Comment by ftxbagholder123 | Hacker News Reader

Comment by ftxbagholder123 | Hacker News Reader

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ftxbagholder123

Maybe this is a naive question with regards to how AML / KYC work in crypto, but would Coinbase (and in the extension, my bank) accept an incoming transfer of that size if they didn't know for sure that either 1) the money was coming from "me", or 2) that I had at least obtained it legally?

In my early conversations with my bank, they stated that among other things, they would need to see proof of where the funds had come from (proof of original $ deposit into FTX, FTX trading history, etc.), and I just assumed that sending the crypto to a different exchange would add another layer of complexity that would make that process much harder.

But perhaps I took an overly conservative (and now catastrophic) stance when trying to do everything as cleanly as possible.

I have a sneaking feeling your approach might have worked (or at least it's hard to imagine it being a worse outcome than what actually happened). I'm feeling pretty stupid now for not exploring this further. I guess I never expected FTX would just disappear, and so I didn't explore every option as fully as I should have. I appreciate your suggestion in any case.

I've never moved more than a few thousand dollars around at a time... but you absolutely could move that much into coinbase and withdraw into a US account. Might have some forms to fill out, might have a small waiting period. Will have to send coinbase your US ID etc. But i would be surprised if you had too many issues.

Thank you, that is helpful to know for future reference if I'm ever in a similar situation. I have also moved smaller amounts in the past without much problems (though this was years ago), but you are probably right that this too would have been doable.

The short answer is no, most exchanges are happy to take large deposits straight from an Eth or BTC wallet with a little bit of KYC, but your US bank might have put up the same guardrails and Coinbase could always fold in the same way that FTX has.

Fair enough, and thank you for the response. Reading some of the other responses, it seems people are generally of the view that it probably would have been doable, but perhaps not without some level of hickup, particularly with regards to the US bank. I guess I will never know 100% since this is now in the past.

And the comment around Coinbase also makes sense, though I suppose my exposure to that risk could have been minimized assuming the money would ideally only have been sitting there for a few days. In retrospect, I should have obviously attempted the Coinbase route.

I don't know if Coinbase would take that much BTC and immediately cash it out to USD and transfer to your bank.

The part that should be no problem is the American bank itself, if you ask first for instructions. Coinbase is a legit American entity. Procedure should be same as making large transfers or consolidations of IRAs or liquidating brokerage holdings to buy a house.

Thank you for the comment. I hadn't spent all that much time thinking about this from an AML / KYC perspective up until now, but I recall in years past when I wanted to make a bank transfer from Colombia to the US, it felt like I was holding my breath for the money to eventually arrive (and this was bank <-> bank, without crypto involved), given all the paperwork and questions asked.

The money did arrive successfully by the way, but I just took away from that exercise that banks are really, really strict about money transfers and the origin of monies. This all has me thinking that getting crypto back into the banking system -- to the extent it's easy today -- might only get harder in the future.

I was wondering if this was your concern - I just didn't know how it stacked up to trying to move hundreds of thousands of dollars from a bank in Brazil to a US one.

Good point. My experience with moving to and from South America to the US is that it has been doable, but always with the feeling of "will the money get stuck somewhere this time" (and I never tried anything near this amount).

My concern in this specific situation was greater around moving money from crypto -> bank, vs. bank -> bank. My general sense is that once the money is inside of the traditional banking system, it's less likely to face issues.

But coming to the bank with a wad of cash (or crypto), in my view, could trigger all kinds of issues (in theory at least).

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