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Author Topic: Risks of the Exodus Exchange function ("CoinSwitch Scam")  (Read 210 times)
1miau
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May 09, 2020, 07:42:03 PM
Last edit: May 09, 2020, 09:02:20 PM by 1miau
Merited by dbshck (6), LoyceV (6), xandry (3), joniboini (3), DdmrDdmr (3), o_e_l_e_o (2), JayJuanGee (1), bullrun2020bro (1)
 #1

Just leaving this here because I heard many Newbies are using Exodus and its included exchange function because it’s easy to use (but expensive).
Recently, some negative experiences happened and were reported on Reddit. I don’t know if that just happened to a few users and if it’s not much of an issue, but in general Newbies should be aware of this when they are using the exchange function of Exodus.

Users should know that Exodus is not an Exchange itself, but only a desktop wallet with an integrated Exchange function. The exchange of cryptocurrencies is therefore carried out by an independent third-party provider used by Exodus. Exodus is forwarding the cryptocurrencies to be exchanged by these external services. Until the end of 2018 Exodus had a partnership with ShapeShift, which operates from Switzerland and Denver. But when they were forced by the SEC to introduced KYC, Exodus was in need to look for another business partner.
This function is now performed by 5 different providers, including Changelly and CoinSwitch etc.. However, reports have appeared recently that users are losing their coins when they are using the Exchange feature.


During the last few months, some users have complained, especially on Reddit:

https://www.reddit.com/r/ExodusWallet/comments/e6rydc/beware_exodus_exchange_scam_ripped_75_via/
https://www.reddit.com/r/Bitcoin/comments/ei0h8m/coinswitch_exodus_scammed_6500_euro_coinswitch/
https://www.reddit.com/r/ExodusWallet/comments/egphm2/exodus_coinswitch_are_a_huge_scam/


And here is a short summary how they got scammed:

Some users had used the Exchange function in Exodus and the coins were sent, but the exchanged coins didn’t come back as promised. After contacting Exodus support, the users were told to contact the third-party provider "CoinSwitch" which was used to exchange the coins.

The affected users did that but CoinSwitch not only refused to swap coins, but also refused to send the funds back (unexchanged) including a compensation for transaction costs. CoinSwitch insisted on the exchange and demanded a full KYC, otherwise all funds would remain blocked:


Source

Another user had frozen 6500$ and sent the requested documents for KYC.
After CoinSwitch had received every requested document, the user still didn’t get his coins back, but was asked to send an identity video. He did that too, but it was still not enough and CoinSwitch demanded that he prove the origin of the funds.
But even after he did that, they didn't send the coins back, only when the user put pressure on CoinSwitch and made a post on Reddit while also Exodus sided with the scammed user, the coins were returned….

=> It looks like CoinSwitch deliberately misleads users and intends to steal their coins via KYC scam.


Finally, it remains to be said that these cases are not the majority and may only be random exceptions. However, not only large amounts were affected, but even low amounts.
I’m not blaming Exodus, CoinSwitch is responsible, a third-party instant exchange provider, which acts dubiously by freezing coins. But after all, users lost their coins completely.

My question here: did you use Exodus for exchanging coins after 2018 and it was fine?

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jademaxsuy
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May 09, 2020, 08:43:32 PM
 #2

Well, you have postdes this thread for good intentions and let newbies know about this situation where when using exodus those newbies may lose their coins if the third party who handle the coins is coinswitch. Not that I completely blame exodus but they are partly at fault since they use a third party. Even the link you privide blame the exodus for it.

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May 09, 2020, 09:55:54 PM
 #3

While the situation outlined in your post is terrible and definitely not the experience that Exodus users deserve, it is a rare occurrence. Thousands of people use the Exodus exchange feature everyday without issue - you've presented two. It is extremely rare that exchanges are ever held and only happens when an exchange is flagged if it is suspected of being connected to a blacklisted address.

While we were extremely unhappy with how this situation all went down, it did teach us quite a few things about how to go forward. While we can never repay someone for the troubles they've endured, this customer was fully repaid by Exodus plus extra for their trouble. We even named the new internal company policy after this customer as a reminder to us.

