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Comment by adrianmacneil | Hacker News Reader

This might be a silly question, but did you use your Coinbase account to conduct any illegal transactions? The team there really cares about customer experience, so generally if they are ignoring you it's because your account has some connection to illegal/banned activity, which they can't disclose due to ridiculous financial laws.

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They only appear to care about the customer experience when someone complains on social media, until then they have a history of being jerks to their users.

They closed my account after I made a (relatively small) wire transfer after not using their service for a while. The year before I made much larger transfers that didn't seem to concern them. Suddenly I needed to provide them with lots of financial information.

The law sucks and I don't blame them for this. But I have provided them with more than enough information to prove all of my income is legitimate, including years of tax forms regarding the income and other crap they absolutely did not need to look at.

What bugs me is that they continued to ask me for this information, which took time for me to compile for them, and they ignored me anyway after I provided everything.

Another thing that bugs me is that (they claim) their support desk software is the most secure method of sending them sensitive documents. Ridiculous. The icing on the cake will be when their system is hacked and I lose a lot of important documents that I was under the impression they would be removing, but clearly haven't.

What's really odd about this (to me at least) is I've never had such an experience from any of my real banks.

Same here. I've been through the KYC loops and I know how invasive they have to be occasionally. Coinbase took it to another level.

I and many other fellow countrymen have had that experience with Itaú (largest bank in the southern hemisphere). Paypal seems to be a popular source of complaints regarding frozen accounts too.

Real banks will ask you for Driver Licenses and SSN when you open a bank account with them.

Information on DL has your height, eye color, address, telephone number, your photo, your finger prints. That's why they don't need to ask for your income again.

However, I tried Coinbase and will not use them ever again.

fingerprints on DL?

I guess they are likely to be on the card? Haha. Also phone number. Does any state DL actually have that?

But....did you use your Coinbase account to conduct any illegal transactions? You didn't answer a very straight forward question.

> I have provided them with more than enough information to prove all of my income is legitimate

That seems like a roundabout way of saying, "No, I did not conduct any illegal transactions".

You can buy drugs with legitimate income. The fact he didn't directly say no the first or second time says the answer is probably yes.

That's a dumb, deliberate misreading of my comment and a ridiculous jump to conclusions. I have done nothing illegal.

I said clearly that I made _one_ transaction (a wire transfer) and I said clearly that they questioned me on my income. Their concern is "where did you get your money" to which I answered them thoroughly.

I had no idea that KYC now has such onerous proof of income requirements. It's mind boggling.

No. It actually seems like a concise way of explaining how coinbase has been deficient in the commenter's experience.

That the transactions were believed to be legitimate was strongly implied in the same sentence, which just required a little deduction on your part.

No, I didn't conduct any illegal transactions. I thought that would be obvious from my second comment. Somehow you believe I would waste my time complaining about Coinbase yet be at clear and obvious fault?

What is an illegal transaction?

Does it matter? In what world is Coinbase a judge, jury and executioner who can determine if a Bitcoin transaction is 'legal' or 'illegal' with absolute certainty?

The law absolutely requires them to stop doing business with - and report on - people who they have good reason to believe fall into money laundering, terrorist financing and other KYC financial crimes categories. Their safest - and cheapest - way to comply is use rather shallow and heavily automated systems to score their customers and react accordingly.

So we shouldn't judge a company for picking their own safety and cheapness over providing timely competent support to their customers?

I don't get the point of your comment.

How would Coinbase know anything about your transactions? Shouldn't they just process the exchange of necessary payment information?

Well if you conduct transactions on their platform, then they know the source/destination, notes, amount etc. AML laws require them to detect and prevent illegal activity on their platform (just the same as Square, Stripe, Venmo/PayPal, your bank etc).

Based on that information it would seem the only illegal transactions there could be (that coinbase could detect) would be transactions over a certain amount (illegal, where?) or transactions with banned destinations (I believe HSBC used to [alledgedly they don't, now?] process transactions for Iran, as well as other banned destinations.).

Is there a comprehensive list of banned destinations?

I most often hear about people getting banned for using bitcoin gambling sites within a hop of their coinbase account. For example, withdrawing from Coinbase straight to "1LuckyB5VGzdZLZSBZvw8DR17iiFCpST7L" as an obvious example. Though they are smarter about it than just static "bad address" lookup.

Bitcoin addresses for darknet marketplaces are easily available - e.g. https://www.walletexplorer.com/

Perhaps Coinbase will turn you away if they see you depositing money on a drugs market?

