Anyone Think Bitstamp is Insolvent? Possible BTC Price Drop Incoming?

[kerafym]

Most likely their hotwallet are empty.

[MyPotPlantDied]

I believe they just went through a very thorough audit not too long ago. I think it is more a case of them being paranoid about following all the regulations.

[r34tr783tr78]

As stated, long after they started this excessive KYC practice (how can someone clean money by withdrawing bitcoin? Cleaning money implies exchanging it for fiat and transfering this money to a bank account), they did an audit.
Until the day you see them delaying withdraws, after people sent all requested documents, I think you can forget about Bitstamp insolvency.

[davidgdg]

Found this today, seems although Bitstamp is making it EXTREMELY difficulty to withdraw both BTC and Fiat currency. Seems like a Mt. Gox 2.0 problem. If they end up being insolvent do you guys think BTC price will increase (due to realized less supply of coins) or go down due to bad media coverage plus people trying to recoup some of their losses?

http://www.reddit.com/r/Bitcoin/comments/26apno/bitstamp_will_not_process_withdrawal_unless_you/

We kindly ask you to send us a high resolution image of both pages of your international passport and answer the following KYC questionnaire: 1. How did you learn about Bitcoin? 2. The purpose of trading on Bitstamp? Please describe in as much detail as possible how you intend to use your trading account. 3. What is the origin of the deposited Bitcoins? If mining, please specify your hardware specifications and submit a receipt or an invoice for your mining equipment. 4. What are your future plans and activities planned on our exchange? 5. Do you plan more withdrawals in the future? 6. Which bank do you intend to use? Please provide the complete address and SWIFT code. 7. Estimated amount that you would be depositing/withdrawing to/from your Bitstamp account per month (in USD and BTC)?

We kindly ask you to submit your answers and documents in a reply to this ticket.

OK fine, here are the details and my passport (already verified with driver's license and had swift code already entered).

They required that I prove where the coins came from that I sold. I provided the receipt from the exchange. Here is what they came back with.

Thank you for your reply.

Please note that the provided information is for only 5 BTC while you have deposited to and sold on Bitstamp more than xxx bitcoins.

We kindly ask you to send us a signed message of your personal, most used wallet so we can establish the veracity of your statements.

some people may bring about their recent "proof of solvency" of Bitstamp by firestartr.co (whoever the hell that is). It is just a statement though, no blockchain proof. And the PDF is even broken on my PC

https://www.bitstamp.net/s/documents/Firestartr_DD_Letter_for_Bitstamp.pdf

If they are insolvent, the price would go down first (as we've seen with Gox) and then would go back up after. I will say that it would hurt the morale more than it already has, though, in that people are starting to lose trust already.

Is this only for BTC sellers? The letter seems specifically directed at sellers rather than buyers. Have any buyers received a similar letter?

[Nicolas Dorier]

While you might consider it anal, the plain and simple fact is that should Bitcoin ever gain true mainstream traction, you will see more of this simply due to the fact that no financial system of any sort is going to go mainstream without meeting some level of regulatory standards. All of this is information that is the same type of information that is 'free-floating' in the mainstream financial system, you simply aren't regularly asked questions like this because the banks already have a system in place that creates the obligatory paper trail and have for years. It's so interwoven into the fabric of international banking we don't even notice it anymore. Bitcoin will need to step up to this level to become truly 'mainstream'.

This is true for financial institution today, but with bitcoin, the barrier of entry to create an exchange is not anymore between the hands of governments.
Which means that if customer don't like it, they will search a substitute and accept the risk, and find a substitute.

Today financial institution complies because the government also ensure some barrier of entry in their market. This won't be the case with bitcoin.

[kroy101]

I withdrawed ~$1500 yesterday and the payments has already been processed....

no questions asked, no hassle, no problems, no nothing

[davidgdg]

I withdrawed ~$1500 yesterday and the payments has already been processed....

no questions asked, no hassle, no problems, no nothing

I've never had any problem with them buying or withdrawing BTC.

[Corelianer]

These questions are normal. You can also run into this questions if you deposit a higher ammount of fiat on it.

I got the same, once it was complete, it just went back to normal processing.

[Amph]

i don't care much, i'm using kraken , which is the best i think

[ranlo]

While you might consider it anal, the plain and simple fact is that should Bitcoin ever gain true mainstream traction, you will see more of this simply due to the fact that no financial system of any sort is going to go mainstream without meeting some level of regulatory standards. All of this is information that is the same type of information that is 'free-floating' in the mainstream financial system, you simply aren't regularly asked questions like this because the banks already have a system in place that creates the obligatory paper trail and have for years. It's so interwoven into the fabric of international banking we don't even notice it anymore. Bitcoin will need to step up to this level to become truly 'mainstream'.

This is true for financial institution today, but with bitcoin, the barrier of entry to create an exchange is not anymore between the hands of governments.
Which means that if customer don't like it, they will search a substitute and accept the risk, and find a substitute.

Today financial institution complies because the government also ensure some barrier of entry in their market. This won't be the case with bitcoin.

While you're right in that it's decentralized and not part of any specific government, that doesn't mean that there's no government control. As we've seen in the past, the governments can actually exert a lot of control over exchanges. So this isn't really true.

[Skele]

Here are some real threats to bitcoin.. and bitstamp is not one them..

