by Virgil Vaduva

It’s a web of mistrust, accusations and outrage. It all started earlier this year when the Department of Homeland Security send Reddit a subpoena for the identities of some members of the DarkNetMarkets subreddit, an online community where users share information and discuss various online markets located on the “dark net,” which is an euphemism used to describe services, sites and machines using anonymizing protocols such as TOR.

This is the current relationship between members of the DarkNetMarkets subreddit and the Bitcoin wallet hosting service, Coinbase.

On May 2nd, a Coinbase customer posted an ominous warning on Reddit, accompanied by screenshots, demonstrating that Coinbase is actively monitoring customer transactions. This particular user claims to have made a donation to Gwern Branwen, who is a researcher and the moderator of the DarkNetMarkets subreddit.

The complain went on to state:

“When I donated to gwern, I hadn’t made any other transactions with Coinbase for two weeks or more. The only transaction in Coinbase for the last two weeks until right now is the gwern donation. It’s no coincidence.”

A second user followed with a post a day later stating,

“Last friday a user posted that after donating to one of Gwern’s wallets coinbase sent him an email shortly after confirmed. Me being an inquisitive person and supporter of /u/gwern decided to give the theory a go and donated 5 dollars to the account. Well pics or it didn’t happen right? Proof: http://imgur.com/XrzWwo4“

Then, after another day, a third user wrote about an even a worse experience; he claims in his post that he made a payment to a dark net market from his Coinbase account and local cops showed up at his house in an attempt to interview him about onine activities:

“I wasn’t home yet from work, but my wife tells me local LE showed up and wanted to have a “chat”. Asked if I or anone had ever ordered anything illicit in the mail. Said “nobody’s in trouble, we’re just following up on something that might be nothing””

Many more Reddit users have been railing against Coinbase and speculating about the reasons behind what appears to be clear monitoring of transactions, especially to wallet addresses associated with dark net markets or researchers, activists or dissidents.

A Coinbase spokesperson e-mailed a comment to The Daily Dot and said, “We don’t comment on specific cases, however, Coinbase is required to monitor activity on its platform in accordance with the Bank Secrecy Act and other regulation governing all Money Service Businesses.”

It was unclear how donations made to specific users constitute a violation of the Bank Secrecy Act.

Until Coinbase explains their monitoring activities in more detail, my recommendation would be to either stay away from their services or practice more caution when using them to make donations to people like Gwern Branwen, Edward Snowden or Ross Ulbricht.

Also, do not send Bitcoin to questionable address directly from your Coinbase account as Coinbase has a physical address for all their customers; if you do need to make anonymous donations or payments to certain individuals, withdraw all your Bitcoin from Coinbase and then make use of a Bitcoin mixing service like bitmixer.io.

Bitcoin is a revolutionary technology which can facilitate anonymous and safe transactions, but it is not anonymous by default. Learn about it and use it correctly before assuming anonymity.

Virgil Vaduva is a Libertarian security professional, journalist, photographer and overall liberty freak.  He spent most of his life in Communist Romania and participated in the 1989 street protests which led to the collapse of the Ceausescu regime. He can be reached at vvaduva at truthvoice.com.

Q: I was at Chase recently and paid my credit card bill with cash. No problem. Then I attempted to pay my wife’s credit card bill and I was refused. They said the policy at Chase now is that only the people whose names are listed on a consumer account are authorized to make payments. That is absurd!  

How can a bank refuse payment about to be made in U.S. currency? I believe that no one can refuse payment of a bill when it is made in legal tender. Other than that, if I attempt to pay a relative’s bill, for whatever reason, if not pre-authorized it will be refused? 

What reasoning is there behind this?

W.A., Middleburg Heights

A: Big picture: the issue wasn’t that you tried to pay your wife’s credit card bill. It was that you tried to use cash.

Chase a year ago changed its policy about accepting cash deposits into a checking or savings account from someone who isn’t an owner or authorized user on an account. So this applies if you want to make a cash deposit into a checking account owned by a relative or friend who might need money ASAP. So starting a year ago, to make a cash deposit into a consumer account, people must either be an account owner or an authorized user on the account and provide ID. That policy doesn’t affect commercial, treasury or investment bank accounts.

Now, Chase is expanding its policy to apply to restrict cash payments on credit cards, mortgages, equity lines auto loans and safe deposit boxes.

The new policy is being rolled out in March in some Chase markets, including in Greater Cleveland, said spokesman Jeff Lyttle. It is not yet in effect anywhere. So you shouldn’t have been prohibited from making this payment yet.

The bank made the change about cash deposits to combat possible misuse of accounts, including money laundering.

