Gamblers, be careful with Coinbase!

[NLNico]

On Reddit someone claimed yesterday to be blocked from Coinbase because he used the Bitcoin poker site Seals and/or Betcoin: http://www.reddit.com/r/poker/comments/2dxuqw/be_careful_seals_users_coinbase_has_blocked_me/

    Upon review of your Coinbase account, we have determined that we can no longer provide you access to Coinbase Services. Please understand that Coinbase is a regulated Money Service Business under the FinCEN division of the U.S. Treasury Department and as such, we are required to review accounts in order to ensure compliance with regulations.

    Gambling is illegal under US law even if you live outside of the US we cannot provide services to your account for the purpose of any type of gambling activity.

    Please note that we have not blocked access to the bitcoin balance currently in your Coinbase account; while we can no longer process transactions of this bitcoin via our banking relationship, you may send this bitcoin to a local wallet or another bitcoin address.

    In the event that your controls change and you are able to prevent such activity from occurring on your platform please let us know and we’d be happy to review your compliance program and evaluate your account to see if we can support it in the future.

Seals uses unique deposit addresses and AFAIK pretty random withdrawal addresses, so I am not sure how they could recognize that.

Betcoin seems to use 1 main hot wallet according to the comments: https://blockchain.info/address/1NyjjRGuBZ1FUSwrgizjZeHTM83RNh5uWr so that is more obvious.

So it seems Coinbase is at least tracking known hot wallets from gambling sites. Generally gambling sites will use unique random withdrawal addresses or other users' deposit addresses, but some obviously not. If you use Coinbase and you gamble, ideally have a normal desktop or blockchain.info wallet in between and don't deposit/withdrawal immediately from/to Coinbase.


edit1: Confirmation from another site than Seals or Betcoin:
http://www.reddit.com/r/Bitcoin/comments/2e2yxr/beware_coinbase_is_banning_accounts_that_play_on/

In the last day we have had players who found their Coinbase account closed because they withdrew coins from SatoshiBet.com to their Coinbase account.

We heard similar stories from other gambling sites (Seals with Clubs, Betcoin, ...)

Switch to Blockchain.info folks.

If anyone has more information it would be great to hear it.


TL;DR: coinbase is blocking accounts that get withdrawals from gambling sites.

[espringe]

Seems very unlikely that coinbase could be directly tracking deposit addresses, almost all of them are generated randomly. Even sites that generate them deterministically don't give out the public key that would allow someone to enumerate all the deposit addresses.

If they are doing something like this, my guess is that they track the published cold-storage addresses. If they see money getting sent to an address, that is getting swept into a gambling sites cold storage, then they could tell. Using an intermediate address (as you suggested) in this case might not even help.


If anyone is interested, https://www.moneypot.com uses bip32 to generate offline deposit addresses. We don't publish anything that would allow anyone to know anyone elses deposit address, so there's no way coinbase could se you're depositing money to moneypot. And since you're depositing directly into cold storage, we don't sweep it into a published account -- so no leakage on that front either.  On the withdrawal side, we send from totally unrelated coins -- so that's untraceable too -- so if you're worried about coinbase, moneypot.com is a pretty safe bet =D

[HollowIP]

This would explain why whenever I send an amount to a gambling site lately it never gets confirmed, and put back into my account.

[NLNico]

Seems very unlikely that coinbase could be directly tracking deposit addresses, almost all of them are generated randomly. Even sites that generate them deterministically don't give out the public key that would allow someone to enumerate all the deposit addresses.

If they are doing something like this, my guess is that they track the published cold-storage addresses. If they see money getting sent to an address, that is getting swept into a gambling sites cold storage, then they could tell. Using an intermediate address (as you suggested) in this case might not even help.

At this point I think they only track known hot withdrawal wallets of gambling sites and block accounts that get a payment directly from them. The person who got blocked after depositing to Seals also had a withdrawal from betcoin before that. The timing is a bit strange though, since he only got blocked after the deposit. But still I assume it's because of the betcoin w/d since betcoin uses 1 hot withdrawal address for all withdrawals (which is pretty easy to detect for Coinbase.) Obviously most sites do not have 1 withdrawal address for all withdrawals.

Still having a "real wallet" is probably a good idea anyway.



To be honest I don't see the relation with your site moneypot.com, seems like a ponzi type of gambling site? Not sure how that can help in any way :X

[Ruzka]

Seems very unlikely that coinbase could be directly tracking deposit addresses, almost all of them are generated randomly. Even sites that generate them deterministically don't give out the public key that would allow someone to enumerate all the deposit addresses.

