When Bittrex Steals Your Money
-->The video version of this story (about 18 minutes long) is available here.
As of this writing, Bittrex has nearly 1,000 complaints against it at the BBB. File this article under: “Yet another reason why you can’t trust centralized exchanges.”
Short summary: Bittrex is allowing "unverified" customers to send them money, but it isn’t allowing unverified customers the ability to withdraw that money. Instead, it holds the deposit hostage until the customer provides an unredacted copy of their driver's license or passport (which, by the way, Bittrex claims the right to store on its servers forever). If the customer is uncomfortable with this, too bad. They either comply or kiss their money goodbye. Some customers have lost tens of thousands of dollars to this "policy."
Bittrex claims that this is a matter of legal compliance. If that were true, they could simply require verification before allowing unverified customers the ability to deposit. However, this would undoubtedly chase most reasonable people into the arms of their competitors, so they’ve chosen to demand ID when you attempt to withdraw instead.
All of this is bad enough, but one other interesting tidbit emerged when I started digging into John Roth, the Chief Compliance and "Ethics Officer" who responded to my complaint. Looks like this might be an issue of: "Sure, they'll take your money, but maybe it's your data that they're really after."
Here's some of John Roth's history: (source: https://www.linkedin.com/in/john-roth-508b8a14/ )
US Department of Homeland Security: Inspector General
Multiple roles at the Department of Justice including "Special Counsel for International Money Laundering Policy"
Senior Counsel and Team Leader for the 9/11 Commission
US Attorney's Office, Miami: "Chief" of the Narcotics Section
So, did Bittrex actually take my money and refuse to return it? Yes it did. And, long story short, I was only able to get my money back after filing a complaint with the Washington State Attorney General's Office. The correspondence appears below (including the response from Bittrex / John Roth).
If you’re currently a Bittrex customer, or thinking about becoming one, I’d recommend reading the rest of this page and checking out these two links before trusting them with either your money or Identification: BBB and Trust Pilot. Last but not least, if you’ve already had your money taken, I’d recommend filing a complaint with the Washington State Attorney General’s Office. Even if it’s a small amount (fortunately, I had only sent them $100), it's worth the effort to get it back. Bittrex shouldn't be permitted to simply take other people’s property.
My Complaint to the Attorney General's Office
Bittrex.com is a Washington based cryptocurrency exchange. I believe that one of its current policies could be illegal. If it isn’t illegal, it certainly should be.
In short, Bittrex is accepting deposits from customers that, according to the Bittrex “verification process,” will never be permitted to get their deposits back. Stated another way: Bittrex knows if a customer is “verified” or not. It also knows that it will not allow an "unverified" customer to withdraw their funds. This being the case, Bittrex could easily warn customers when they press the "deposit button” that their deposit will not be available for withdrawal if the customer can’t pass the verification process. However, the Bittrex verification process is far more invasive than its competitors. Additionally, Bittrex claims the right to keep the customer’s personal information on its servers forever (you cannot request that it be deleted.) This verification process would undoubtedly turn many customers away.
So, instead of properly warning customers of its invasive verification process, management has chosen to let customers make deposits and then, only after it has their money, force them to provide sensitive information. (You’re instructed to take a "selfie" and submit it with a completely unredacted copy of your driver's license or passport which, again, can never be deleted from their servers.) If you’re uncomfortable giving them such sensitive information, they claim the right to keep your money. (They won’t even refund what you just sent them). If you don’t have a driver’s license or passport? They claim the right to keep your money.
Not only are they trapping new customers this way, they're also doing it to customers who've already undergone a previous verification process. In other words: You were “verified,” sent in your money, now you’re NOT verified.
Last but not least, they are also rejecting perfectly legible ID. Based on the nearly 1,000 complaints against this company (see the BBB link below), I’d love to know how many hundreds of thousands of dollars they have claimed for themselves via the “policy” outlined above.
Attorney General's Office Reply
Dear Joseph Plummer:
Thank you for contacting the Consumer Protection Division of the Washington State Attorney General’s Office. Consumer complaints provide valuable information that our office uses to identify patterns of unfair or deceptive practices that may warrant enforcement of the Consumer Protection Act.
The complaint you submitted to our office regarding Bittrex was reviewed and determined to be appropriate for the informal complaint resolution services offered by our Consumer Resource Center. This is an informal, voluntary process. Our office acts as a neutral party to facilitate communication between consumers and businesses to assist in resolving the complaint. We are prohibited by Washington State law from providing legal advice or representing either party.
