[Blacklist] of unreliable, 'taint proclaiming' Bitcoin services / exchanges

[LoyceV]

Tether can decide to blacklist
~
unlicensed IOUs.

This makes me wonder if the users ever thought about the long-term perspective. With exchanges, you often hear the advice to take your coins out because "not your keys, not your coins". Weirdly enough, that generic recommendation isn't applied to "stable" coins!
Who thinks Tether will still exist 10 years from now? Or 50 years? I bet the dollar will still be around, and Bitcoin too. I'm not so sure yet about the euro, but I'm pretty sure the current stable coins won't last 50 years.

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[o_e_l_e_o]

Does it matter if it's transparent alone, though?

Not at all. We can see what Tether does with USDT on various chains, but we can't see a single thing they do with their reserves. We know from previous court cases and filings that USDT is not backed up 1-to-1 with USD and that Tether are running a fractional reserve.

I am only talking about the concept of a stablecoin as a pemissionless, borderless and cheap internet currency we can use in crypto sportsbooks or in marketplaces similar to Opensea.

But stablecoins aren't permissionless - they are centralized and can be remotely locked/frozen by their issuers at any time, which has happened many times.

Also, yes 1 bitcoin = 1 bitcoin but what you can buy with bitcoin during November will presently cost you more today because it is -85% in value. It is a head shaking argument for stability.

Yes, but what I can buy with bitcoin 2 years ago will cost me far less because bitcoin is +50% in value. Whereas what I can buy with USD has never been lower than it is today. Until tomorrow.

I'm not so sure yet about the euro, but I'm pretty sure the current stable coins won't last 50 years.

Case in point - a "stablecoin":

[dkbit98]

Does it matter if it's transparent alone, though? Alright, so we can verify that there are about 66.83B USDT according to coinmarketcap. Does it have a point if there can't be consensus found in a monetary policy and users have to just follow what one entity says? Sure, there's transparency of their action, but not of their arbitrary intentions. I can't do something if they decide to freeze some Ethereum addresses or inflate USDT to infinity by tomorrow morning, other than to verify it.

I don't think anyone can verify exact supply of US dollars, and it's monetary policy is even worse, yet everyone many people are still using it.
Yes I know anyone can freeze your USDT tokens, and people tried to make better alternatives (USDC, DAI, etc.) but they are all crap because they are based on ethereum blockchain.
If something can be reversed once like eth chain, that means it can be reserved again.  

I don't think that's how stablecoins are defined.

I really don't know exact definition of crypto stablecoins, there are some algorithm based and pegged to it's based shitcoin, like in case of Terra debacle.
There are even some stable coins that are pegged to Gold, like for example Tether Gold.
https://gold.tether.to/

The definition of 'stable' is 'when measured against USD'. Just like they measure stocks and other assets against the USD; they do so with cryptocurrency and if a currency is more 'similar' to the US dollar, it's called 'more stable'. But I argue that the dollar itself isn't stable, and I don't think anyone doubts that.

Wait a minute, and what happens in time of hyperinflation like it was in Weimar Republic and other countries?
In United States dollar crashed in great depression, and nobody could say this was stable currency.
They all claimed Mark and other failed fiat currencies were ''stable''.

[n0nce]

I am not quite certain what you are arguing about if a peg to fiat for you is a problem for a stablecoin.

Oh don't worry about it; it's off-topic anyway. You're correct; these coins are 'stable' compared to the dollar and Bitcoin is 'cheap' now compared to November - but this all assumes we value BTC and everything else against the US dollar.
It's obvious the dollar itself isn't stable in terms of purchasing power; and if we're calling something stable because it follows the value of something else, even though that loses value, we might just as well call BTC 'stable' when it loses (or gains) real value.

Or, to make it more analogous to Tether; maybe easier to understand, let's assume we create a BTCT (Bitcoin-tethered stablecoin that always has the value of 1BTC).

|	Tether	|	BTCT	|
|	Loses value when USD loses value	|	Loses value when BTC loses value	|
|	Gains value when USD gains value	|	Gains value when BTC gains value	|
|	Is only stable in reference to the USD	|	Is only stable in reference to BTC	|
|	Is always worth 1USD	|	Is always worth 1BTC	|
|	Is even called stable if 1USD lost 99% of its value	|	Is even called stable if 1BTC loses 99% of its value	|

So it seems very comparable; this BTCT should be called a stable coin right?

I am only talking about the concept of a stablecoin as a pemissionless, borderless and cheap internet currency we can use in crypto sportsbooks or in marketplaces similar to Opensea.

