About 10 years ago a startup I co-founded had about $3M in a Chase account. We received a notification that they were closing our account within 30 days. We weren't able to get any information but I assume this was a KYC false positive. The only thing I can think of is that we had some investors from the Middle East. We had no problem withdrawing our funds but since then, I've opened another business account and a personal travel credit card with Chase, both of which were shut down within weeks, so apparently I'm personally flagged for life.
Just for posterity, we received this on 6/28/2013. Looks like they actually gave us 60 days.
> Dear [redacted] Inc.
> A review of our records indicates that we are unable to retain your above-referenced account(s) (the "Accounts") at JPMorgan Chase Bank, N.A. (the "Bank").
> The terms and conditions governing the Accounts ("Account Rules") provide that
the Bank may close your Accounts at any time. Although the Account Rules do not require the Bank to provide you with advance notice of the termination of the Accounts, as a courtesy, please be advised that the Accounts will be terminated and closed after the close of business on 08/26/2013. Any items presented for
payment on the Accounts and not paid prior to termination will be returned unpaid. If the Accounts were covered by Overdraft Protection, as that term is defined in the Account Rules, such Overdraft Protection will terminate with respect to the Accounts on the Termination Date.
> Please do not deposit checks to the Accounts within five (5) business days of the Termination Date or any earlier date that you close the Accounts. Please arrange to cause any Automated Clearing House or ACH deposits or transfers to the Accounts to be terminated prior to closure. Provided that no checks have been deposited to your Accounts within the five (5) business day period before the Accounts are closed and no deposits of any kind have been made to your Accounts within a two (2) business day period before such closure, upon closure the Bank will, at your risk, mail to you at the address set forth above a check for the balance of your Accounts, less any service charges assessed to the Accounts. If deposits are made to the Accounts prior to closure inconsistent with the foregoing, the Bank will mail your check as soon as reasonably possible following closure of the Accounts. If you wish to make other arrangements for receipt of any funds remaining in the Accounts or if you have questions, please contact 1-877-691-8086 OPTION-NUMBER-1.
> Notwithstanding the Bank's intent to allow the Accounts to remain open until as set forth above, the Bank reserves the right to close the Accounts earlier, at any time, for any reason, without notice.
did you retype this? Assuming not, I just noticed they made the "if" -> "fi" typo twice and in two different ways -- interesting that what amounts to boilerplate can have that stuff get through.
> the Bank may close your Accounts at any time...the Account Rules do not require the Bank to provide you with advance notice of the termination of the Accounts
I assume most of the big banks probably have similar language, which would be a huge red flag to me for a small business account. But what about banks like Mercury Bank, mentioned in the article as being more supportive of small businesses? Do their terms of service provide at least some kind of guarantee about due process if the bank has a question about your account?
"A financial institution is not allowed to inform a business or consumer that a SAR is being filed, and all the reports mandated by the BSA are exempt from disclosure under the Freedom of Information Act."
Roughly, if you deposit more than 10K USD in cash, they will need to file this form with the OCC. And, a bunch of other activities qualify. There is no guarantee that this will result in account closure, not does it directly indicate illegal activity. This seems to be a myth online. In the industry, the SAR is regarded as a "get of jail free card" for poorly staffed compliance departments. "When in doubt, file a SAR!", then the bank cannot be so easily sanctioned for allowing illicit activities.
If a bank suspects you of money laundering, they cannot discuss it with you. A bank employee could go to federal prison just for leaking the existence of a suspicious activity report (SAR).
So, the guy who rushes up and parks his car right by yours in the otherwise spacious bank parking lot to block yours from view, the fellow wearing a mask, hat and dark glasses who's sporting a "Suspicious Person Here" flashing Caution button on his Tshirt, is he going to cause trouble for the bank's opinion of you?