The following information describes our informal complaint resolution process:
Informal Complaint Resolution Process:
The process takes approximately four to six weeks to complete. A copy of your complaint was sent to the business(es) with a request to provide our office with a response within 21 calendar days. If a response is received, you will be notified and a copy of the response will be provided to you. If our office has not received a response from the business(es) within 14 calendar days, a courtesy reminder will be sent to the business(es) reminding them that their response is due within the next 7 calendar days. If the business(es) do not respond to our request, our office cannot compel the business(es) to respond.
If the business does not respond or does not resolve your complaint to your satisfaction:
If the business(es) do not respond, or your complaint is not resolved through our informal complaint resolution service, your complaint will be closed. However, you will be notified of additional options and resources that may be available to assist you in the event you wish to pursue the matter further.
If you contact our office regarding your complaint, please reference the assigned complaint number referenced above.
We hope this information is helpful. If you have questions or would like to submit additional information regarding this complaint, our email address is CRCComplaints@ATG.WA.GOV.
ANDREW F. WU
Consumer Resource Center Specialist
Consumer Protection Division
1-800-551-4636 for in-state callers
1-206-464-6684 for out-of-state callers
Response from Bittrex / John Roth
Re: Joseph Plummer, File #543633
Dear Mr. Wu:
We are in receipt of the attached correspondence regarding Joseph Plummer, who complains of an inability to withdraw funds. I have attached the support ticket that references our communication with him on this subject. Mr. Plummer originally joined Bittrex as a customer in 2014, before anti-money laundering standards had evolved to require full customer identification policies. In the fall of 2017, Bittrex began phasing in a policy of full customer identification, required by the U.S. Department of the Treasury (31 CFR 1010.410) and the State of Washington (WAC 208-690-210) for transactions reaching a specific monetary threshold. Prior to that time, Mr. Plummer was able to withdraw money without submitting his identification.
As can be seen by the attached correspondence, we have attempted to work with Mr. Plummer to have him submit his identification. I have personally examined his records and have not found evidence that our third-party identification verification service provider received documents from Mr. Plummer. Although we are well within our rights under the Terms of Service that Mr. Plummer agreed to, because the value of the account is less than $100, and we have verified his identity in other ways, we will permit Mr. Plummer to withdraw his funds, and then we will close his account.
Please contact me if you have any questions.
Chief Compliance Officer
My Final Reply to Attorney General's Office
I sincerely appreciate your time and assistance, Mr. Wu.
I can confirm that I was permitted to withdraw my funds. I have just a few things to add:
1. Mr. Roth seems to imply that I never submitted my identification. This is untrue. I submitted a scanned copy of my driver's license that clearly showed my face, my name, and my address. As instructed, I also included a picture of the back of my license and a “selfie.” After submitting these, they were declined as unacceptable. When I asked why, the representative told me that the "black line" (a magnetic strip that appears on the back of my ID), was "blending in" with the background of the image. The front scan and selfie (which proved that I had not opened my account with false information), were perfectly clear and were not listed as the problem.
I tried to upload again, this time with a lighter background for the back of my license, and my verification was declined again. When I refused to upload for a third time, my support ticket was closed and I was told: “There is nothing more the support team will be able to assist you with if you are unable or unwilling to proceed with account verification. Any future replies to this ticket which do not pertain to assistance with the verification process will be solved without response.” Please note that UNABLE “to proceed with account verification” is included as a reason to ignore the customer and, as a result, keep their deposit.
2. I hope the Attorney General's Office will consider asking Bittrex how much profit it has derived from granting itself the "right" to keep unverified customer deposits. Mr. Roth claims that his company kept my deposit in an attempt to follow legislative requirements, but this claim is misguided at best. My transaction was too small to trigger any further legal obligation, and Mr. Roth admits that Bittrex has alternative ways to verify identity (which it only chose to use after your office contacted them). In other words: When they said they were keeping my money because they couldn’t identify me, that was apparently untrue. They were keeping my money because they could.
3. Last but not least: How many customers have been unjustly affected by this policy? How many of them simply surrendered their money in frustration, not knowing that the Attorney General’s Office could have helped them? If Bittrex can refuse withdrawals without verification, it can just as easily refuse deposits without verification. That solves this problem. Unfortunately, the company has an incentive to keep things exactly the way they are, which will inevitably lead to the continued abuse of its customers.
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