MtGox Extortion

[strider007]

Yes, extortion is a criminal act but "coercion" is a type of extortion. In this case perhaps I should have just stuck with coercion. And you can certainly get civil damages for financial coercion.  Regarding civil damages for a criminal act, you can sue as a victim of a crime and you can get damages. Just google "Civil action for damages for criminal act" and click any of the links on the first page for a variety of state code on the matter.

None of this applies to you because they are requiring you to comply with the law.  There is no crime being committed by MtGox and nor are they committing any tort.  Asking you to identify yourself in accordance with AML/KYC requirements is not coercion or extortion.  Nonetheless, I really hope that you do make a complaint to the A-G and file a civil action.  You'll give the lawyers some free entertainment and likely end up with your financial accounts being investigated for possible tax evasion.

Why didn't you just state your first sentence "There is no crime being committed by MtGox and nor are they committing any tort.  Asking you to identify yourself in accordance with AML/KYC requirements is not coercion or extortion." I think that would be sufficient to point out my ignorant use of the word "extortion" and calm my hyperbolic posts that were derived from a simple failure on the part of MtGox to send out a single email to users. Notice after my reply to LoupGaroux's measured and charitable post that my tone change quite a bit. He's a good measuring stick when it comes to informing others in a classy way.

[1713297014]

1713297014

[1713297014]

1713297014

[1713297014]

1713297014

[casascius]

There is no crime being committed by MtGox and nor are they committing any tort.

Tort?  You bet.  Just google "tort of conversion".

http://en.wikipedia.org/wiki/Conversion_(law)

[eliale]

From MTGox TOS:

....Transactions may be frozen until the identity check has been considered satisfactory by Mt. Gox as required by applicable money laundering laws....

[MagicalTux]

Let me clarify a few points:

• We cannot prevent people from sending us funds via Dwolla. Once funds are here, they are here.
• We have announced the AML requirements for everyone as soon as we were informed by Dwolla that we would have to comply with US laws on Dwolla customers and put as much time as we could before actually enabling these
• There is no way to refund Dwolla transfers. We could send a transfer back for the same amount, but then if your bank were to cancel your deposit, you'd end with your initial deposit back on top of getting the same amount back from us. There is nothing protecting us against this kind of cases.

.
Anyway since Dwolla implemented requirement to provide an ID sooner than we did for all our customers, chances are only people who are comfortable providing an ID were still using Dwolla at this point. Anyway we have to comply with US laws on this and require identification for anyone moving money in or out via Dwolla.

[Bitcoin Oz]

Let me clarify a few points:

• We cannot prevent people from sending us funds via Dwolla. Once funds are here, they are here.
• We have announced the AML requirements for everyone as soon as we were informed by Dwolla that we would have to comply with US laws on Dwolla customers and put as much time as we could before actually enabling these
• There is no way to refund Dwolla transfers. We could send a transfer back for the same amount, but then if your bank were to cancel your deposit, you'd end with your initial deposit back on top of getting the same amount back from us. There is nothing protecting us against this kind of cases.

.
Anyway since Dwolla implemented requirement to provide an ID sooner than we did for all our customers, chances are only people who are comfortable providing an ID were still using Dwolla at this point. Anyway we have to comply with US laws on this and require identification for anyone moving money in or out via Dwolla.

Why do you require so much more ID than dwolla themselves do

[ZodiacDragon84]

Sorry friend, but consumer protection laws do not include extortion clauses. You entered into an agreement with them, and if you read the fine print, that agreement included language that they can and will take whatever actions, and make whatever changes, they feel necessary to run/improve/stay legal with their business.

The chances of your State Attorney General doing anything other than filing your complaint in the round file are exactly zero. It's a company based in Japan, doing business through the internet exchanged hypothetical tokens of value that have no corporeal existence. They are offering at least as secure a protection scheme for your documents as your state driver's license agency, probably safer, they have a stronger vested interest in protecting your data than either your state or federal taxing authorities, and have less than a fraction of a percent of the exposure that your bank, your doctor and dentist, stock broker, credit card company, landlord, school, mortgage lender, selective service bureau, post office automobile dealership where you purchased a car or any police department that has stopped you for a moving violation; yet every one of those entities saw, and probably photocopied your identification documents. And most of them are keeping them in electronic form, on servers that are about as secure as Paris Hilton's virtue.

Send them your id. Add a specific statement that you will hold them liable for any data loss of breach of the security of your information, and demand that they destroy all traces of that document when you stop doing business with them.

I would have to agree with this statement. The exchanges make it hard to keep the coin anon. Satoshi is rolling at his desk.

[repentance]

There is no crime being committed by MtGox and nor are they committing any tort.

Tort?  You bet.  Just google "tort of conversion".

http://en.wikipedia.org/wiki/Conversion_(law)

That isn't what is happening here though.  

Conversion, being a wrongful act, cannot spring from the exercise of a legal right.