But this is bullshit though? if they indeed didn't want you to know of the SAR they would have not closed the account and let you build more of a case to arrest you
Most SARs are innocuous, the feds aren’t going to run a sting operation every time someone is a little too suspicious for a compliance department to touch.
> In the U.S., SARs gather up in piles at the Financial Crimes Enforcement Network (FinCEN). Most are write-once read-never. The dominant way they are actually used is that, when someone comes under criminal suspicion for other reasons, law enforcement runs their name through FinCEN. That will, some of the time, turn up sufficient threads about their money laundering to allow investigators to send letters to the relevant financial institutions to get full account histories.
Had a similar experience at a startup I co-founded. Chase's risk or compliance team suddenly decided to close our accounts. Possibly because we were in the crypto space.
The Chase Sapphire card was rated as the best travel card. I had no idea that I had been flagged personally at the time I applied.
I can't remember why I chose them for a business account. At the time I was working under the assumption that this was a "lightning strike" type of event which could have happened with any bank. I'm more inclined to believe it's Chase-specific now, or at least more likely with Chase, esp. based on other anecdotes in this thread! I was also inclined to believe that most large banks are terrible. For example, I have experienced extremely poor customer service with B of A, and Wells Fargo is a very sleazy company. However, my experience with Chase is by far the worst I've personally experienced.
I'm a very happy customer of Mercury Bank for my current business, FWIW.
> I'm more inclined to believe it's Chase-specific now, or at least more likely with Chase, esp. based on other anecdotes in this thread!
The only reason anecdotes in this thread are about Chase is that Chase is the bank you mentioned in your article. If you had mentioned any other of the big banks I am sure you would get similar anecdotes. All of the big banks work basically the same way. For example, as I commented in another response upthread, they probably all have similar "we can screw your business any time we like and there's nothing you can do about it" language in their terms of service.
> my experience with Chase is by far the worst I've personally experienced.
Have any of your experiences with other big banks been small business accounts? If not, that's an obvious reason for your Chase experience to be worse.
I’ve had business accounts with almost every large US bank. I’ve founded quite a few businesses - venture-backed and bootstrapped product and consulting companies, going back to the 90s. I’ll repeat: I’ve never had an experience as bad as the one I had with Chase. Not sure what would possess you to
post something so condescending about a statement of opinion and then to make incorrect assumptions about the extent of my experience.
Also: the same company that got flagged by Chase had an account with Bank of America open at the same time and later opened accounts with a couple of other banks. No KYC issues with any of them despite exactly the same set of facts. And again, we did nothing even remotely shady or suspicious.
Correction from the poster I was responding to: it is not his article. My comment about why the anecdotes in this thread are about Chase are still valid, but I did not realize that the poster I was responding to was not the article's author. So I should have said "mentioned in the article", and the last paragraph of my post is irrelevant to the poster I was responding to. Sorry for the confusion on my part.
These banks are too big to fail and get bail outs funded by taxpayers (and SMEs), and yet SMEs are too small to matter and entire livelihoods can be thrown to ruins based on ahat is often a very subjective and often erroneous risk process. I understand banks have to comply with laws and often complex risks but i doubt they would shutdown accounts of companies worth over $1B unless youre violating some serious laws and even then it would probably be done with a lot more caution due to risk of law suit.
I doubt Mercury can do much more as arent they just a vrand on top of a bank? Like Heroku vs AWS.
For all of the complaining about banking majors in the US here on HN, why don't more people bank _intentionally_ with credit unions, or at least local banks? When you open your account, make sure that the branch manager knows who you are and what your pattern of business will be. Open your account wearing good clothes (suit, if possible), and share a business card with your account rep and branch manager. Think old school, like it is the 1950s, and it will be much harder for them to terminate your accounts.
> why don't more people bank _intentionally_ with credit unions, or at least local banks
Simply put, national access to those banks. Traveling business owners who deal with cash will have access to physical banking locations all over the country. You cannot deposit cash in San Francisco for a bank that is local to only NYC.
