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Bitfloor shuts down
- PaperclipTaken 14y agoI just yesterday wired Bitfloor over $1000, and they have yet to acknowledge my transaction. The money is gone from my bank and is currently in limbo. I'm frustrated that they have given so little information out, my recent transaction represents 100% of my disposable income. Perhaps part of the fault is mine, but I thought they were reputable and no warning was given. They are also no longer accepting deposits or acknowledging any in progress deposits.
- tptacek 14y agoCan I ask why you moved 100% of your disposable income to an account at any Bitcoin exchange?
- waterlesscloud 14y agoCan I ask why you'd ask?
- tptacek 14y agoBecause that's a surprising decision to make, whether or not it's a good one, and I'm interested in why someone would decide that.
- mcantelon 14y agoIt's probably not the first time someone has put all their disposable income into what they think is a time-sensitive investment opportunity.
- prophetjohn 14y agoIt's also possible that the intent was to make a purchase with those bitcoins.
- tptacek 14y agoI totally don't care what he wanted to buy, or to chastise him for his investment decisions; I'm just curious if people are generally moving their money into Bitcoin in an attempt to move "off the grid" financially, or if this was an investment.
- mritun 14y agoYes its not the first time someone had last money on "time sensitive investment opportunities" aka gambling. And yes there are lots of people who do that with 100% of their disposable income. They also usually lose it all.
- mcantelon 14y ago>gambling What makes it gambling rather than an investment?
- PaperclipTaken 14y agoRead all the responses. I spent the money because I've been tracking bitcoin for a long time, and I felt confident that I understood the markets. Even if I completely failed as a trader, I should expect to get a fair chunk back. I put in $1200 because as a student it was everything that didn't need to go towards housing. I expected it to grow very fast. Bitfloor seemed reliable, and many people seemed to be trading on it. I thought it was sound. Even if I lost 100%, I expected the loss to come from my failure as a trader, not from my exchange's failure as a business. If I do get my money back, I will probably try to join a different bitcoin exchange, though more carefully. I've been trying for almost a month(since btc was about $90 before the crash) and it's incredible how difficult it is to trade bitcoins. Maybe I'll open my own exchange.
- krschultz 14y ago100% fault is your own. Regular online businesses have a hard time operating merchant accounts, much less these kind of sites. Bitcoin is no safer than online poker was in the US (I had a little of my money in Full Tilt, and a lot of 'winnings', and got $0 out of it). BTC operates in a pretty gray market. The companies involved are not regulated and perhaps violating existing regulations. Mt Gox et al are not ETrade. Any money in BTC should be money you are totally OK with losing.
- foobarqux 14y agoFulltilt players actually lost their balances?
- krschultz 14y agoI think it depends on what amount of your balance was your own money vs other people's money. My balance on the day the feds shutdown FT was around $500, but I had started out with money my roommate transfered to my account so $0 of it was deposited by me. He had put in $100 originally and his balance on the day FT shutdown as over $1000, and he got nothing back either. (Edit, after a quick google search, it appears that FT is just now starting the refund process. http://www.pocketfives.com/articles/full-tilt-claims-administrator-announced-refund-process-begin-shortly-588203/ http://www.pocketfives.com/articles/full-tilt-claims-adminis...)
- waterlesscloud 14y agoApparently as a Full Tilt user I'm a "fraud" "victim". Excellent work by my government to protect me on this one.
- mikeyouse 14y agoApparently as a Full Tilt user I'm a "fraud" "victim". Excellent work by my government to protect me on this one. You do realize full tilt was a giant ponzi scheme and that the owners looted hundreds of millions of dollars from players' accounts right?[1][2] But don't let that get in the way of your snarky libertarianism. [1] http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/ http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-p... [2] http://online.wsj.com/article/SB10001424127887324050304578410983313986810.html http://online.wsj.com/article/SB1000142412788732405030457841...
- abbott 14y agoCall your bank. There is a small chance you can still cancel the transaction even if the funds have cleared your account.
- rmc 14y agoTalk to your bank? I'm sure they'll know how to get your money back?
- dangrossman 14y agoThey were a US corporation with a US bank account and registered with FinCEN. What could be the reason their bank account was closed? Overly-cautious risk department at their choice of bank?
- sillysaurus 14y agoWhat could be the reason their bank account was closed? I wish Bitfloor had provided this info so that others could defend against the same fate.
- sachingulaya 14y agoThis is pure speculation but I think it could have something to do with them using CapitalOne's P2P transfer for high volume business transactions. I'm sure they violated the terms of service somewhere.