If they are doing something like this, my guess is that they track the published cold-storage addresses. If they see money getting sent to an address, that is getting swept into a gambling sites cold storage, then they could tell. Using an intermediate address (as you suggested) in this case might not even help.

At this point I think they only track known hot withdrawal wallets of gambling sites and block accounts that get a payment directly from them. The person who got blocked after depositing to Seals also had a withdrawal from betcoin before that. The timing is a bit strange though, since he only got blocked after the deposit. But still I assume it's because of the betcoin w/d since betcoin uses 1 hot withdrawal address for all withdrawals (which is pretty easy to detect for Coinbase.) Obviously most sites do not have 1 withdrawal address for all withdrawals.

Still having a "real wallet" is probably a good idea anyway.



To be honest I don't see the relation with your site moneypot.com, seems like a ponzi type of gambling site? Not sure how that can help in any way :X

Moneypot is not a ponzi site?

[NLNico]

Re Moneypot: I assumed the "multiplier increases" as more players bet and "crashes" as no players bet any more, aka a ponzi. But looking more into it, it seems the "multiplier crash amount" is predetermined in a somehow provably fair way, so I guess that is not too bad, and definitely not a ponzi.

[Magicman420]

I need to know if this is true or not., can anyone confirm?

[cloverme]

I need to know if this is true or not., can anyone confirm?

I sent money from coinbase to a couple of gambling sites and did not have a problem. The number of confirms though seemed to take a very, very long time. Unless this just started yesterday, I don't think it's a real issue.

[NLNico]

Confirmation from another site than Seals or Betcoin:
http://www.reddit.com/r/Bitcoin/comments/2e2yxr/beware_coinbase_is_banning_accounts_that_play_on/

In the last day we have had players who found their Coinbase account closed because they withdrew coins from SatoshiBet.com to their Coinbase account.

We heard similar stories from other gambling sites (Seals with Clubs, Betcoin, ...)

Switch to Blockchain.info folks.

SatoshiBet processes withdrawals from a wide range of addresses, and not necessarily from a single hot wallet. Although it is possible that sometimes part of a withdrawal comes directly from the hot wallet.

[rogerdonkey]

do you meant he lost all money bcz coinbase block him id?

[Gogo ppp]

"Coinbase demanding to know where btc are being sent."


http://www.reddit.com/r/Bitcoin/comments/2aagzi/coinbase_demanding_to_know_where_btc_are_being/

[Beefheart]

So if my Coinbase account is still active right now(I received coins I "bought" and processed a "sell" to my bank today), I SHOULD be okay?... Still taking the above advice...

[BitCoinPokerBro]

If you use Coinbase and you gamble, ideally have a normal desktop or blockchain.info wallet in between and don't deposit/withdrawal immediately from/to Coinbase.

Switch to Blockchain.info folks.

[/quote]

I've always done this ever since back when coinbase was new they were quite slow at processing withdrawals. Round trip 1 more transaction fee and maybe 1/2 hour waiting time is the price of an intermediary wallet.

[espringe]

I've always done this ever since back when coinbase was new they were quite slow at processing withdrawals. Round trip 1 more transaction fee and maybe 1/2 hour waiting time is the price of an intermediary wallet.

If they know the deposit address, and are actively trying to block them -- going through an intermediary wallet isn't going to be particularly effective.  You're far better off using a gambling site that has private deposit addresses (which, really, is most of them).

e.g. If you can give me any information on

Code:

1PgCuG6kWUH1B89GVQAWdMS7LusYPb8Jfv

being a moneypot.com deposit address or not, I'll give you a 1 BTC. But you can't, and nor can coinbase.

Just becareful with where you withdraw your winnings to. If the gambling site pays out from well-known addresses, just never withdraw into a coinbase wallet. Otherwise, don't worry about it.

[bigasic]

What if I receive a coin from someone that uses a gambling site and I then transfer it to coinbase?to me, it seems that they are reviewing the history of that coin and if it has been at a known gambling site, they jump to action. Id like to know how they are figuring it out. I mean, if all coins are considered tainted once they hit a gambling site, then that could cause a lot of issues..

[kolloh]

Wow. This is good to know and a little disturbing. Should always use an intermediate address though.

[Ruzka]

Will be more careful with coinbase from now on for sure.

[ju34400]

it's good to know
i'll use an other wallet
thanks

[Rating Place]

Coinbase started asking for social security numbers when they transfer money from Coinbase to a bank account. I don't know if they do it with everyone but I know of some.

[hopenotlate]

This really sucks imo.
I understand is a problem of regulation not due to Coinbase willing (maybe) but if I'm not free on how to use my bitcoin I'm surely going to avoid them from now on.

Thanks for your useful thread NICO