What is a proof of origin?

[Cashi]

Many people are probably wondering what a proof of origin of your own coins is, so here is an attempt to explain it:

Proof of origin of your own coins is required when you deposit such coins at a respective exchange platform or crypto exchange. Because after deposit you will be asked where you got your coins from.
It can be from similar exchanges, from mining or anywhere else. It is important to have documentation to show it, such as screenshots or blockchain. It is assumed of such proof of origin can be created automatically soon if Bitcoin’s blockchain is analyzed more closely.

If you deposit a large amount of coins, your exchange will automatically ask where you got your coins from.

It is to prevent you from transferring dirty coins from illegal sources to exchangers and afterwards selling such coin on your exchanger.

[coolcoinz]

Thankfully not all exchanges use this tactic because it's actually worse than KYC. Why? Because you can easily produce an ID, but most people cannot prove where they got their coins.

For instance, I got most of my coins long ago from now defunct exchanges. Some I got from trading on these exchanges and I cannot prove any of that because back in the day they didn't give you any invoices. You'd have to take screenshots every step of the way, with every transaction and every trade. Let's hope this will never become an industry standard.

What about people who got their coins for cash? I know a few people who bought coins this way 10 years ago and can't prove anything but the fact that they own these coins. Bitcoin in itself should be all the proof you need. You have the private key, you're the owner. The exchange shouldn't care if you fixed neighbor's car, bought it with cash or paid with your ass.

[btcltcdigger]

That's been the case for fiat for years now. Whenever you wanna deposit a sum larger than lets say 10k euro in the bank, you have to show how you got the money.
And excuses like "my grandma gave me cash" usually don't work

[Ammar M. A.]

Just heard about this concept, it sounds ridiculous that CEX wants to know where our deposits come from. As far as I have been using CEX (either local or global), I have never had a case like this, probably because I have never made a large deposit. Is this based on a true story? or just a concept that might happen?

If this is a true story, it would be a good idea to let us know which CEXs have done this, in case people here want to make large deposits.

- Ammar M. A.

[GPVibes]

That's been the case for fiat for years now. Whenever you wanna deposit a sum larger than lets say 10k euro in the bank, you have to show how you got the money.
And excuses like "my grandma gave me cash" usually don't work

This sounds more understandable with the analysis of cash to bank deposit you use and yes banks do require source of income if the money is large or exceed the account limit.

If this is same practice for cryptocurrency, it means the exchange operators are also trying to prevent fraud and money laundering. This is the simple reason I think about such practice for cryptocurrency also because I understand cryptocurrency can be digital type of money that people can send direct without third party online.

[Peanutswar]

Many people are probably wondering what a proof of origin of your own coins is, so here is an attempt to explain it:

Proof of origin of your own coins is required when you deposit such coins at a respective exchange platform or crypto exchange. Because after deposit you will be asked where you got your coins from.
It can be from similar exchanges, from mining or anywhere else. It is important to have documentation to show it, such as screenshots or blockchain. It is assumed of such proof of origin can be created automatically soon if Bitcoin’s blockchain is analyzed more closely.

If you deposit a large amount of coins, your exchange will automatically ask where you got your coins from.

It is to prevent you from transferring dirty coins from illegal sources to exchangers and afterwards selling such coin on your exchanger.

If you open an account at your local exchange, they seek details about the transaction. Ideally, you should create transactions frequently so your account's activity is not suspicious to them. This will prevent you from getting hassled with the documents submitted and also from having your account frozen. If you make a transfer from an unknown exchange directly to the wallet possible they will seek some proof of origin. Its get hassle if you transfer again with the another known exchange but its up to you if you want the convenience or not.

[cryptoaddictchie]

If you deposit a large amount of coins, your exchange will automatically ask where you got your coins from.

It is to prevent you from transferring dirty coins from illegal sources to exchangers and afterwards selling such coin on your exchanger.