Woah, you picked a strange edge case. What legitimate businesses in 2024 fit this category? I'm pretty sure that you can deposit cash at any ATM if that ATM and your card have either "Cirrus" or "Plus" interbank network compatibility.
> I've opened another business account and a personal travel credit card with Chase, both of which were shut down within weeks
This pattern repeats itself frequently here on HN. My questions / advice are always the same. Did you send written letters to Chase to ask for an explanation? In parallel, CC the same letter (yeah, by snail mail, and tell Chase you are doing it) to your local and national banking regulators. I cannot believe you will get zero response.
What exactly is a "personal travel credit card"? I never heard that term before.
Believe it. Our account seems to have been closed due to a KYC issue, and the bank, by law, cannot tell you any details. See this comment: https://news.ycombinator.com/item?id=41333832
And, yes: we tried every avenue to get more information, including having an attorney write a letter. As you can imagine, this was quite concerning for our company. We wanted to understand if there was some piece of information that might lead other banks to close our account. As I mentioned in another comment, none of our other accounts were closed - only this Chase account.
I tried again to get more information when the Chase accounts I opened, for another business and subsequently a personal credit card, were closed, although by that point, the only logical explanation was my connection to the business bank account that had previously been closed and I didn't have much hope that I'd get an answer.
Also: to be blunt I'm not sure what gave you the impression that I'm looking for advice. I was relating an old anecdote that was relevant to the OP, not asking for help. I just stay away from Chase. At this point I know that I'm blacklisted with them. I have no issue with other banks.
> What exactly is a "personal travel credit card"? I never heard that term before.
"Personal" as in: this was a credit card for me personally, not a business credit card. My point is that I seem to be blacklisted by Chase even for _personal_ accounts unconnected to the business whose account the closed. I assume you've heard of a "travel credit card", but if not: https://www.nerdwallet.com/best/credit-cards/travel
Credit cards typically come in two flavors: cash back and travel. Cash back is self explanatory, travel cards reward points instead (cash equivalent of 1 point is $0.01 at least for the US). These points can be transferred to other accounts to take advantage of things like reward seats on airlines.
I had about $80,000 in IRA/CD's. I'd created & contributed to them over a period of 35 years.
Last year, it's time to retire, and Citibank won't give me half the money. It seems that some CD's are for "Cliff Stoll" and some for "Clifford Stoll".
Citibank Retirement demanded a "Marriage Certificate, Divorce Decree, or Court Order" to demonstrate that "Cliff Stoll" is the same person as "Clifford Stoll".
Took more than 8 months, dozens of emails, five visits to Citibank offices, and a letter to the Citibank president, to shake loose money that I'd deposited across three decades.
Related to an earlier comment I posted on a different thread https://news.ycombinator.com/item?id=41316889 , I didn't name the "national bank", but I now feel perfectly comfortable outing "Citibank" as the national bank that I will no longer (personally) do business with. Corporate stuff is a different matter.
As a matter of policy, they do not empower their front-line (personal) banking CSR reps, and even 1st-level escalation folks. They're basically nothing more than stenographers.
After 20 days of back-and-forth with non-answers, I finally sent them a certified letter giving them 30 days to "take action" or "explain non-action" on a specific dispute amounting to ~$5k.
The responded with a non-reponse bizarre marketing letter in 10 days.
I called to verify the prior letter was "on-record" in my account. Given the nature of the postage, it was already verified delivered.
Moving forward, that 15 year+ line-of-credit is just going sit on their books until they close the account. There is no longer a fundamental basis of forthright communication, confidence in competence, and trust to move forward.
> As a matter of policy, they do not empower their front-line (personal) banking CSR reps
This appears to be the original sin in most of these scenarios.
Eventually, automation and predictive analytics will break.
If you do not have a customer service org empowered and staffed to (a) investigate what went wrong & (b) make it right, then you will lose customers.
