A Canadian bitcoin broker was defrauded by a customer who paid for bitcoins by cheque. The transaction appeared as two ‘deposits’ on the broker’s bank account, at which point the broker thought it was safe to deliver the bitcoins to the buyer. He did so. The bank then changed the status of the deposits as they discovered the cheques were written from an empty account. The broker is suing the bank in question, TD bank, for the CAD12k loss. TD Bank suggested a settlement of CAD500, which the broker refused.
Fraud avoidance is the most important incentive for strong Know Your Customer (KYC) procedures. Virtual Currency Exchanges and Brokers view KYC as a hindrance. However, it protects your business and you. If you need help making your KYC watertight contact us for support.