Seriously I never heard of this algo. Is it being recognized elsewhere?cause as far as I know when I sent tokens coming from a non custodial wallet cex doesnt need any info regarding where it came from.

Mayne if its suspicious transaction that the user never did used or send that kind of amount of tokens before.

[Lucius]

That's been the case for fiat for years now. Whenever you wanna deposit a sum larger than lets say 10k euro in the bank, you have to show how you got the money.
And excuses like "my grandma gave me cash" usually don't work

It usually doesn't work, but some are resourceful and bring a certificate signed by two witnesses that the grandmother is still the source of money because she saved all her life and in the end gave everything to her grandson

Resourceful people will always find a solution to justify the origin of money or to launder money in some innovative way. It doesn't even have to be something illegal, because those who know the laws usually know how to find some loophole in the same law that allows the impossible to become possible.

[Findingnemo]

If you deposit a large amount of coins, your exchange will automatically ask where you got your coins from.

It is to prevent you from transferring dirty coins from illegal sources to exchangers and afterwards selling such coin on your exchanger.

Seriously I never heard of this algo. Is it being recognized elsewhere?cause as far as I know when I sent tokens coming from a non custodial wallet cex doesnt need any info regarding where it came from.

Mayne if its suspicious transaction that the user never did used or send that kind of amount of tokens before.

Every exchange touched about this in their terms, most common term is proof of funds instead of origin.

It's just trigger the security when the user deposit huge amount that he done never before and trying to withdraw it immediately so they consider it's sign of money laundering so they will hold and ask for proof of funds.

[Apocollapse]

It sounds like a joke for me to see centralized exchanges and banks are asking proof of origins and ban tainted coins. Technically almost all Bitcoin are tainted, even coins held by  the US or other countries are tainted. They confiscate coins from illegal services, which mean they have tainted coins.

I don't think proof of origin is to combat against money laundering, they can track it by themselves. I think the implementation of proof of origin is used to increase the chance the company can earn money by confiscate the users' coins.

[Rustam Meraj]

It sounds like a joke for me to see centralized exchanges and banks are asking proof of origins and ban tainted coins. Technically almost all Bitcoin are tainted, even coins held by  the US or other countries are tainted. They confiscate coins from illegal services, which mean they have tainted coins.

I don't think proof of origin is to combat against money laundering, they can track it by themselves. I think the implementation of proof of origin is used to increase the chance the company can earn money by confiscate the users' coins.

I agree with you that it is suspicious when big exchanges and banks ask for proof of where Bitcoins come from and ban coins that have been used for bad things. Almost every Bitcoin has been used for something bad at some point so it is not fair for these institutions to say they care about stopping money laundering. Really  they probably have ability to track Bitcoin transactions themselves. It is more likely that they are using this as excuse to take people Bitcoins and make money for themselves which is worrying for people who own cryptocurrencies because it affects their freedom and safety.

[Porfirii]

It sounds like a joke for me to see centralized exchanges and banks are asking proof of origins and ban tainted coins. Technically almost all Bitcoin are tainted, even coins held by  the US or other countries are tainted. They confiscate coins from illegal services, which mean they have tainted coins.

I don't think proof of origin is to combat against money laundering, they can track it by themselves. I think the implementation of proof of origin is used to increase the chance the company can earn money by confiscate the users' coins.

I agree with you that it is suspicious when big exchanges and banks ask for proof of where Bitcoins come from and ban coins that have been used for bad things. Almost every Bitcoin has been used for something bad at some point so it is not fair for these institutions to say they care about stopping money laundering. Really  they probably have ability to track Bitcoin transactions themselves. It is more likely that they are using this as excuse to take people Bitcoins and make money for themselves which is worrying for people who own cryptocurrencies because it affects their freedom and safety.

But although in the case you're right, and they do it to take people's Bitcoin, they would get tainted coins in exchange, which would be paradoxical.

The best practice is saving the track of all coins with proof, know which exchanges and services usually ask for them, and avoid making big deposits and withdrawals.

