Coinbase customer arrested

Thanks to /u/throwawaydl340d ; this case is very relevant to recent discussions about how proactive, exactly, Coinbase is in investigating their users & turning them over to LE:

I would say that it's clear now, if it wasn't before, that Coinbase should not be used for anything related to the black-markets without, at the minimum, effective tumbling.


Comments


[113 Points] None:

[deleted]


[44 Points] lopeor:

Calling all the "tumbling is useless" crowd.


[35 Points] None:

[deleted]


[21 Points] watchgwernthrow:

I tried to address Coinbase's concerns in our e-mail correspondence and they just locked me out of my account (even though they said I would be able to still log in, just not buy) and then closed the support case that was opened for my account and stopped talking to me.

I kept asking them what transactions were suspicious and they wouldn't say anything. I bet my fucking records are going to be coming across the desk of LE at some point for a walk and talk or worse.

Fuck me. Don't use Coinbase and obfuscate ANYTHING you do with Bitcoin, guys. This is fucking absurd.


[15 Points] IGetDankShit:

Pretty bold business move by Coinbase. I wonder what percentage of their users buy bitcoin for DNM purposes? Probably the majority of them. I'll be curious to see how many people ditch CB after this and I wonder if Circle is any more reasonable about where we are allowed to spend our money or if they'll be the next ones to pull this type of shit.


[7 Points] None:

I wonder if this is what drew their attention

Gelli had the drugs delivered to his house, and he sold them, according to the U.S. Attorney’s office.

edit: I looked at the transaction logs. I wonder if the shear amount of money he was spending drew attention.


[6 Points] cashmeres:

Welp. So much for coinbase.


[7 Points] None:

This is fucking disturbing. I don't think I will be using coinbase anymore.


[5 Points] None:

I can see coinbase going out of business in a few months now.


[3 Points] LRADoperator:

great, i just made a purchase through coinbase a few days ago. should i sell my btc back and purchase elsewhere? or can i effectively tumble my coins and not have to worry? i really dont want to wait a couple days for the transactions to go through again.


[5 Points] brrj:

Coinbase DDoS incoming


[2 Points] blackbankthrowaway:

It is a huge leap to go from someone using Coinbase to purchase Bitcoin to implying they are complicit in identifying people to LE.

And the failure of logic is that, if they were in fact policing individual transactions for potential illegal activity, your list would be a couple hundred links long at a minimum. Not 10.

FUD.


[2 Points] None:

[removed]


[2 Points] swagstermcdonalds:

What is a good alternative to coinbase?


[2 Points] pookiethegreat:

Are there any tumblers that are currently recommended? It seems like everything I hear about them is "xxx-tumbler is a scam! Stay away". Which ones have a good reputation?

Or would sending to a blockchain.info wallet be sufficient enough?


[2 Points] Ion_Man_Sparx:

TS is a fear monger, no service should be used in black markets without proper tumbling, common sense 101.


[1 Points] rogueXleader:

I understand they're trying to stay on the safe side of the law by covering their own asses, but they could handle situations like this better. I had considered linking a credit card so I could make instant purchases with them, but with all this going on I'm saying fuck that. They could have at least had the courtesy of warning the user that their information had been subpoenaed like Reddit did with /w/gwern . Had several orders cancelled days after placing them and got no explanation when I asked customer service beyond a very vague "we couldn't process your transaction at this time". Never sent anything from any BTC purchase to anything but a secure personal wallet. Screw these guys. I hope they tank for fucking their own customers

EDIT: Know I screwed up linking gwerns name to my post, but I'm still learning how the sub works. Glad I've joined though because it has been an invaluable resource and a great place to talk to like-minded people who have offered me a lot of great advice


[1 Points] futilerebel:

Guys, don't blame Coinbase for this. They are legally obligated to report suspicious activity.


[1 Points] UDNM:

Somethings not adding up here.

Joseph Patrick Gelli, 23, plead guilty to conspiracy to commit money laundering after investigations found that he used Bitcoin to purchase marijuana and psychotropic mushrooms from illegal websites

Why is he being charged with money laundering in relation to his BTC transactions? He used BTC to purchase drugs and then sold the drugs for cash. All his profit was in cash so shouldn't he be charged with laundering the cash? Also it says "conspiracy to commit money laundering " not actual money laundering.

