Bitcoin users frustrated: Coinbase and Circle starting to act like banks - they freeze accounts of customers suspected for "operating Money Service Business"

So, you are trading bitcoins? Your account at US based "regulated" bitcoin exchanges might be frozen (if they suspect that you are "operating Money Service Business"). This is why you should not use US based financial service providers.

Coinbase and Circle closed my account (I think) due to trading on LocalBitcoins.com

Coinbase sent me an email, asking if I was operating a Money Service Business. I did not respond and soon after closed my account on my own after withdrawing the remaining balance (I had already decided to stop selling on LocalBitcoins.com). Circle never sent me any notification, they just froze my account. When I wrote them, telling them my account was frozen but I still had some bitcoin held there they unfroze my account, I withdrew, they froze it again.

I'm not trying to demonize these services. I think they serve an important function for non technical people just getting started. They also may track your use and freeze your account without notice -- much like traditional banks.

I used Coinbase a lot more than Circle, so I'm not surprised that some red flags were raised there, but at Circle I bought an average of 2 to 3 bitcoins a week. I wouldn't think that volume would raise any flags, so perhaps something else triggered it for them. I sometimes sent the bitcoins direct to my LocalBitcoins.com account.

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They essentially froze my Coinbase account for "high volume" even after I sent them w-2, bank statement, and company invoice. I am still in awe just being like well WTF would I have to send to get it enabled again. No idea. "Proof of income" they tell me.

Fucking hate them and will never recommend them to anyone again. Like dealing with 10 year olds in the financial industry.

homad

Here is a good alternative outside of the U.S. jurisdiction. They don't ask you for your name or address. Verification only is needed for unlocking some features.

Comments

  1. Written WaterMay 29, 2017 at 2:39 PM

    I made one purchase. They froze my account, said "for security reasons", and stole my coins. No matter how you slice it, it's not legal.

    ReplyDelete

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