have signed up with your service to begin with. Its this kind of crap which got me hating centralized banking  - they would freeze my credit card every month for making an online purchase. now it seems bitcoin is headed towards the same fate.  Until the day you can use bitcoins buy or pay for something useful such as land, a house or vehicle payment, bitcoins are going to be completely useless...except as a vehicle for exchanges to defraud their own customers. no wonder the value of BTC is in constant freefall.

I am very sorry you feel this way, if we had not implement the security process and frozen all accounts the short answer is, is that we would have been put out of business the next day(due to the heavy fraudulent transactions on our accounts), World bitcoin exchange is here to stay we have had our fair share of problems in the past as well as larger exchanges have but this is what to expect with a new and exciting venture as bBitcoin offers,

Yes i agree we were a bit heavy handed on this occation and i do apologise for that, but when it come to your money that is what is secured first and for most and i make no apology for that, we started this exchange on the same principles as you have and unfortunately it only takes a few to spoil it for the rest

Be rest assure we are around 90% completed in clearing the huge back log, we do apologise if we have not got to your account on the exchange, if you like to speed the process up please email me andre@worldbitcoinexchange.com.au and i will personally look into your situation.

Sincerely

Andre Jensen     
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November 21, 2011, 02:48:58 PM
 #9

Compared with AML in a lot of other places this was quick painless and without a lot of the hassle a certain large exchange puts you through  Wink

Andre Jensen (World Bitcoin Exchange)
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November 21, 2011, 02:56:53 PM
 #10

@Andre Jensen WBX

Mystery Miner is spot on. Bitcoin was designed for complete decentralized and anonymous transfer of money. All the exchanges are "Virtual Laundromats" so to speak, to pretend otherwise is stupid. Why do you think Mt.Gox is in Japan? Because Mark Karperles just likes Japan or is it because, out of all the modern countries on the planet, Japan has some of the toughest internet privacy laws in existence.

The only way an ISP hands over information in Japan is with the order of a High Court Justice, not a lower court and the only time that has ever happened with a non Japanese request was issues concerning terrorism. Almost all request for information by foreign legal entities is just plain ignored. If successful the process takes YEARS.

Implement all the bogus security measures you want, you're not going to change the fact that "Dirty Fiat" goes in, mixes with Bitcoins and  "Clean Fiat" comes out. You can forget about running a non laundering exchange LOL...Bitcoin isn't even 2% mainstream...it's major use is still illicit drug buys, illegal trading and money laundering.

What you're trying to do is akin to selling Crack Cocaine and claiming its legit because you have a Business License, A Pharmacist behind the counter and a lame TOS to enter the store.


If you can't come to terms with this, I suggest you slap up a 404 Error page and be done with it.

Just my .02 BTC.

~BCX~

I agree with almost everything you have to say here.... please let me cover some points here, i am only doing whats in the best interests of the Australian Bitcoin community and thats providing a fast low fee secure escrow service that connects Bitcoin Miners with Bitcoin Buyers nothing more nothing less what ever happens in between is none of my concern.

Implementing these "Bogus" security measures is to protect our customers and ourselves from fraudulent activity agin this is nothing more nothing less.

We believe in the future of Bitcoin and some day like the "internet" it may break that 2% barrier, a  promising out look is that around 90% of the exchange data base have complied with the new Security Measures we have implemented, You have to remember we are a small fish in a bigpond.

Looking at other large exchange's you will find sophisticated trading patterns that don't reflect...it's major use of illicit drug buys or am i missing something here. it may have been a thing of the past ( e.g when the price of a bitcoin was worth $30 each) to trade Drugs and so forth, today the price indicates a more stable looking trading platform.

Bitcoin is still a decentralised and anonymous way to transact and it will always be.

Let me ask you a question if you were placed in my position what have you done i will patiently wait your reply

Kind regards

Andre Jensen
racerguy
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November 21, 2011, 04:21:37 PM
 #11

Compared with AML in a lot of other places this was quick painless and without a lot of the hassle a certain large exchange puts you through  Wink

+1
took me a few hours to get verified (heard similar accounts from others too), I was dreading having to wait a week or 2 like other exchanges.
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November 21, 2011, 05:17:40 PM
 #12

Would you mind if I asked the nature of the business that sent this up the flagpole to a level where it would cause you to be threatened with closure? Can you at least confirm or deny whether it has anything to do with gambling?

Certain countries around the world would obviously love to freeze the bitcoin funds of any kind of gaming houses (whether they operated legally and outside those countries or not). Are there any cases where you're closing accounts or seizing funds even when the account holders have provided valid ID up to normal AML standards, based on size of transaction alone or what they may be doing with their own Bitcoins? Would our funds, for example, be safe with you as a licensed entity in Costa Rica, even if some other country wanted us shut down? Or does this depend on who asked and how much pressure they were able to exert?

With 20k US Marines about to start camping with the 'roos, I imagine Oz might start looking less and less like a good place to bank, high interest rates or otherwise... I think some clarification might be necessary here to restore user confidence in maintaining wallets on your site, if no one knows what triggers could cause those wallets to be arbitrarily seized.