And maybe you're fine with that trickle, but know that the Kafkaesque burning of a relationship means they will never do business with you again.
For all its faults, Amazon is an example of a company that still remembers this and seems to empower its support folks. As a counterexample, I severed a 20 year relationship with Bank of America because they disempowered their retail staff to the point of uselessness.
Truth re:Amazon. I think my longest support call with them (~30min) over decades of service was with their pharmacy and the root cause turned out to be related to the Change Healthcare hacks.
Even though it wasn't their fault and they could do nothing, at the time, to source the medication, I received instant credit (very expensive med) and they even talked to my insurance (with me on the line) to smooth-out the instant re-issuance of the prescription with an alternative vendor.
My worst experience with Amazon was a rogue computer system re-flagging a refund as erroneous. It was annoying to have to go back 4 times, but every person I talked to was empowered to reverse the charge, and the last one knew how to stop it for good.
> After 20 days of back-and-forth with non-answers, I finally sent them a certified letter giving them 30 days to "take action" or "explain non-action" on a specific dispute amounting to ~$5k.
> The responded with a non-reponse bizarre marketing letter in 10 days.
>I called to verify the prior letter was "on-record" in my account. Given the nature of the postage, it was already verified delivered.
What was the purpose of the certified letter? you can use that in court but did you take any further action?
To verify they received it, signed for it, and to, essentially, guarantee that it would also be logged into my account. Emails are supported in court, but a certified letter or courier service has, essentially, zero grounds for evidentiary hearing challenges.
The purpose was to layout an explicit log of prior communications and the terms of any/all communications moving forward (only physical mail), actions they needed to take if they wanted the account to remain active, and a time frame under which they needed to take those actions. Franky, just bog-standard financial dispute stuff.
Cleaning out my attic last month, I just found a stash of punch cards left over from the 1980's. Some paper-tape that has my phd dissertation. And a fortran manual from my high school's IBM-1620. Oh my...
I read your book for the first time a few months ago after someone here recommended it. I was hooked. It took me back to my beginnings (99/00) when the internet was different, when we had dial up and there was still discovery.
I appreciate the time you put into writing it — and the nostalgic enjoyment it brought me.
What are you up to these days? Were you able to predict or see the advent of modern AI and LLMs coming from earlier in your career? Thoughts on the future of computing?
All truth is one. In this light may science and religion labor here together for the steady evolution of mankind from darkness to light; from prejudice to tolerance; from narrowness to broadmindedness.
I'm having the same issue due to changing my surname (male). So far I've mentioned that millions of women experience name changes during marriage... to deaf ears.
The good news for this is that my primary stock has gone up 80% (since this issue became apparent, just two years ago), and it has encouraged me to live more frugally. Eventually?
Unrelated: thanks for the awesome Klein Mug, Cliff!
Millions of people experience name changes… and have to file paperwork. I don’t know how many copies of my marriage cert I’ve had to send out now. I had to send one to a multiplayer video game company to change an account name, for example. It’s not just a given that you can change your name on certain records!
I've had some weird experiences related to my address although none were really a serious problem. My street name changed (probably when an interstate spur was put in about 40 years ago) and I still have issues now and then with geolocation.
>My street name changed and I still have issues now and then with geolocation.
This happened at my previous house, except with an additional twist: the street name was changed to an identical streetname, less than a mile away, but within a different city.
Adding to the confusion, my address was duplicated on that other street with a commercial brokerage which often gets sued. How do I know about these lawsuits? — because several process servers showed up (over about eight years living there) to sue the other address. They never believed my factual explanation: the numbers repeat on the same road, so closely ("yeah, ok buddy").
Usually just accepted the documents/lawsuit, then drove up the mountain to give it to the intended recipient. The first time this happened, business was closed... so I just taped it to the door (and then the owner came out LIVID, thinking I was the process server...).
Only once did the process server actually look on his phone to see that there were in fact two same-addressed properties (and obviously mine was residential).