- _red 14y agoRemember how a few weeks ago when the USGov released a reported acknowledging BTC as a currency? Remember how everyone thought that was a great thing? There was a hidden point to that. Being a currency brokerage company requires millions in compliance / certification / regulatory fees. Its not like the big NY banks are going to just let people get their money out of the system without a fight.
- julespitt 14y agoThe FinCEN guidance explicitly states that Currency Exchange regulations do not apply: http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.... "A person must exchange the currency of two or more countries to be considered a dealer in foreign exchange. Virtual currency does not meet the criteria to be considered 'currency' under the BSA, because it is not legal tender. Therefore, a person who accepts real currency in exchange for virtual currency, or vice versa, is not a dealer in foreign exchange under FinCEN’s regulations." Edit: Just need to clarify that Money Transmitter regs do apply.
- kintamanimatt 14y agoWhat's Bitfloor? I've never heard of them. This is an ongoing phenomenon. The first time I (and I presume others) seem to hear about a company is when they're closing up shop.
- jaredsohn 14y agoNever heard of them either but if you click About you see this: Bitfloor, Inc. is a New York City based online exchange. We run a marketplace for Bitcoin buyers and sellers. We also focus on spreading all that is great about Bitcoin and helping people purchase and use their coins with ease.
- kintamanimatt 14y agoThanks. I wish they'd say why they're closing down. I don't love others' failures, but I sure do love learning from them when they happen. A postmortem would have made an interesting submission; a five sentence au revoir from an otherwise unknown company, not so much. I don't quite understand why this is grabbing the attention it is; this isn't like a well known company such as 37 Signals is abruptly saying pip pip cheerio. (Having said that, at least they'd write an interesting goodbye note.)
- jzwinck 14y agoI think they said why: one of their key bank accounts is being closed against their wishes. It's not easy to get an account like that opened, and when it's closed the money has to go somewhere. In this case, back to the clients.
- kintamanimatt 14y agoBank accounts can be closed for all kinds of reasons. They don't really say what happened or why their account is being closed, or why they aren't being tough cookies and working around this blip, if possible, etc. In essence, their post is about as content-free as imaginable, which is a shame because it was a good opportunity to educate others.
- powertower 14y agoI just placed money into my account a day or two ago, and have been waiting for bitcoin prices to stabilize. So I have USD in there and no way to convert it and get it out without giving them my gov. id. and bank routing numbers. I've only accessed Bitfloor via Tor to keep my anonymity. So fuck that (the id and bank details part). If I'm lucky, maybe they'll offer to convert funds to BTC and send them to an address.
- jaredstenquist 14y agoYou know what they say about poor decisions. They're made every day.
- dfc 14y agoFull context, in a recent post jared admits/confesses: I "invested" $1,000 in BTC during the early hype as it was approaching $32.00. I told my co-workers how cool of a concept it was and that my investment was sure to pay off with a skyrocketing price. After months and months the price drops and drops. My $1,000 is worth $200. I go through a ridiculously long process of proving my identity to Mt. Gox and Dwolla just to get real USD back at 1/5 their original value. Now if only I had kept it in there for the long haul, I'd have my $1,000 back. It's precisely this volatility that personally makes me skeptical of it truly reaching a critical mass of any sort. [1] https://news.ycombinator.com/item?id=5262486 https://news.ycombinator.com/item?id=5262486
- sillysaurus 14y agoNow if only I had kept it in there for the long haul, I'd have my $1,000 back. He would in fact have about $3,000 today (just 2 months after his comment). Of course, yesterday he would've had $2,000, and a week or so ago he would've had about $8,000. It'll be interesting to see how Bitcoin plays out.
- ams6110 14y agoThis is the classic "buy high, sell low" pattern seen when investors get into a volatile market with a lot of hype. If you can't afford to lose it or at least let it ride, put your money in CDs.
- blissofbeing 14y agoI had some $ and a couple BTC in my account there, I initiated the transfer out, got my BTC right away, hopefully the ACH goes through quickly also.
- hackerboos 14y agoThey had their servers compromised last year: https://bitcointalk.org/index.php?topic=105818.0 https://bitcointalk.org/index.php?topic=105818.0
- makomk 14y agoDid they ever manage to pay out the funds users had on the site at the time? Last I heard, they'd decided to solve the problem by freezing all those funds and gradually releasing them as they earned enough money on trading fees to actually repay people.
- bcoates 14y agoThis makes me wonder if they had taken their user dollar accounts and bought bitcoins with them to try and make up for the shortfall, then were impossibly wiped out by the crash.