MtGox is exercising both a legal right and a legal duty.  Nor is their any evidence that MtGox has appropriated the OP's funds for their own use.

Anybody who expects to be able to deal anonymously with the exchanges at this point is a fool.  AML/KYC requirements are not going to become less stringent and just because new services tend to ignore them when they first start up doesn't mean they'll continue to do so as they grow and their banks require them to be compliant or risk their accounts being frozen.  Expecting anonymity from businesses which are looking to establish themselves as legitimate financial service providers is ridiculous and those who prefer to deal with services which offer anonymity need to find individuals or services willing to provide it.

[casascius]

Conversion, being a wrongful act, cannot spring from the exercise of a legal right.

MtGox is exercising both a legal right and a legal duty.  Nor is their any evidence that MtGox has appropriated the OP's funds for their own use.

What this statement means is that I am entitled to possess your property and deprive you of it under certain circumstances, for example, if I am renting it from you.  Being told by Dwolla to "keep the money" when that money belongs to neither MtGox nor Dwolla, isn't a legal right.

MtGox doesn't need to have spent or benefited from the OP's funds in order to have converted them, it need merely have deprived the OP of them without taking some action to specifically dispose of them (e.g. refunding them, or forwarding them to an agency of a state to comply with a law).

[casascius]

Let me clarify a few points:

• There is no way to refund Dwolla transfers. We could send a transfer back for the same amount, but then if your bank were to cancel your deposit, you'd end with your initial deposit back on top of getting the same amount back from us. There is nothing protecting us against this kind of cases.

Mark, with all due respect, I disagree with this one.  This as a policy is nonsense.

Dwolla may indeed not have a "click here to refund" button, but sending them a transfer in an identical amount - or contacting Dwolla and asking them how to refund someone, and then obeying their instructions - has the constructive equivalence of being a refund.  I am certain Dwolla is NOT going to say "We don't support merchants giving refunds, so just keep their money."

If Dwolla were to instruct you to refund by doing another transfer, and then later force upon you a chargeback and then claim that your refund transfer wasn't really a refund, they'd be in shaky legal territory.

Essentially you are saying that Dwolla has a policy of posting refunds against your account twice, if they feel like it.  This would be totally indefensible in a court of law, even if such a policy were deliberately spelled out in their ToS.

If Dwolla ever held you to such a chargeback, you would have an instant public spectacle with their shareholders and client base.  Instead, by claiming that you need to keep people's money to protect yourself from such a policy, you're inviting a spectacle upon MtGox and yourself.

[Maged]

If Dwolla ever held you to such a chargeback, you would have an instant public spectacle with their shareholders and client base.

They'd also be forced to stop using Dwolla, killing the golden goose. You see the problem, here.

There is literally no way MtGox can issue Dwolla refunds without either eating the loss themselves, screwing the customer, or suing Dwolla into insolvency. And because of how incompetent the "we're not bankers" Dwolla team is, chances are that they'll never get around to allowing refunds.

[casascius]

If Dwolla ever held you to such a chargeback, you would have an instant public spectacle with their shareholders and client base.

They'd also be forced to stop using Dwolla, killing the golden goose. You see the problem, here.

There is literally no way MtGox can issue Dwolla refunds without either eating the loss themselves, screwing the customer, or suing Dwolla into insolvency. And because of how incompetent the "we're not bankers" Dwolla team is, chances are that they'll never get around to allowing refunds.

What does Dwolla say to do when asked how to refund money back to someone unable to identify them to the standards Dwolla themselves imposed?  Certainly they should be able to answer this question, in writing I'd hope as well.

If Dwolla really has a policy this dumb, then what Mark should do is send the money straight to Dwolla (e.g. send them a wire or a check, for the aggregate sum of all funds in this situation, not to a Dwolla customer account, but to Dwolla themselves where they have sole control over the funds) and then tell the customer "We sent the money back to Dwolla on (date) via (method) because we cannot accept you as a depositing customer without satisfactory identity.  Here is a reference number to prove we sent it back.  We don't have your money anymore.  Ask them for it."  This would be 100% reasonable in my view as well as likely many others.

[Maged]

If Dwolla ever held you to such a chargeback, you would have an instant public spectacle with their shareholders and client base.

They'd also be forced to stop using Dwolla, killing the golden goose. You see the problem, here.

There is literally no way MtGox can issue Dwolla refunds without either eating the loss themselves, screwing the customer, or suing Dwolla into insolvency. And because of how incompetent the "we're not bankers" Dwolla team is, chances are that they'll never get around to allowing refunds.

What does Dwolla say to do when asked how to refund money back to someone unable to identify them to the standards Dwolla themselves imposed?  Certainly they should be able to answer this question, in writing I'd hope as well.