If you need permissionless, borderless and cheap you should try Bitcoin (on Lightning for small amounts where a few cents in tx fee is not considered cheap).
As far as I know, Tether is not decentralized, so it's not permissionless; at least not nearly as permissionless and borderless as Bitcoin.

The definition of 'stable' is 'when measured against USD'. Just like they measure stocks and other assets against the USD; they do so with cryptocurrency and if a currency is more 'similar' to the US dollar, it's called 'more stable'. But I argue that the dollar itself isn't stable, and I don't think anyone doubts that.

Wait a minute, and what happens in time of hyperinflation like it was in Weimar Republic and other countries?
In United States dollar crashed in great depression, and nobody could say this was stable currency.
They all claimed Mark and other failed fiat currencies were ''stable''.

Yes, that's the irony: you can have a super inflationary 'base currency' (USD, Weimar Republic Marks etc.), create a crypto coin that follows its value and call it a 'stable' coin.
Everyone can see the dollar is not stable, but the coins that follow its price are stable (by definition).

I'm arguing that by the same definition, I can create a coin that follows BTC price action and call it a 'stablecoin' because it always has the value of 1BTC, no matter if it tanks or 'moons'.

In fact, in an attempt of 4D chess, I could create a coin that follows 'TerraClassicUSD' price and it would have been 1:1 to this day, never 'lost any value' (compared to the base currency TerraClassicUSD), even though USTC has crashed compared to other currencies like the US dollar, the Euro or just purchasing power. It should be a 'stable coin' based on the definition given earlier: stable = following something else, no matter if that itself is not stable.

Basically, peg = stable - which is pretty misleading, if we look at the USD purchasing power chart.

Case in point - a "stablecoin":

Looking at these 2 graphics side by side; if I peg something to the above currency and call it 'stable', I should also be able to peg something to the below currency and call it 'stable', right?

[LoyceV]

Looking at these 2 graphics side by side; if I peg something to the above currency and call it 'stable', I should also be able to peg something to the below currency and call it 'stable', right?

The difference is the time frame: the dollar is quite stable from today to tomorrow, while Bitcoin can easily lose or gain 20%. But I've also seen the dollar (or euro) gain or drop much more than 1% in a day, after some announcement from a central bank.
Now that I think about it, it makes me wonder if Bitcoin is called volatile to distract from the continuous drop in value of fiat money. Fact is: there is no stable currency anymore.

[icopress]

n0nce, in case you need an official statement from the Betnomi.

We do accept deposits from mixers etc but not from illicit income.
If user is using our services to clean/ launder the funds then this will be a violation but mixers by themselves should be no problem.

[LoyceV]

We do accept deposits from mixers etc but not from illicit income.
If user is using our services to clean/ launder the funds then this will be a violation but mixers by themselves should be no problem.

How do I interpret this? Let's say someone steals 1 Bitcoin, and gambles it at Betnomi. That's not allowed, right? And that makes sense!
But if someone gets 1 Bitcoin from a mixer, he can use it to gamble at Betnomi, even if that 1 Bitcoin was previously stolen by whoever sent it to the mixer? If so, that would make perfect sense to me too!

The thief isn't allowed to use stolen funds, but you can't blame a Bitcoin owner because of whatever a previous owner did.

[icopress]

The thief isn't allowed to use stolen funds, but you can't blame a Bitcoin owner because of whatever a previous owner did.

I think the way you put it makes sense. As far as I know, my short question was answered directly by the founder.

I decided to quote the answer that I received so that there would be no confusion in the future.

[BlackHatCoiner]

Not accepting funds from illicit activity sounds very confusing. You'll have to determine:

• What's considered illicit? If it's illegal? Based on which country? User's? Casino's? Laws differentiate.
• How can you prove it's illicit? Money is fungible. Most thieves wouldn't be thieves if they knew they can be traced somehow probably. Unless you infringe on everyone's privacy.

Responding with "we don't care about mixed funds, we just don't accept money that come from illicit activity" opens up a big discussion. Do casinos need to make such heavy statements to maintain the status quo?

[n0nce]

Looking at these 2 graphics side by side; if I peg something to the above currency and call it 'stable', I should also be able to peg something to the below currency and call it 'stable', right?

The difference is the time frame: the dollar is quite stable from today to tomorrow, while Bitcoin can easily lose or gain 20%. But I've also seen the dollar (or euro) gain or drop much more than 1% in a day, after some announcement from a central bank.

Sure, the time frame is different. But as you say, fiat currencies can also fluctuate quickly. Let's keep in mind that there are also other 'fiat stablecoins', so even a coin following the Mexican peso would be called stablecoin. Even though it went from $0.70USD to $0.05USD in the last 10 years. Relative to the Mexican economy and to Mexican Peso holders, such a stablecoin would indeed appear 'stable' and not have lost any value.