Just a final word of warning about reposting things like this...
While it may be getting reposted with good intentions, the full circumstances behind an incident may not be fully explained in the original post, the story is usually only told from one person's perspective or it may not be true at all.

Thanks for allowing me to comment on this rare but ugly incident.
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May 09, 2020, 10:49:14 PM
 #4

My question here: did you use Exodus for exchanging coins after 2018 and it was fine?
I have never used any wallet to exchange my coins. I regularly use exodus but only for keeping my coins and sending them out. I don't understand why someone would exchange coins through the wallet instead of sending them to an exchange like binance, kucoin or instant exchange like coinplaza.it or Exolix.com where the rates are so friendly compared to the wallet exchange services.

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Velkro
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May 10, 2020, 01:01:55 AM
 #5

=> It looks like CoinSwitch deliberately misleads users and intends to steal their coins via KYC scam.
Sounds like a scam and keep in mind that mentioned user did so much to get his BTC back.
But... you cant know that if it was like 3-4 extreme problematic cases in legitimate business that serves tens of thousands users?
Then jumping to conclusions based on 0.01% of users makes false accusations in the end.
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May 10, 2020, 01:19:17 AM
 #6

I have never used any wallet to exchange my coins. I regularly use exodus but only for keeping my coins and sending them out. I don't understand why someone would exchange coins through the wallet instead of sending them to an exchange like binance, kucoin or instant exchange like coinplaza.it or Exolix.com where the rates are so friendly compared to the wallet exchange services.
Storing coins on exchanges is always the worst method. Making deposits and finish trades before withdrawing your capital as soon as possible. Big exchanges are secured, and safe but they surely can be hacked. If you store your capital on one exchange during the period it is hacked, that's terrible. No one knows how severity the hack is and how it affects that exchange. Unfortunately, in worst case, you will lose your money. Don't put your capital on hands of the others even they are big exchanges.

I have never used Exodus but thanks 1miau for point this out. It reminds me about the risks of capital storage on exchanges.

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May 10, 2020, 04:46:42 PM
 #7

I don't think that coinswitch is scam because it's integrated into coinomi wallet as well and 2 days ago I used coinswitch to swap 3000$ worth of Ethereum to Bitcoin, received my coins completely with no problem

1miau
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May 10, 2020, 05:41:42 PM
Last edit: May 17, 2020, 06:38:43 PM by 1miau
 #8

While we were extremely unhappy with how this situation all went down, it did teach us quite a few things about how to go forward. While we can never repay someone for the troubles they've endured, this customer was fully repaid by Exodus plus extra for their trouble. We even named the new internal company policy after this customer as a reminder to us.
I'm not blaming Exodus here but their third party service. Maybe it could be an idea for Exodus to arrange a fund to pay for such mistakes (like "SAFU" from Binance) and if they have more incidents they should sort out such flawed third party providers. Obviously only CoinSwitch is causing problems.



=> It looks like CoinSwitch deliberately misleads users and intends to steal their coins via KYC scam.
Sounds like a scam and keep in mind that mentioned user did so much to get his BTC back.
But... you cant know that if it was like 3-4 extreme problematic cases in legitimate business that serves tens of thousands users?
Then jumping to conclusions based on 0.01% of users makes false accusations in the end.
I've never said that people shouldn't use Exodus exchange function, my intention was to point out that there have been *a few* users experiencing issues and explaining how that happened. Having these obviously rare cases everyone can decide on his own if it's worth using it.
I've also used it and never had any problems but who knows how many people had problems and didn't report it.



My question here: did you use Exodus for exchanging coins after 2018 and it was fine?
I have never used any wallet to exchange my coins. I regularly use exodus but only for keeping my coins and sending them out. I don't understand why someone would exchange coins through the wallet instead of sending them to an exchange like binance, kucoin or instant exchange like coinplaza.it or Exolix.com where the rates are so friendly compared to the wallet exchange services.
Most likely because it's very easy to use. Exchanging on Exodus requires only a few clicks while in opposite sending coins to an exchange account might be more work including creating the exchange account (even if exchanges like Binance are much cheaper).

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