Reminder not to use Coinbase for high volume transactions

Someone from /r/bitcoin was asked to explain "the primary use case for your Coinbase account," "the source of the bitcoin being deposited," "the source of funds for your bitcoin purchases" and "the nature of your outgoing transfers and what, if any, services they are related to."

https://pay.reddit.com/r/Bitcoin/comments/2fkfe7/moved_my_bitcoins_off_coinbase_and_got_the/

This will be common sense for many of you. Remember not to make large transactions that you can't explain. Personally, I stick with LBC.


Comments


[4 Points] None:

Just send your coinbase purchase to one of many cryptocurrency exchanges (BTC-e.com or cryptsy.com seems the best as they are the shadiest) solves this issue... do your own tumbling by trading BTC for any alt coin then selling back for BTC. Rinse and repeat till you are not paranoid then send to marketplace. Good luck tracking BTC blockchain to alt coin blockchain a few times... especially when the exchange is in Ukraine or Russia or somewhere like that.


[3 Points] None:

I think this is part of the US Know-Your-Customer (KYC) and AML (Anti-Money Laundering) laws. Places like Coinbase are required to do certain things to ensure people are not using the service for money-laundering.

You run into the same thing if you try to deposit $10,000 in cash in a regular account. But it isn't that simple. If you deposit $9,990 it may be reported as suspicious as well. There are a bunch of different algorithms they use to detect "suspicious" behavior.

Local Bitcoins runs into the same problem. If you try to do a large volume through there you will have the same issue. In fact, if you sell more than $10K (I think) of BTC though LBC you can be arrested as an illegal money transmitter.

This isn't really about tumbling. You can tumble all you want, but if you have a "large" volume of money going into and out of Coinbase it is going to attract attention. Tumbling just makes it hard to track; it doesn't mask the fact that you have a lot of money coming out of Coinbase.

People doing small amounts of money are going to be in the noise.

I don't have any ideas for how to get around this. Maybe set up multiple accounts using friends' credentials just to make the volume on each one smaller.

The biggest challenge with BTC has always been the fiat($$)->BTC->fiat conversion steps. If you can stay withing BTC you have no issues.


[1 Points] hrmbus:

Or just simply send it to a second wallet first...


[1 Points] None:

If there's a bitcoin ATM in your area use that otherwise LBC is the way to go.