Even if there was confusion about when this new policy starts, you could have successfully made the payment on your wife’s credit card account if you’d paid by check.

This policy is unusual but, since Chase is the nation’s largest bank, I wouldn’t be surprised if we start seeing more of this in this era of sensitivity about funding terrorists and other illegal causes.

Q: My bank (PNC) has tried for a long time to convince me to get a debit card. I have taken your articles into the bank and they have finally stopped pressuring me.

However, the bank charges me a $10 fee per year for my ATM card. If I had a debit card, it would be free. I understand why they charge me the fee, but I also think that they are discriminating against me by charging me that fee.

What do you think?

H.H., Ashland

A: This is a policy PNC has had for several years, and it’s not the only local bank that charges customers who want an ATM card instead of a debit card. KeyCorp and FirstMerit are others that charge a nominal monthly fee for the “privilege” of having an ATM card instead of the debit card they love to cram down your throat.

I doubt PNC’s 83-cent-per-month fee is going to break you or be a big windfall for the nation’s sixth-largest bank. It’s meant to tick you off enough to persuade you to just accept the debit card and be done with it. The hope is that you then might use that debit card occasionally, and that brings in revenue for the bank from merchant interchange fees.

Key’s and FirstMerit’s fees are in that same ballpark — about $1 a month. Again, not a burdensome amount, but just meant as a deterrent.

I think the fees are stupid, insulting and not customer-friendly, but they’re not discriminatory. If this fee upsets you enough, you should shop for a new bank that doesn’t have this fee. Of course, the new bank could have other fees you don’t like. You just need to decide what’s important to you.

Q: Perhaps your experience with the banking industry might help me with a bad situation. 

I made a purchase with a Bank of America credit card that I rarely use, then I forgot about it. The purchase was for about $250. About seven months after this purchase, I received a letter from BofA demanding payment for the purchase. I had received no communication from BofA prior to receipt of this letter, plus they had cancelled the account several months earlier.

I called to inform BofA that I would make a payment with interest to close the matter, but because BofA had never communicated with me (even though it confirmed it had my phone number and e-mail). I said it was unreasonable to pay the total interest and penalties that accrued. My recollection is I paid $500 toward the $250 purchase.

Recently, I discovered BofA reported this to the credit bureaus, which dramatically decreased my credit score from excellent to good. 

I am in the process of applying for a new home loan so this downgraded credit score is hurting me. The balance on the BofA account is $150. Is it best to pay it and move on, or is there any way I can clean up my credit score without remitting payment? Is there an oversight agency I should report BofA actions to?

L.C., Stow

A: I find it odd that you wouldn’t have gotten a letter or phone call about a payment that was a month or two or three late. But stranger things have happened.

Of course, not getting a bill doesn’t eliminate our responsibility to pay a bill when we have every reason to expect it. You acknowledge you messed up by forgetting about your purchase.

That said, it sure would have made your life easier if you’d remembered this purchase after only a month or two, or if BofA had reached you much sooner.

Even with the letter after seven months, I would have urged you to try to negotiate a lesser amount — assuming you’d been a good customer over a number of years.

If that didn’t work, at least you should have been able to negotiate keeping this off your credit report if you paid the full amount due, including late fees and interest. (If you had had that conversation with BofA, obviously you should have gotten the the name of the person you spoke with for your records.)

It sounds like this didn’t happen. I’m not sure why you paid $500 but not the full $650 if that’s what was due. (But boy, that sounds like a bang-load of late fees.)

If you did not pay the full amount that BofA requested at the time, and the charges were legitimate, that wasn’t smart. You probably could have kept this off your credit report if you’d paid the full $650.

I don’t see any way for you to improve your credit rating without paying this additional amount due. If I were you, I’d reach out by phone and have the conversation you should have had the first time: Fess up that this was an oversight. You’re a longtime customer with a good payment history. You’ll pay what’s due. Can BofA get this late payment off your credit report?

It would be best to get this in writing. At least, get the name of the person you speak with. It’s probably going to have to go to a supervisor-level anyway.

If you choose not to pay the remaining $150, your life could get worse. A charge-off (a payment never made) is much worse than a 90-day delinquent payment. This will continue to plague you for years to come, and cost you a lot more than $150 as you’re hit with higher interest rates.

You certainly can file a complaint with the Consumer Financial Protection Bureau. Call 855-411-2372 or go to: www.consumerfinance.gov/complaint.

In addition, I’d recommend that you sign up for text or email alerts for any credit card accounts you have. You can still get paper bills in the mail if you’d like. But you also would have a backstop if a bill gets lost or you forget about it. Most credit card companies offer to send electronic alerts when you have a new bill and also seven days before your payment is due, just in case you forgot.