Are large cryptocurrency companies and exchanges watching how you use your Bitcoin? A Coinbase customer was threatened with account closure when attempting to use a gambling site.
A member of online gambling site BitBet posted on Reddit that Coinbase prevented a user from spending Bitcoin on their site:
We are the admin team for https://bitbet.us, and it has come to our attention that Coinbase has silently started tracking how their customers spend the coins purchased on their site.
One of our users what threatened by Coinbase with account closure after he placed a bet on our site.
The implication is basically that Coinbase is now officially in the business of deciding what you can and can't do with your own money.
They've essentially lowered themselves to the level of the likes of VISA and Paypal.
Should you decide to spend your coins on dildos and should Coinbase tomorrow decide that dildos are something they disapprove of, you may face account closure.
Coinbase forced to do due diligence to maintain legal compliance
In order to comply with anti-money laundering/know your customer (AML/KYC) regulations, Coinbase has a legal obligation to ensure Bitcoin used through their services is not used for illegal activity, the company said in a statement:
“As a registered Money Services Business, Coinbase has an obligation to monitor for suspicious or illegal activity on our platform. Gambling is heavily regulated so Coinbase, like most payments processors, has strict policies in place around gambling and any other activities which may violate U.S. law. We disclose these in the prohibited use section of our user terms.”
No need to go through large regulated processors
In response to the post by BitBet, a Reddit user posted an image illustrating the simplicity of getting around Coinbase’s regulations: simply transfer Bitcoin to a different wallet, and then spend them as you see fit.
Robert Genito, CEO of decentralized peer-to-peer Bitcoin exchange Wall of Coins, believes that cryptocurrency users should conduct their own financial affairs and eschew management by large corporations bound by all manner of regulations.
“If your service provider is going to be your parent, then it's time to move out and life your live on your own terms!”