It is ironic that Bitcoin is thought of as the criminals currency when it's one of the most trackable in the world.

It depends on how it is used. Any darknet that has addresses associated with it could be run a lot better.

Bitcoin allows more to know of those criminal actions.

With untrackable currency (USD, et al.), you get HSBC's and all the others, who may commit crimes in secret and destroy the evidence.

Yes, there is a comprehensive list of banned destinations and banned people/organizations. Banks develop and audit systems that import this database and scan their data warehouses to make sure no one is on it.

http://www.treasury.gov/resource-center/sanctions/SDN-List/P...

They wouldn't unless you did business with a blacklisted wallet (or blacklisted coins). However, as a financial institution, they may be required to ask questions.

That's what they should do. Instead, they follow your coins in and out and if they don't like how you use them they freeze your account.

'Some connection' has seemed to mean more than two hops away, coinbase has decided that a transaction was for 'illegal' activity (I guess they play judge dredd in their own sandbox).

I hope it isn't true, but by now I think I've seen a dozen or so closed account and no communication stories.

I thought Bitcoin transactions were supposed to be private or something? How would Coinbase know if your transaction was illegal?

Bitcoin is decentralized, but it's definitely not private. Every transaction is recorded publicly in the blockchain. Some folks are very good at backtracking to figure out how funds are flowing through the network. And sometimes it's not even hard, especially if you reuse a wallet's address for receiving funds across multiple transactions.

In particular, there was an article alleging that Coinbase keeps a list of suspicious wallet addresses, and transacting with them will get your account banned. @gwern (who posts to HN sometimes) is reportedly one of the folks whose address is flagged as suspicious: http://truthvoice.com/2015/05/coinbase-accused-of-tracking-b...

But if the anonymity can be deciphered as such, then why does the Silk Road rely on Bitcoin?

Bitcoin transactions are much harder to censor than conventional fiat transfers, but the transaction graph is completely transparent.

Check out https://www.walletexplorer.com/

yuup

Curious, why would you do that? Why wouldn't you transfer coins to a wallet you control and then conduct the transaction from there? Doing it from Coinbase throws away anonymity -- why not just buy your drugs with a Visa card then?

that's the recommended course of action, IIRC.

personally, I prefer to do all my gray market drug purchases on the ol' regular internet with a prepaid debit card.

How do you get the prepaid card?

Cameras are so cheap that practically every shop has them. Voice, face, body recognition are getting better by the week and can be run on all recordings.

What are some examples of "illegal transactions"? Under what jurisdiction? Arguably, anything is illegal somewhere, and is also legal somewhere else. Also, what do "conduct" and "some connection to" encompass? Are VPN services considered "illegal"? What about anonymous VPS rental? And what about gambling, in jurisdictions where it's legal?

I get the sense that Coinbase is about as capricious as PayPal. And ought to be avoided for the same reasons.

The jurisdiction in which Coinbase operates? This is a pretty lame argument

Where it's headquartered? Or where it's doing business? Microsoft, for example, is making a strong distinction between its operations in the US vs Ireland.

Unfortunately, both. Because that is how financial laws work.

That must get complicated. I see that Coinbase is incorporated in Delaware. Let's say that there's an online retailer of sex toys with a Coinbase account, and that they're incorporated in China. That business is legal in both the US and China, right? But what if they sell to customers in some nation where sex toys are illegal. Does that put their account at risk?

It depends. If Coinbase doesn't have a presence in that country (registered company, licensing, employees) then they most likely don't need to follow their laws, and could make an argument that they are operating purely on a cross border basis. However, if Coinbase started advertising their services in that country, then that country's regulators might start getting upset (just as US regulators get upset with any company that supports online gambling, even if they are not based in the US).

> a bunch of waffling and trying to dodge the question

Gonna go out on a limb here and assume that, yes, you did a bunch of illegal shit.

My point is that Coinbase gets to decide whether or not their customers "did a bunch of illegal shit". At will, with no effective recourse.

Welcome to how financial regulations work. Show up with a bag of cash if you want to get around it.

They have civil asset forfeiture to handle that ;)

Indeed. USPS money orders are pretty good for getting around that. They can be cashed at any USPS facility, can be bought in $1K limits (no more than $3K per day though), and can essentially be treated as bearer bonds if you don't fill them out until time of exchange.

Why is that safer? Cops can seize cars; why can't they seize money orders?

10K in money orders is easier to conceal than $10K in cash.

And $10K in Bitcoin is easier still ;)

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