[2020-07-28] LBC adds 2 Elliptic surveillance tools to "manage risk"

[buwaytress]

AMLD5 continues its march. Not sure how it really changes how I use LBC, but LBC's now added 2 tools from Elliptic (which provides blockchain forensics/analytics).

From the Press Release: "By integrating with Elliptic Navigator to screen crypto transactions, and Elliptic Lens to screen wallets, LocalBitcoins have now automated their compliance and anti-fraud processes to drive cost savings and reduce risk."

If I understand this, now any deposits to and from dark markets will be tagged, just wondering if this might extend to casinos and others deemed "illicit".

[Lucius]

Nothing unexpected, monitoring and analysis of crypto transactions will become mandatory for all who operate in EU. What I see as a possible problem is that the whole process is automatic which is of course good for LocalBitcoins, but the question is how intelligent this software is in catching suspicious transactions. Can we expect an increase in blocked accounts because of this - even in transactions that will have nothing to do with the dark market?

According to the article itself, such transactions have been declining by as much as 50% in the last few years - which means that BTC is less and less used on the dark side.

[gentlemand]

just wondering if this might extend to casinos and others deemed "illicit".

Gambling stuff is only problematic in a relatively small number of countries.

Since LBC are Finnish I dunno where that leaves people in countries where it can be a pain. Does Finnish law apply to every trade?

[o_e_l_e_o]

I've not used LocalBitcoins in years since they started asking for KYC, but who is still using them? What niche are they filling? From what I can tell they are incorporating all the negatives of centralized exchanges - centralized control, KYC, keeping their users under surveillance, and now performing blockchain analysis to control how their users spend their own money - with all the negatives of decentralized exchanges - manually having to generate and accept trades, finding reputable traders, long fiat transfer times.

If you are fine using a centralized exchange and completing KYC, then use one which will complete your trade instantly. If you aren't fine with that, then use a DEX to avoid KYC. Why take the worst of both worlds? Am I totally missing something here?

[gentlemand]

I've not used LocalBitcoins in years since they started asking for KYC, but who is still using them? What niche are they filling?

There are still quite a few countries where there are no functioning exchanges and with very few options to move money to those abroad. They have gradually shat all over what made them worthwhile for most users, but even if they lose a lot of custom now future custom in that niche may make up for it.

[o_e_l_e_o]

There are still quite a few countries where there are no functioning exchanges and with very few options to move money to those abroad.

Sure, but what does LocalBitcoins bring over a decentralized exchange like Bisq or LocalCryptos in these cases? Citizens of these countries can use these exchanges to trade peer-to-peer with other citizens in their own country or abroad, and can do so without completing KYC or signing up to allowing Elliptic to stick their noses in to all their holdings and transactions.

Considering the amount various kinds of false positive on past, i'm sure it'll be increased.

Of course it will - just look at other centralized exchanges which lock accounts for so much as daring to log in from a different IP address, or from having coins that were traced to a casino 5 transactions ago despite the fact you only bought them 1 transaction ago.

[gentlemand]

Sure, but what does LocalBitcoins bring over a decentralized exchange like Bisq or LocalCryptos in these cases? Citizens of these countries can use these exchanges to trade peer-to-peer with other citizens in their own country or abroad, and can do so without completing KYC or signing up to allowing Elliptic to stick their noses in to all their holdings and transactions.

Availability.

There's someone on LBC in almost every country. Localcryptos has plenty of blank space though I hope it grows. Bisq has even bigger yawning gaps.

If we take Bulgaria as an example, though I've no idea what the exchange situation is there.

https://localbitcoins.com/buy-bitcoins-online/BG/bulgaria/

https://localcryptos.com/Bitcoin/Bulgaria

https://bisq.network/markets/?currency=btc_bgn

A fair few on LBC, three on localcryptos, zilch on Bisq.

Same story for almost everywhere else a bit out of the way.

[bbc.reporter]

just wondering if this might extend to casinos and others deemed "illicit".

Gambling stuff is only problematic in a relatively small number of countries.

Since LBC are Finnish I dunno where that leaves people in countries where it can be a pain. Does Finnish law apply to every trade?

There are few people use casino to mix/laundry their coin, which could be problematic such as another user who withdrawn their funds got "illcit" coins.

Also, what might be the extent of this to mixers? This appears that it can be applied everywhere where the government can assume the criminals send their coins before sending to an exchange.

[buwaytress]

According to the article itself, such transactions have been declining by as much as 50% in the last few years - which means that BTC is less and less used on the dark side.

Bitcoin itself has been seeing really, really low percentages since at least 2016/17 for illicit purposes, actually, according to research by Elliptic themselves. Perhaps that percentage was/is higher on LBC, as a trader there I do get quite a lot of dubious offers if I leave a sell offer. That actually hasn't really dropped since enhanced KYC (if you sell micro amounts as $100 and below doesn't need KYC).