I remember some weeks in 2018, where the TRY was inflating so hard that it 'out-crashed' Bitcoin, so measured in TRY people would have made profit holding Bitcoin (even though it was losing tons of value when measured in USD) compared to a Turkish Lira stablecoin. In that sense, Bitcoin was more stable than a theoretical stablecoin.

Now that I think about it, it makes me wonder if Bitcoin is called volatile to distract from the continuous drop in value of fiat money. Fact is: there is no stable currency anymore.

I don't believe in conspiracies hiding behind every corner, but I do believe that the majority of people sees their country's currency as stable and everything that loses or gains value, when measured in their local currency, unstable. This is a general thing that I also noticed before Bitcoin and / or in other contexts than Bitcoin.

The thief isn't allowed to use stolen funds, but you can't blame a Bitcoin owner because of whatever a previous owner did.

I think the way you put it makes sense. As far as I know, my short question was answered directly by the founder.

I decided to quote the answer that I received so that there would be no confusion in the future.

Thanks for reaching out icopress! I myself don't fully understand, like LoyceV and BlackHatCoiner, how they try to accomplish that (discerning funds after they have been mixed).
I do get that casinos don't want to be used as mixers. My issue is just with blocking users' funds if they come from ChipMixer or CoinJoin.

Maybe they mean that if e.g. I hold 'tainted' coins (coming from a theft, etc.) and deposit them to Betnomi, they will block them, but if I send them through a mixer, first then I'm good? Would be great if Andrew can confirm the last sentence..

It would be interesting to know how they are able to tell apart mixed and non-mixed funds, though. I guess ChipMixer chips can be identified by always being multiples of BTC0.001 minus a small 'sweeping' transaction fee, but other mixing methods may not be that easy to identify and could lead to coins being labeled as 'illicit', even though the user for example, got it from another CoinJoin user who themselves got it through theft.

[LoyceV]

It looks like you can add Openchange.cash to the list: SCAM EXCHANGE: Openchange (Openchange.cash):

I have tried to exchange 0.256 BTC, one ChipMixer's chip, to Monero.

After receiving enough confirmations they changed order status to "Mistake" and accused me of trying to money launder stolen funds. According to their AML bot funds that I have sent are stolen. I have tried to explain them what Chipmixer is and it was a waste of time. They keep insisting on:"Risk of your transaction - Stolen 100.00%".

[icopress]

After receiving enough confirmations they changed order status to "Mistake" and accused me of trying to money launder stolen funds. According to their AML bot funds that I have sent are stolen. I have tried to explain them what Chipmixer is and it was a waste of time. They keep insisting on:"Risk of your transaction - Stolen 100.00%".

Are the funds returned to the owner?

[NeuroticFish]

Are the funds returned to the owner?

Nope, they're asking for "supporting documents" (KYC, source of funds) which, from my understanding, the rightful owner doesn't want to send.

[icopress]

Nope, they're asking for "supporting documents" (KYC, source of funds) which, from my understanding, the rightful owner doesn't want to send.

It is one thing to reject a deposit/withdrawal, another to confiscate.

BestChange should intervene. If they do not intervene and the funds are not returned, this will be a bad precedent that deserves a red label.

Every exchanger presented on our website has been thoroughly checked before listing, and the BestChange team constantly monitors exchangers' services quality. This minimizes risks when making financial transactions in exchangers listed on our website. Should an exchanger fail to properly fulfill its obligations, a number of measures would be taken against it which stimulate the exchanger to solve the issue as fast as possible.

I wouldn't say better.

It doesn't worry you that an anonymous entity demands people to share their legal documents? It worries me! I'm okay with legit companies following the law in the country they're registered in. I'm also okay with totally anonymous services that solely rely on their reputation.
But I'm not okay with anonymous entities cherry picking which rules do or don't apply to them.

[LoyceV]

BestChange should intervene.

They responded twice, see Janyiah's feedback:

   Admin BestChange.com    June 30, 2022, 20:14
Hello!

We request the exchanger's administrator to respond to the user's complaint.

Best regards, BestChange administration.

Admin BestChange.com    June 30, 2022, 21:47
Hello!

There is no mark in monitoring about possible verification because verification is not carried out at the exchange service.
The situation with your order is another, the funds from you were not received by the exchange service and were frozen by the exchange, which requested verification, because the funds have the status Stolen 100%.

By creating and confirming your initial order, you have agreed to all the terms and conditions of the exchanger. The rule 7.7 of terms says about situations with frozen funds.
Verification is one of the most common and effective ways of following the AML and KYC policies.