Mr. Gelli’s criminal activities involved the laundering of specified unlawful activity using Bitcoin‎,

This seems a bit strange. Is it possible that these charges are in relation to using a tumbler? That would explain the "conspiracy to commit money laundering". Also it doesn't appear that they intercepted any drugs in the mail and they didn't bust him through a vendor or market. They haven't charged him with anything in relation to purchasing drugs from a DNM. It almost looks like they noticed him buying lots of BTC and sending it to a tumbler, got a warrant for conspiracy to launder BTC and then busted him selling drugs.


[1 Points] None:

Question? What if someone downloads the Bitcoin software. Runs it gets an address or 100 does transactions with DNM, North Korea. Then deletes the Bitcoin software. Tosses machine into Lake. What the fuck are they going to do then?

They going to drag lake and try recover. Seems to me that creates a lot of transactions with no owner per se.

I ask cause I don't know but won't the blockchain be pointing to 100's of shit dead end transactions? No owner.

Correct my stupidity. My point is why fuck with Coin anything?


[1 Points] shoelace120:

Just closed my Coinbase account. Local Bitcoin or LibertyX for me from here on out.


[1 Points] darrenturn90:

Surely that's what coins like Monero are for? I can't imagine there would be much to go on if coinbase BTC was exchanged for Monero then Monero used. Last report I saw though said that anon coins aren't really used much yet and BTC is still traded mostly.


[1 Points] throwawayshowaway1:

Well damn. Looks like my post from yesterday doesn't seem so "Shady" and "FUD"-y does it? Apparently Coinbase is actively in the business of a being a privacy violating, snitching piece of shit.

Wheres the Coinbase Rep who'll come here and spin their usual "we take privacy soooo seriously. We love our customers. Blah blah blah blah". Fuck these guys, seriously fuck these guys.

In this situation, a man is facing decades in jail and an absurd amount in fines because he MIGHT have sold some planets and fungus. Fucking kidding me?


[1 Points] AliceBTolkas:

Can someone please post some alternatives to coinbase? I use coinbase now, would love a better service


[1 Points] mad87645:

Do coinbase also have the capacity to follow and monitor specific coins they send and recieve? Because that could put everyone that uses btc in danger.


[1 Points] lucasjkr:

I'm just curious, I'm not seeing the mention of coinbase in any of the primary links. Is there any other background available?


[1 Points] weedandcocaineplease:

that's a bummer. Use LB or BTC-e.


[1 Points] minerscentral:

Quick Question. I thought SC was one of the only two states without MSB requirements therefore how can this be money laundering if their are no state laws to comply with and only fincen?


[1 Points] None:

speaking as link number 2 guy, I'm not really too afraid. That being said coinbase can enjoy losing my business. Thank you OP for posting this


[1 Points] Duderino420:

so whats the next best site to use to purchase BTC?


[1 Points] namekian:

who says psychotropic mushrooms lol


[1 Points] agentgreasy:

I think there is something important here - the IRS. It seems funny to me that the same way most people are caught, ends up also affecting bitcoin - but at the same time it also seems logical.

Places like coin base have always been something of a scary thought to me when it comes to freedom - the more money they have the more they can dedicate to pattern recognition within their systems.

However, nothing can defeat the biggest hand of all: its a broke Government - they need money, how better to collect it than to find the people with the greatest tax discrepancy?

Hell, the IRS alone has been the demise of criminal empires since Capone - and the precedent goes rather far back...

Oy, I love math because numbers don't lie... but damn, sometimes that truth is a little irritating.


[0 Points] PurpleBeamz:

I usually send funds from my Coinbase to gambling site like Prime dice, then to either a DNM tumbler or directly into a DNM! Thank you Gwern for keeping us up to date with all the latest info! Your gonna save someones life one day.


[0 Points] None:

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[0 Points] bignaturalthrowaways:

I was just emailed at the account I used to open my Coinbase account a survey asking how likely I would be to recommend Coinbase to a friend. 1 to 10 scale, then a text input box popped up asking why I chose what I did. LOL