This seems disingenuous to me, but my personal experience with Coinbase colors my opinion.
I had my Coinbase accounts canceled more than 5 years ago. Despite my merchant account with them processing over 1MM USD a year in BTC, they refused to tell me why they terminated my merchant and personal account.
At the time, I was buying physical giftcards in bulk from official wholesale distributors for 90c on the dollar, scanning and OCR'ing the redemption codes, and was selling those for the BTC equivalent of $1.05 on the dollar.
At the time, some of those merchants had their own plans for digital giftcard distribution and said they didn't want to be associated with cryptocurrencies. I ignored their pressure because I was staying true to the law in regards to various resale doctrines.
I suspect some of the larger merchants pressured their financial partners to represent them and put pressure on Coinbase.
I didn't mind writing my own bespoke payment processing system to replace them, but the loss of an easy USD <-> BTC gateway did make life quite a bit harder. Since my move to NY, it's been even more difficult because there are few companies that are allowed to operate here.
> At the time, I was buying physical giftcards in bulk from official wholesale distributors for 90c on the dollar, scanning and OCR'ing the redemption codes, and was selling those for the BTC equivalent of $1.05 on the dollar.
Isn’t this kind of thing usually associated with criminal behaviour? Why would somebody buy $1 of gift cards for $1.05 worth of Bitcoin instead of using an exchange? Seems like the main appeal is avoiding KYC laws that the exchanges follow isn’t it?
I really can't tell if the comment you are responding to is satire. "I don't know why Coinbase would ban me all I did was use their platform to launder money"
The sources are rarely stolen. I used to work in this area for a large e-commerce company and generally what happened is a retail partner would have a sale on gift cards (15% off or something like this), and organized people who did this for a living would buy up multiple thousands in discounted gift cards, often chaining other discounts to get up to 20-25% off.
In our case, the arbitrage operators would try to extract the money themselves by using gift cards to buy goods that retain value well (Apple products, gaming consoles etc) to resell. The company is taking a hit, but it's often not outright theft. Technically, they're just savvy customers.
As for this case, it sounds like he's buying from genuine wholesale distributors who get gift cards from below face value anyway.
Retail outlets would never agree to sell gift cards without clipping the ticket, therefore they aren't paying $100 for the $100 gift card they sell you.
This is a perfect example of the old adage, we lose on every gift card sold but we make it up in the long run.
Imagine,
Customer buys $100 gift card
Customer gifts gift card.
Recipient buys $89.99 worth of stuff
Recipient never returns to reclaim $10.01
Gift card expires
Company writes value of unused gift card off their books as profit.
There is a reason gift cards are popular, it’s a money making machine. There’s probably a stat out there but from memory 30% of the value of gift cards goes unclaimed.
I don't recall paying more than they're worth, I was using a service called Steam Loader and it allowed me to spend my "magical internet money" on Steam which does not accept bitcoin.
Even if it was a few percent more, it's cool to be an early adopter of technology. I got all my bitcoins back then for free from mining anyway, so who cares? free games!
I had my Coinbase accounts canceled more than 5 years ago. Despite my merchant account with them processing over 1MM USD a year in BTC, they refused to tell me why they terminated my merchant and personal account.
At the time, I was buying physical giftcards in bulk from official wholesale distributors for 90c on the dollar, scanning and OCR'ing the redemption codes, and was selling those for the BTC equivalent of $1.05 on the dollar.
At the time, some of those merchants had their own plans for digital giftcard distribution and said they didn't want to be associated with cryptocurrencies. I ignored their pressure because I was staying true to the law in regards to various resale doctrines.
I suspect some of the larger merchants pressured their financial partners to represent them and put pressure on Coinbase.
I didn't mind writing my own bespoke payment processing system to replace them, but the loss of an easy USD <-> BTC gateway did make life quite a bit harder. Since my move to NY, it's been even more difficult because there are few companies that are allowed to operate here.