In this case it is not possible to resolve this situation without providing the requested information to the exchange office.

None of this makes sense: if funds are stolen, sending documents to an anonymous website isn't going to change that. But they say they'll return it after receiving documents.

Note that the feedback has been bumped 48 times: BestChange allows the exchanger to cancel the claim (this happened 20 times). Then, Janyiah can renew the claim (which happened 19 times). That alone is very shady: imagine if any user on Bitcointalk could turn their negative feedback into neutral just by clicking it.

This brings another interesting question: what happens to "tained" Bitcoins once a service decides they're "tainted" (based on completely arbitrary criteria)? I wouldn't be surprised if they use this as an excuse to keep funds for themselves, AKA stealing. It's not as if they know Bob stole the Bitcoins from Alice, and they return them to Alice. So what's the plan after announcing some Bitcoins as "tainted"?

[icopress]

This brings another interesting question: what happens to "tained" Bitcoins once a service decides they're "tainted" (based on completely arbitrary criteria)? I wouldn't be surprised if they use this as an excuse to keep funds for themselves, AKA stealing. It's not as if they know Bob stole the Bitcoins from Alice, and they return them to Alice. So what's the plan after announcing some Bitcoins as "tainted"?

We will return to this as well.

I'll wait until Monday and see how the situation unfolds and then I think to intervene.

[malevolent]

Does anyone believe that over the years these companies will change their behavior? Because what I see is that the list of companies will get bigger and bigger. There will be more control, less privacy, more KYC/AML and more blacklist of supposedly tainted coins.

"Taint" becomes real if enough people believe it's real. So this will depend on the users, but given that many users accept KYC-demands, they'll probably go for this too. I don't have high hopes.
Privacy changes on the protocol level could help, but I have no idea how likely that is to be implemented.

It's possibly too late for that. Given the size of the market, and how many do not want to deal with Monero, or view such transactions with more suspicion, at this point I really wouldn't be surprised if major exchanges and businesses decided to stay on the old chain without privacy, assuming they wouldn't have been able to successfully torpedo efforts to improve BTC at all.

[n0nce]

Does anyone believe that over the years these companies will change their behavior? Because what I see is that the list of companies will get bigger and bigger. There will be more control, less privacy, more KYC/AML and more blacklist of supposedly tainted coins.

"Taint" becomes real if enough people believe it's real. So this will depend on the users, but given that many users accept KYC-demands, they'll probably go for this too. I don't have high hopes.
Privacy changes on the protocol level could help, but I have no idea how likely that is to be implemented.

It's possibly too late for that. Given the size of the market, and how many do not want to deal with Monero, or view such transactions with more suspicion, at this point I really wouldn't be surprised if major exchanges and businesses decided to stay on the old chain without privacy, assuming they wouldn't have been able to successfully torpedo efforts to improve BTC at all.

I'm not that sure about this. Look at Lightning: it's in a way 'protocol-level privacy' (just one layer higher), and some exchanges added or plan to add Lightning support for deposits and withdrawals.

Since improved privacy was always one of Lightning's selling points, I'm not sure how customers would react if suddenly certain LN payments were declined / stolen. Hopefully more outrage than when this happens on-chain, where unfortunately as we determined, lots of people bought into 'well, the blockchain is transparent (no privacy, just pseudonymity) and I guess I got bad coins'.

The hope is that protocol-level privacy (on L1 or L2) creates different expectations in the majority of customers, who would 'let their money talk' if a business were to act against (like by ignoring or questioning) such built-in privacy.

[LoyceV]

lots of people bought into 'well, the blockchain is transparent (no privacy, just pseudonymity) and I guess I got bad coins'.

If you put it like this, the whole "taint" thing really sounds like a scam to confiscate people's funds. And the last case I read about totally looked that way. "Taint" is used by shady websites to steal funds.

[swogerino]

lots of people bought into 'well, the blockchain is transparent (no privacy, just pseudonymity) and I guess I got bad coins'.

If you put it like this, the whole "taint" thing really sounds like a scam to confiscate people's funds. And the last case I read about totally looked that way. "Taint" is used by shady websites to steal funds.

I think I agree while I had a lot of problems with Cex.io last week but at the final they released the funds,of course I am never ever using them after lots of questions from their side,nevertheless I think to put that exchange here as a couple of friends have been asked even to sign a message to demonstrate their belongings in order to verify the deposits,so far more than a week passed and no answer from them,most probably it should be added to the list here.I don't know what they are thinking but they tell you after,for example they don't send you an email that your account is under investigation but once you deposit funds and then try to withdraw they bomb people with questions.Looks like this "tainted" thing is being abused in a very big way from many centralized exchanges.