Of course, what you did was the kind and polite thing but would the process server have any recourse to, "You would be failing to serve that notice if you leave it with me"?
Many decades ago I transfered my money from the USA to Europe. Nothinf much but I didn't want to cross borders with wads of cash even though it's perfectly legal.
I had to give my origin bank everything imaginable, including address, phone, fax of both the destination bank as well as the branch.
All of my ID obviously and the destination account number.
Weeks later I get a message from my destination branch saying they got some money in USD for someone that had a subset of my name but no account information whatsoever.
I said it was for me and thankfully that was it.
What happened?
Eventually I got something that looked like a traceroute of the transfer.
The origin bank used Citibank as an intermediary and at that step everything but the amount, name of the destination bank and my first and last name was lost.
Early this year they messed around with a credit card account I had with them. I immediately said fix it or I cancel today, they refused, I cancelled the account and they've been nagging me to come back for 6 months. Fuck no!
Aside: Hey Cliff, love your work and efforts, glad to hear you're retiring too.
Yeah, we had another issue with Chase like yours and the article's. Finally got around to letting Chase know that a family member had died, took a little while, because, duh. We were all on the accounts together. So, Chase then goes and makes us all down as dead. Freezes everything, then started up the process to put up the money for probate to our various estates (?!). Luckily, we get daily emails about this and were able to go and start everything back up again. It's still no where near finished up, after about 5 months of weekly visits. They managed to make us undead in their system, but then a week later it would revert. No one ever knew what was going on and still don't. Eventually managed to get a check of all the cash in the checking and savings accounts and have gone and put it all with a local credit union. However, about $120k of retirement savings from my dead family member are still locked up in Chase. No amount of records from the county or newspaper obits or hospice forms can convince Chase that the deceased is actually dead. They, and I am not joking here, said that my family member has to sign off on declaring their death to Chase.
Chase, never again.
I want to be clear to the other readers here: This is your warning that 'something is rotten in Denmark'. When another large fiscal crisis starts up again in ~3 years, you'll now know it's because these banks have become too big to operate, not just fail. Cleaning out that mess is going to be a lot harder than 2008, as all their internal records stink.
Thanks D'moy! I'm still having fun with Klein bottles and other topological manifolds. Toying with immersions of the projective plane and several knot embeddings.
At the moment, retirement mainly means "start taking out required minimum distributions".
All the same, I wonder: How do you retire from a marginally profitable nano-business built upon glass mathematical shapes? How'd I ever reach 74 years old?
Find someone interested in continuing that business under a long term (royalty or such) or short term (lump sum) financial arrangement that is acceptable to you? I think there will be interested people, maybe even within this community (not suggesting I’m one of them, though).
There are lots of us that made good money over the years and your books were important to lots of us.
Sell signed copies of your books for $1000 at the klein bottle store so we can buy them. Let us help you have fun in your retirement! (A signature or signed bottle would be awesome too.)
How was it possible for both "Cliff Stoll" and "Clifford Stoll" to exist? Shouldn't your legal name be used as it is (i.e. no nicknames) on all papers? Or did you change your legal name?
Names are fuzzy things, and what you write on a piece of paper can change. What's on your ID can change over time too.
I've known people who couldn't get their name into the system (no last name), couldn't fit their names into the system (two last names, no hyphen), changed family name (spouses), change first name, put in a different first name (sometimes Timothy, sometimes Tim), their name didn't _fit_ in the field (too many characters, unexpected character encoding), trans people.
This should be expected by computer systems, and expected by staff.
I can walk into my credit union's offices - they have just two branches - and talk to someone with decision making power. An actual human being picks up the phone if I call. Their customer service has been impeccable despite some complex asks.
I am unlikely to be able to do this if someone steals my crypto.
(My security question when calling in was once "you sent an email last week that made my boss very happy, what was it about?")