I've not used LocalBitcoins in years since they started asking for KYC, but who is still using them? What niche are they filling?

There are still quite a few countries where there are no functioning exchanges and with very few options to move money to those abroad. They have gradually shat all over what made them worthwhile for most users, but even if they lose a lot of custom now future custom in that niche may make up for it.

I'm still a user, a freelancer earning and invoicing in Bitcoin, and remote working. Living and paying bills/taxes over two or three countries at a time. I dont'know any exchange that will send me my money instantly if I sell my BTC for two of the currencies I use. For countries in Southeast Asia like Malaysia, Indonesia, Singapore, Thailand, Vietnam, if you use LBC to sell, you can close the deal, with escrow protection and instant bank transfer (yes, actual real time money in your account, not SEPA "instant" or "same day" haha) in under 1 minute. Over the years, I've also built up a network of peers I trust, I SMS them, they open a trade, I take it, or the other way around.

Rates can often be much better too than exchanges.

If you don't mind KYC and don't mind navigating scammers in the beginning, LBC's pretty all right. Localcryptos and Bisq though are where I'm looking to go, except volume is not so good, and that network of trusted users isn't there.

Hope I explained why p2p platforms are still popular. As gentlemand says, they shat on us users a lot over the years, so we're slowly migrating but for sheer convenience and options for travellers, you can't find better than this.

[gentlemand]

they shat on us users a lot over the years, so we're slowly migrating but for sheer convenience and options for travellers, you can't find better than this.

It's going to be interesting to observe whether they hang on to enough users and add enough new ones. They have a whole lot of track record and people may resolve to keep with the familiar. It's the users themselves of course who make it and there'll be traders on there with 7-8 years of feedback. That's going to be compelling for buyers even if there is KYC.

I last used them in 2014. No plans to again.

[Lucius]

Bitcoin itself has been seeing really, really low percentages since at least 2016/17 for illicit purposes, actually, according to research by Elliptic themselves. Perhaps that percentage was/is higher on LBC, as a trader there I do get quite a lot of dubious offers if I leave a sell offer. That actually hasn't really dropped since enhanced KYC (if you sell micro amounts as $100 and below doesn't need KYC).

I've never used LBC, I really didn't need it given the other choices I had - but I have to admit I didn't know that transactions up to $100 didn't require KYC. Does that limit apply to one-day trading, or is it set differently?

All this analyzes should be taken with caution, there may be some truths, but it is strange to me that these are always very attractive round numbers. Although fact is that people are quite resourceful when needed, and that those who have the will and knowledge can always somehow circumvent the restrictions.

[Harlot]

they shat on us users a lot over the years, so we're slowly migrating but for sheer convenience and options for travellers, you can't find better than this.

It's going to be interesting to observe whether they hang on to enough users and add enough new ones. They have a whole lot of track record and people may resolve to keep with the familiar. It's the users themselves of course who make it and there'll be traders on there with 7-8 years of feedback. That's going to be compelling for buyers even if there is KYC.

I last used them in 2014. No plans to again.

Also I don't think P2P exchanges are at fault here. LocalBitcoin's wasn't this strict when it comes to their compliance with the government but then the authorities came knocking that's why we have seen them freeze accounts for KYC compliance. So we don't need to be surprised in implementing Elliptic's service maybe this is just their way of showing to the authorities that they intend their service to be free from illicit activities as long as possible on their side.

[squatter]

If you don't mind KYC and don't mind navigating scammers in the beginning, LBC's pretty all right. Localcryptos and Bisq though are where I'm looking to go, except volume is not so good, and that network of trusted users isn't there.

That goes to show why Coinbase is still so popular too. People go where the volume is. Plus, the first-mover advantage.

Localcryptos has actually been improving a lot in that respect. In-person cash listings have exploded over the past couple months, at least where I'm located. It's not quite like LBC was in the old days, but it's getting there. I've made several new contacts recently.

Paxful seems to be making a comeback too, possibly because they allow some volume of trading without KYC:

[bbc.reporter]

@squatter. Do you use Paxful regularly? I have read a news article that Paxful has required KYC on everyone because of an all time high in scams during that time hehe.

[Karartma1]

I wonder how they will "manage risks" when all our day-to-day transactions will be settled on the Lightning Network and on every layer-2 network we have.
Bitcoin is on its march to destroy the financial world as we know it.
Stack sats 

[squatter]

@squatter. Do you use Paxful regularly? I have read a news article that Paxful has required KYC on everyone because of an all time high in scams during that time hehe.

No, Localcryptos is the only P2P exchange I use. I was just speculating about why Paxful might be growing compared to LBC.

From the look of things, you're right that they have gotten more rigid recently. There are still loopholes, though. You can avoid KYC by avoiding the escrow system, using the escrow system only from non-flagged jurisdictions, posting sell offers (not buy offers), or responding to buy offers -- up to $1,500 in aggregate volume. Once you make a trade or two getting near that limit, you can dump the account and make a new one.