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November 21, 2011, 05:50:55 PM
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...if we had not implement the security process and frozen all accounts the short answer is, is that we would have been put out of business the next day(due to the heavy fraudulent transactions on our accounts),
...

This stuff fascinates me, so if you have the ability and a few minutes, I would love to understand the mechanics of being 'put out of business the next day.'

The simplest explanation is that you will be liable to return or forfeit certain kinds of funds.  And if you send them on without meeting some sorts of AML or related requirements, it'll be sad day for you and you'll have to make them up out of your own capital.  If you could confirm or deny that this is roughly correct, that would be interesting to me and appreciated.


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November 21, 2011, 06:34:57 PM
 #14

what kind of fraudulent transactions are you seeing?

PatrickHarnett
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November 21, 2011, 08:21:39 PM
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Probably the unusual activity is deposit BTC, withdraw dollars because they used to have one of the best arbitrage margins in the bitcoin market.  Also, why trading on an exchange with anonymity to your deposit holder is an issue is part of choice - you can still do transactions elsewhere.   

For interest, I'm doing a FSL application at the moment for trading derivatives and advice, and was going to add a clause in the proofs to allow bitcoin to see what the ASIC analysts say.  Last one I did was a few years ago, and they are not too hard.
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November 21, 2011, 08:24:50 PM
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My account's suspended for some reason, all i do is deposit 40-50$ every 2 weeks to buy bitcoins, strange that would seem suspicious.  Anyway seeing as I have to identify now to reclaim my bitcoins is an expired drivers license + current bank statement ok?(drivers license doesn't have my current address and utilities aren't in my name)

We apologise for the incovenience you are experiencing, and would ask if you could forward your details to AML@worldbitcoinexchange.com and we will reply with a decision promptly.

Andre
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November 21, 2011, 08:44:54 PM
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What surprises me in threads like this one is the assumption that exchanges in Australia can somehow avoid the provisions of the AML & CTF Act.  Even if they are not reporting entities themselves, the organisations through which they process users funds are reporting entities and are legally required to take action in regard to suspicious activity.  

There's not magical exemption which applies to the exchanges because...Bitcoin.  Just like your personal bank accounts/PayPal accounts/Technocash accounts/Western Union transfers, their business accounts which process user funds are subject to AML/CTF laws and those accounts can be frozen indefinitely with no notice if their financial service provider detects suspicious activity.  People also need to remember that "money laundering" includes things like credit card fraud as well as the more traditional processing large amounts of cash through multiple transactions to hide its origins.

Compliance with AML/CTF legislation isn't a matter of choice for the exchanges - they literally can't process user deposits and withdrawals of actual currency without using services which are reporting entities.  The threat of their accounts being frozen isn't imaginary.  It already happened with MtGox's Technocash accounts.  Had the majority of MtGox user funds been held in its Technocash accounts in Australia, it would obviously have threatened their ability to continue operating.

The administrative burden of AML/CTF compliance is substantial.  Does anybody really believe that the exchanges are doing this for shit and giggles?  

If people want exchanges to operate in markets where there is heavy AML regulation, they're going to have to accept that the operations of those exchanges will be subject to that regulation.

Quote
For interest, I'm doing a FSL application at the moment for trading derivatives and advice, and was going to add a clause in the proofs to allow bitcoin to see what the ASIC analysts say.  Last one I did was a few years ago, and they are not too hard.

I don't really see that there's going to be a huge issue with ASIC.  They'll either exempt Bitcoin or they'll more likely classify it under one of the many existing categories where they have jurisdiction.  The issue seems to be more about exchanges either not wanting to be regulated as Australian Financial Service Providers (they'd probably be classified as reporting entities) or not wanting to front the cost of licensing (from memory, the performance bonds for deposit-takers are substantial).

ASIC only needs to determine whether the exchanges are offering a financial service or product which is subject to regulation.  

AUSTRAC is the real wildcard here.  If they keep receiving reports of the Bitcoin exchanges being used to launder money then there will come a point at which they look at regulating Bitcoin itself and require certain Bitcoin transactions to be reported to them as well as requiring people opening accounts to trade Bitcoins to be formally identified.

It's also worth noting that different Bitcoin services could be regulated differently.  If the exchanges are acting purely as escrow services and not buying and selling Bitcoins themselves, then they're likely to be licensed in a similar manner to PayPal - as authorised deposit takers.  A business which is actually buying and selling Bitcoins to the general public and institutional investors would most likely be regarded as dealing in a financial product rather than offering a financial service and therefore regulated somewhat differently (they'd probably have to issue a PDS similar to those issued for insurance, superannuation, management funds, etc).


All I can say is that this is Bitcoin. I don't believe it until I see six confirmations.
David M
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November 21, 2011, 10:53:52 PM
 #18

It was my understanding that AML only applies to transactions of $500 AUD or more.

Is this correct?
Matthew N. Wright
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November 21, 2011, 10:58:06 PM
 #19

Is it just me or is Andre Jensen's childlike misspellings and lack of proof-reading a dead give away that World Bitcoin Exchange is run by 12 year olds?

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November 22, 2011, 12:03:27 AM
 #20



[/quote]

^^^ LMFAO




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