"Any new and disruptive technology has its share of detractors who do their utmost to imbue the perceived threat with negative connotations. This has been happening for eons, and will continue until the end of time."

http://www.coindesk.com/five-biggest-threats-facing-bitcoin/

[Marbit]

I'd say Bitstamp going down (insolvency, government shut-down, etc) would be pretty bad for the price of bitcoin, short term (months or maybe a year). A lot of services use them, and they are the most well known exchange. But it would not kill BTC by any means.

[ranlo]

I'd say Bitstamp going down (insolvency, government shut-down, etc) would be pretty bad for the price of bitcoin, short term (months or maybe a year). A lot of services use them, and they are the most well known exchange. But it would not kill BTC by any means.

It would cause a loss of trust in other exchanges, though. We are already hitting that point as it is, with all the scams and "hacks" going around. One more major one like this could be detrimental to the morale.

[Marbit]

I'd say Bitstamp going down (insolvency, government shut-down, etc) would be pretty bad for the price of bitcoin, short term (months or maybe a year). A lot of services use them, and they are the most well known exchange. But it would not kill BTC by any means.

It would cause a loss of trust in other exchanges, though. We are already hitting that point as it is, with all the scams and "hacks" going around. One more major one like this could be detrimental to the morale.

Sure, that's why I think months or maybe a year. Inevitably as more trustworthy and regulated businesses/exchanges come about, people's level of comfort will improve as well.

[Gimmelfarb]

it seems to me that it is more likely that bitstamp is being pressured by the US government or other authorities as a result of the Silk Road case and other black market/money laundering issues. i don't see enough evidence that they are insolvent.

[ranlo]

I'd say Bitstamp going down (insolvency, government shut-down, etc) would be pretty bad for the price of bitcoin, short term (months or maybe a year). A lot of services use them, and they are the most well known exchange. But it would not kill BTC by any means.

It would cause a loss of trust in other exchanges, though. We are already hitting that point as it is, with all the scams and "hacks" going around. One more major one like this could be detrimental to the morale.

Sure, that's why I think months or maybe a year. Inevitably as more trustworthy and regulated businesses/exchanges come about, people's level of comfort will improve as well.

We keep hoping that more trustworthy businesses will come about, but what have we been historically seeing? Most businesses end up tanking due to the owners getting that "I'm rich now and I can run away" feeling. I don't see this changing anytime soon.

This would also help push regulators into a worse frenzy, where they can use it as yet another example as to why people should avoid cryptos like the plague.

[Gimmelfarb]

I'd say Bitstamp going down (insolvency, government shut-down, etc) would be pretty bad for the price of bitcoin, short term (months or maybe a year). A lot of services use them, and they are the most well known exchange. But it would not kill BTC by any means.

It would cause a loss of trust in other exchanges, though. We are already hitting that point as it is, with all the scams and "hacks" going around. One more major one like this could be detrimental to the morale.

Sure, that's why I think months or maybe a year. Inevitably as more trustworthy and regulated businesses/exchanges come about, people's level of comfort will improve as well.

We keep hoping that more trustworthy businesses will come about, but what have we been historically seeing? Most businesses end up tanking due to the owners getting that "I'm rich now and I can run away" feeling. I don't see this changing anytime soon.

This would also help push regulators into a worse frenzy, where they can use it as yet another example as to why people should avoid cryptos like the plague.

do you think that will happen with coinbase? or secondmarket? i feel like those are more well-regulated, open and respectable. if we see a professional exchange out of new york or something and it's back by a lot of money, perhaps backed by a big name, licensed to the teeth, and with a professional interface, it could be pretty big news for bitcoiners.

[ranlo]

I'd say Bitstamp going down (insolvency, government shut-down, etc) would be pretty bad for the price of bitcoin, short term (months or maybe a year). A lot of services use them, and they are the most well known exchange. But it would not kill BTC by any means.

It would cause a loss of trust in other exchanges, though. We are already hitting that point as it is, with all the scams and "hacks" going around. One more major one like this could be detrimental to the morale.

Sure, that's why I think months or maybe a year. Inevitably as more trustworthy and regulated businesses/exchanges come about, people's level of comfort will improve as well.

We keep hoping that more trustworthy businesses will come about, but what have we been historically seeing? Most businesses end up tanking due to the owners getting that "I'm rich now and I can run away" feeling. I don't see this changing anytime soon.

This would also help push regulators into a worse frenzy, where they can use it as yet another example as to why people should avoid cryptos like the plague.

do you think that will happen with coinbase? or secondmarket? i feel like those are more well-regulated, open and respectable. if we see a professional exchange out of new york or something and it's back by a lot of money, perhaps backed by a big name, licensed to the teeth, and with a professional interface, it could be pretty big news for bitcoiners.

It's really hard to say. People already hate Coinbase because of their false flagging accounts as being "high risk" and things like that. Not to mention it can take 24+ hours to get a Bitcoin payment out of their wallet. Circle, should they prove to be legitimate, may change this, but people are even wary of them due to what we've had to deal with in the past.

[Gimmelfarb]

ahh that's right -- circle. i do hope that goes well and that they are able to have a product that at least competes with coinbase to help form a stronger and more competitive market. it's true though, the exchange situation is frankly scary.

[ranlo]

ahh that's right -- circle. i do hope that goes well and that they are able to have a product that at least competes with coinbase to help form a stronger and more competitive market. it's true though, the exchange situation is frankly scary.

I do have my doubts about Circle as well. I'm really hoping they pull through with their promises, but to be completely honest... if they do I'll be surprised. If, and it's a big if, that happens, I think it could completely change the game when it comes to exchanges and buying/selling coins.

Then the next step will be changing the way the real exchanges (for coin<->coin transfers) work.