- slg 14y agoIt is a little ironic consider one of the often trumpeted benefits of Bitcoin is a limited money supply and lack of a fractional reserve system. The truth of the matter is that Bitfloor was under no restrictions whatsoever on how much USD/Bitcoin it needed to have on hand in the event of something like this.
- jzwinck 14y agoThe theft from Bitfloor was roughly half the total assets (most of the BTC, none of the USD) at the time. A fractional reserve of 50% is still many times higher than what you'll find if you look in the vault of any regular bank in the US.
- slg 14y agoThat might be true, but the fact is that Bitfloor wasn't required to have anything on hand. Their reserve might have been 50% in that instance, but customers are putting their faith in Bitfloor to responsibly set and maintain a reasonable reserve rate. I find it ironic that people who distrust their local banks and government to that extent will put that much faith into a Bitcoin exchange.
- sachingulaya 14y agoWell, shit. Time to trash my bitfloor/mtgox arbitrage bot.
- tocomment 14y agoDo you really have one? Everything I read talked me out of it when I had the idea.
- girvo 14y agoDo you honestly have one? How did it perform? I was considering doing something myself, I'm curious how it went.
- sachingulaya 14y agoNo, we finished coding a trading dashboard and we were building the arbitrage functionality last night. The general premise is this: match bids on mtgox with asks on bitfloor when transaction fees are less than the spread. Then later on you have to balance with a bid on bitfloor and an ask on mtgox. Send coins between exchanges to fund accounts. If cash runs low on one exchange(it would be bitfloor) then the plan was to manually fund bitfloor with capitalone p2p(no transaction fees) and withdraw using dwolla($0.25 transaction fee). The big problem was the lack of liquidity in the bitfloor market. We figured if we brought bitfloor prices down to mtgox prices we could attract people who didn't want to go through the onerous mtgox verification process. People were, more or less, turned off by bitfloor by the 5% markup that you pay to buy bitcoins on bitfloor. There are plenty of arbitrage bots running in European exchanges that are making money. Some are on github. I'm going to write the idea off as abandoned for now. Mtgox is crap. Bitfloor is gone. B24 has been offline for a while. The platforms just aren't there yet.
- leot 14y agoWhy people haven't deployed something like this (http://www.millenniumit.com/capital_market_solutions/ http://www.millenniumit.com/capital_market_solutions/) as part of a bank in the Cayman Islands eludes me. Yes, the upfront cost is large. But it seems likely that you'll own the market basically overnight.
- MrBlue 14y agoI wonder if MtGox is re-evaluating their move to the US.
- astrodust 14y agoAny exchange company should operate in one of the well-known havens like Gibraltar or Curaçao, not the US.
- lwat 14y agoAnywhere but the US
- epynonymous 14y agoor china for that matter
- jQueryIsAwesome 14y agoCayman Islands or Ireland.
- mxxx 14y agoThat's disappointing. I really like Bitfloor, I like the approach they'd taken to their API, and I felt among the major(ish) exchanges they were refreshingly open and honest. When they were compromised earlier they seemed to make a real effort to ensure all their users were taken care of, which is a nice change from the many other exchanges who just packed up shop and never paid out. Sorry to hear the bad news, guys.
- patio11 14y agoI have a IngDirect (now CapitalOne360) checking account, which for many years was attached to Paypal and Google Checkout for receiving payments for Bingo Card Creator. One day, I got a call from their fraud/security department. Paraphrasing: "We know you're clean and well-established with us, but this use of the account with two incoming transfers a day is outside of our risk parameters, so you've got 30 days to move off it for your business use. We don't want this business." It's highly likely that Bitfloor was receiving many times that volume from many more payers with less history and, let me be charitable here, less ability to convince the fraud department that there was a legitimate business causing the deposits. It was obvious they were going to be shut down. P.S. If any of you think this won't happen to Mt. Gox I encourage you to consider "How high do I rate my understanding of risk controls and regulation at Japanese commercial banks?"
- trevorcreech 14y agoWhere do your BCC payments go now?
- patio11 14y agoA business checking account at Bank of America, currently. I should probably have two of them, technically, since I have two LLCs now, but I haven't gotten around to that yet.
- jplewicke 14y agoIf you don't mind me asking, I'd be curious to hear what decisions you've made on cash vs accrual accounting, pass-through vs corporate taxation, and the use of guaranteed payments vs distributions. I know a lot depends on the specifics of each situation, but haven't heard a lot of details on this from people running single-member bootstrapped SAAS LLCs before :) .
- melvinmt 14y agoCan you elaborate on why incoming transfers from reputable companies have a certain risk attached? I simply can't think of any reason why that should be the case. Isn't the primary function of the bank to receive and store your money?
- deleted 14y ago[deleted]