The OP could even add to his opening post the services mentioned in this thread to make it more helpful. What do you think?

[Aanuoluwatofunmi]

Proof of origin of your own coins is required when you deposit such coins at a respective exchange platform or crypto exchange. Because after deposit you will be asked where you got your coins from.

This could be insane, even the most recognized exchanges like binance and bybit don't demand for this, as it had been said already, it will be more worse than kyc, we don't get to be asked of this same procedure with using banks under the traditional economy and currencies, except for rare cases where there have been suspicious moves from the account holder for fraud or any illegal activities, aren't they going to be tired, for how many users will they have to conduct this proof of source from, this could actually be another way to scam and hold on peoples fund.

If you deposit a large amount of coins, your exchange will automatically ask where you got your coins from.

What if i use my fiat money to buy a using a physical p2p or an escrow service, will they proceeds asking further to the source of my fiat money.

It is to prevent you from transferring dirty coins from illegal sources to exchangers and afterwards selling such coin on your exchanger.

there is what we called tainted bitcoin, does this solves a solution more than the one already found with tainted bitcoin.

[nakamura12]

Thankfully not all exchanges use this tactic because it's actually worse than KYC. Why? Because you can easily produce an ID, but most people cannot prove where they got their coins.

For instance, I got most of my coins long ago from now defunct exchanges. Some I got from trading on these exchanges and I cannot prove any of that because back in the day they didn't give you any invoices. You'd have to take screenshots every step of the way, with every transaction and every trade. Let's hope this will never become an industry standard.

What about people who got their coins for cash? I know a few people who bought coins this way 10 years ago and can't prove anything but the fact that they own these coins. Bitcoin in itself should be all the proof you need. You have the private key, you're the owner. The exchange shouldn't care if you fixed neighbor's car, bought it with cash or paid with your ass.

This is true and I agree with it that it is worst than KYC. In my opinion, most of bitcoin are tainted since it is in circulation for years already except the new coins that are mined but it is possible that it will also be tainted later on. If it will become standard then it will be a lot of work and a waste of time even though I understand the purpose of asking where people got their coins. In my own point of view, I think that platform that does this wants to earn more coins by asking someone a proof where they got their coins which is kinda the same as those casinos who banned gambler's account by making it that they have broken a rule of their casinos when they are not breaking any and then confiscate the funds in their accounts.

[Salahmu]

Many people are probably wondering what a proof of origin of your own coins is, so here is an attempt to explain it:

Proof of origin of your own coins is required when you deposit such coins at a respective exchange platform or crypto exchange. Because after deposit you will be asked where you got your coins from.
It can be from similar exchanges, from mining or anywhere else. It is important to have documentation to show it, such as screenshots or blockchain. It is assumed of such proof of origin can be created automatically soon if Bitcoin’s blockchain is analyzed more closely.

If you deposit a large amount of coins, your exchange will automatically ask where you got your coins from.

I have not use any exchange that required me to send any proof of origin before deposit or after, however what will those exchanges be doing with origin of such coin?, I don't no if memo is what you are trying to imply but that's the only one I can say some exchanges can ask from you when you want to deposit from non exchanges, so that they would no the source you are sending from and how they can processed it. For those exchanges that requires so much proof how would they no that those information are real and just a bypass?, except the proof will be a wallet address that will be same as the one that would be provided on the documents having the name of the platform will it not be bypass.

[CryptSafe]

The crypto world is quite different from the fiat world, proof of origin of funds is majorly requested by banks for a deposit or when there is any suspicion but crypto is not like that, nobody cares how you got your coin and how you spend it as it is anonymous and very private to handle but the inception of exchanges led to government involvement with regulations and policies for third-party exchange to abide by and this is why exchanges demand kyc unlike before were a person would open an account without undergoing kyc.

As for what you are talking about, no exchange has ever asked me for proof of origin in my years as a crypto enthusiast, although kyc is demanded by third-party exchanges and they have a way to detect if a coin is coming from a flagged wallet or a mixer directly. It is none of their business to ask you where your coin is coming from as the crypto space is an open space for everyone to come in and exit, unlike the fiat system.