If Dwolla really has a policy this dumb, then what Mark should do is send the money straight to Dwolla (e.g. send them a wire or a check, for the aggregate sum of all funds in this situation, not to a Dwolla customer account, but to Dwolla themselves where they have sole control over the funds) and then tell the customer "We sent the money back to Dwolla on (date) via (method) because we cannot accept you as a depositing customer without satisfactory identity.  Here is a reference number to prove we sent it back.  We don't have your money anymore.  Ask them for it."  This would be 100% reasonable in my view as well as likely many others.

That still has the problem of not being connected to the original transaction, which can be reversed at any time.

[casascius]

That still has the problem of not being connected to the original transaction, which can be reversed at any time.

At which point MtGox can then contact Dwolla and say "OK, that $100 I sent you?  I'd like it back in my account, since you now just charged it back to me as a chargeback.  This way we're not billed twice for the refund."

Dwolla should reasonably be able to handle that, since there's no chance that the customer could double-dip, assuming the customer might have been able to if MtGox were to have sent the refund to the user's account where they could withdraw it and run.

[Maged]

That still has the problem of not being connected to the original transaction, which can be reversed at any time.

At which point MtGox can then contact Dwolla and say "OK, that $100 I sent you?  I'd like it back in my account, since you now just charged it back to me.  This way we're not billed twice for the refund."

"Sorry, but we already gave it to the customer like you told us to. And they already withdrew the dwolla to some random bank account."

[casascius]

That still has the problem of not being connected to the original transaction, which can be reversed at any time.

At which point MtGox can then contact Dwolla and say "OK, that $100 I sent you?  I'd like it back in my account, since you now just charged it back to me.  This way we're not billed twice for the refund."

"Sorry, but we already gave it to the customer like you told us to. And they already withdrew the dwolla to some random bank account."

"We didn't tell you to give it to the customer.  As you'll recall in the letter we included with the payment, we specifically said we were sending this to you for safekeeping to ensure we didn't run the risk of being charged for a refund twice.  If you refunded the customer twice after the way we brought this to your attention, that is most certainly outside of our control and well beyond our duty of due diligence.  There is no way this loss is our burden."

..."Will you be refunding the $100 back to our account, or should we involve the Iowa attorney general and issue a press release explaining how you are defrauding us too?  Certainly this can't help your position with TradeHill."

They may be incompetent at Dwolla, but they're not immune from accountability for their actions.  Someone there knows that such a practice isn't compatible with them remaining in business.

[Coinoisseur]

I haven't seen MagicalTux explain why they require more ID (if true) than Dwolla itself for "verification" purposes.

[LoupGaroux]

If you had not married your trading bots, then you would not have been required to prove their identity. You should have stuck with that honey from your previous photo.

[Coinoisseur]

I guess I need to be more blunt. MagicalTux, is it true that you are requesting more ID materials than Dwolla itself requires in the case of OP's frozen $100?

I haven't seen MagicalTux explain why they require more ID (if true) than Dwolla itself for "verification" purposes.

Relevant comment by OP:

Yes, it does. The funny thing is that they said they Dwolla is the company that made them require this new policy. I told them that with Dwolla, I just had to submit a utility bill (and no photo ID) and then MtGox changed their reason. They said since they do international business, they need more information.

[markm]

From the sound of it, scammers should have no problem providing other people's identity documents since they can obtain such documents simply by extorting them from anyone whose money they manage to get hold of by means of any pretext that they can later relate to "need to know" rules?

The documents exchanges are obtaining might for some exchanges be worth far more than any potential commissions they could make on actual trades, and this makes it sound somewhat unlikely that people who complain about exchanges holding lots of their money for such extortion purposes are scammers since if they were scammers the large sums involved would have already made it well worth their while to have already run precisely such an extortion scheme themselves thus to have ready for use lots and lots of people's identity forms, which they would presumably be well prepared to spend whenever someone else tries the same scam on them over a large sum of money.

Whole thing kind of smells.

Is there at least some standard system that is used in imaging one's identity that watermarks it as being only a copy and specifically as a copy submitted into the safekeeping of a specific blackmailer/extortionist/KYC-excuse-purporter?

-MarkM-

[Bitcoin Oz]

From the sound of it, scammers should have no problem providing other people's identity documents since they can obtain such documents simply be extorting them from anyone whose money they manage to get hold of by means of any pretext that they can later relate to "need to know" rules?

The documents exchanges are obtaining might for some exchanges be worth far more than any potential commissions they could make on actual trades, and this makes it sound somewhat unlikely that people who complain about exchanges holding lots of their money for such extortion purposes are sammers since if they were scammers the large sums involved would have already made it well worth their while to have already run precisely such an extortion scgeme themselves thus to have ready for use lots and lots of people's identity forms, which they would presumably be well prepared to spend whenever someone else tries the same scam on them over a large sum of money.

Whole thing kind of smells.

Is there at least some standard system that is used in imaging one's identity that watermarks it as being only a copy and specfically is a copy submitted into the safekeeping of a specific blackmailer/extortionist/KYC-excuse-purporter?

-MarkM-

http://bitcoin-otc.com/  just use this exchange