I think if any exchange asks you such a question, they are likely going to do away with customer coin because there is no basis for them to ask you such a question since they have your kyc with them and their device could be able to detect wherever your coin is coming from if it is from a flagged wallet in a wanted list.

[lizarder]

Proof of origin of your own coins is required when you deposit such coins at a respective exchange platform or crypto exchange. Because after deposit you will be asked where you got your coins from.
It can be from similar exchanges, from mining or anywhere else. It is important to have documentation to show it, such as screenshots or blockchain. It is assumed of such proof of origin can be created automatically soon if Bitcoin’s blockchain is analyzed more closely.  

As far as my trading involvement in crypto has never been asked such a question on any exchange I have used. In fact, I have deposited or bought bitcoins in much larger amounts than before but have never had such a problem. Maybe you mean cash deposits to the bank because the bank does require information about where the money came from, but if the money does not exceed the limit of the account you are using, it is probably impossible to ask such a question.

Exchanges do not require such a statement because there are many people who make transactions every day so making such a rule would make users feel uncomfortable because it is the same as the KYC process and I think it is impossible to do.

[EluguHcman]

I have been hovering around Bitcoin and its Blockchains and have not come about this term "proof of origin" in Bitcoins mechanisms.

I would assume you misunderstood this probably you mean the "proof of reserve" at mentioned of exchange which simply means a systematic term of cryptography of an exchange proving said Bitcoin in their network on signing in with private keys to ascend messages.

Maybe if I have to go extravagant, you might also mean "proof of ownership" which in accordance is a process of proving you have Bitcoin by performing ownership of acclaimed Bitcoin using your private keys to access your wallet either to show the amount of Bitcoin or executing transactions. Once in control to this performances, it proves you have or are the owner of the specific Bitcoin.

Take it a serious note that it is only when you are faced with illegal accusations that these terms can be applied and it is only the legal security agencies that has the right to make such request.
This is due to your funds security conciousness and declined from any private or suspicious entities asking you if this proof.
Always keep you seed phrase and private keys to your self.

[sokani]

This could be insane, even the most recognized exchanges like binance and bybit don't demand for this, as it had been said already, it will be more worse than kyc, we don't get to be asked of this same procedure with using banks under the traditional economy and currencies, except for rare cases where there have been suspicious moves from the account holder for fraud or any illegal activities,

They do. Here's everything you need to know about Binance's proof of funds:
https://www.binance.com/en/support/faq/how-to-prove-the-source-of-my-assets-7ee8ff5813c142248c6796897b654378

The reason exchanges do this is to checkmake money laundering, terrorism financing and other financial crimes. There was a time some forum members account were frozen because they received their sig campaign payment from a suspicious bitcoin address. They were asked to submit similar documents. You can read it here: https://bitcointalk.org/index.php?topic=5476064.msg63248280#msg63248280

[Franctoshi]

Many people are probably wondering what a proof of origin of your own coins is, so here is an attempt to explain it:

Proof of origin of your own coins is required when you deposit such coins at a respective exchange platform or crypto exchange. Because after deposit you will be asked where you got your coins from.
It can be from similar exchanges, from mining or anywhere else. It is important to have documentation to show it, such as screenshots or blockchain. It is assumed of such proof of origin can be created automatically soon if Bitcoin’s blockchain is analyzed more closely.

If you deposit a large amount of coins, your exchange will automatically ask where you got your coins from.

It is to prevent you from transferring dirty coins from illegal sources to exchangers and afterwards selling such coin on your exchanger.

All these are done in the name of preventing money laundering, but still can't totally solve the money laundering problem because the smart guys wouldn't want to do such a bulk trasanction that may result in exchanges asking them to provide a proof of origin but will split such bulk money to various exchanges and into smaller amount and withdraw them via various exchanges.