Pros of a credit union: many processes are still manually-controlled
Cons of a credit union: many processes are still manually-controlled
There's a lot of scenarios where that's the lesser of two evils, though. And god it's nice to be able to walk into a branch, explain the situation to someone, and get "Let me see what I can do. There, all fixed" in reply.
At my previous credit union (before moving), the local branch manager knew me and my family (mom, husband, etc) by name. And she either (1) had actual power to make things happen or (2) could just call the person that did in any given circumstance.
This is a medium sized credit union, with a dozen or so branches.
Banks are for-profit and credit unions are not-for-profit. Banks will do whatever they think they can get away with to increase their profits, which affects every interaction you have with them. I've had accounts at Citibank and now multiple credit unions, and I regret ever having had accounts at Citibank. They were constantly making things difficult in new ways. I don't know how the bureaucracy compares, but how they treat customers is definitely different.
The main difference is size. I have an account at the #4 biggest credit union by assets. It would be about 80th if banks and credit unions were ranked together. I previously had an account with what's currently the 4th largest bank, and it was a totally different experience that I won't repeat.
At that level of assets, you're usually not thousands of branches, it's probably just tens, and the organization is small enough to be based on empowering people to use their brains as opposed to strict script following and zero thinking.
Credit unions are a bit more flexible than a small bank though, because of shared branching. It's not as good as they say it is, but you can go to selected other credit union branches and get limited teller services.
I feel bad for the people who went through this Kafkaesque nightmare.
> After months of back-and-forth, [...] I finally got my money.
I didn't find any mention of a lawyer in the article.
When you realize you're dealing with people who aren't operating in good faith, seriously consider consulting a lawyer.
(A harder problem is realizing when people aren't operating in good faith. Especially if you're a Pollyanna, or decent folk dropped into the big city.)
> consider using my referral link to open an account with Mercury
I'm not going to click a kickback link on a piece like this, and I'm going to disregard the recommendation.
If the goal is to warn people away from something, or to make a positive recommendation for something else, why add an obvious conflict of interest that didn't have to be there?
It assumes you know which one was first, the chicken or the egg.
One option is that the author found/got a referral deal with an alternative provider, so thought they could write this article complaining about a competitor.
Or... They were so pissed with Chase due to this nightmare they had to go through, they looked for alternatives, found something, so they mentioned it in the post.
Disregarding is fine as you don't know if they are honest, at the same time I wouldn't attribute evil intentions either.
It's like when a native iOS developer says the best apps are truly native. It could be that they tell you that so that you hire them and their niche stays strong... or they really believe it and that's why they are iOS developers.
after my money was withheld i messaged a mercury investor to see if i could get set up asap, they set me up so i could get paid and reroute all my payroll.
I think online is so saturated with disingenuous influencers, that we've gotten acclimated to a lot of conflict of interest behavior, so it doesn't jump out at as as a potential problem.
yeah this sounds like some kind of corporate fraud, i imagine they were blocking people out and moving their money around to cover their own books after something went wrong, there should be a payout
I still have a different business checking with a Mercury-like fintech provider. Chase freezes accounts, Fintech startups go under.
Chase already froze my business credit card once. I had to send them a deed of a house that I had already sold. It made little sense.
On the fintech bank side, my biggest client cannot make transfers to that account. Their payment system throws an error when they try to ACH to it. That plus the news about Synapse going under made me want a chase.
So I don't really know what to do. I now have multiple business accounts, multiple personal accounts. I want to find like a good credit union maybe?
What's clear is being in small business requires building tolerance for money uncertainty that wasn't as necessary when I was an employee.
I feel for the author. That all sucks. I enjoyed the 'Yuppie Nightmare' reference. Many thanks for sharing.
I got a letter from Citibank demanding I prove my business was legit. I sent them a "secure message"(on their online site) containing the documents. But(according to them) they could not open those secure documents. They called me and asked for the password for that secure message. That was of course a red flag so I went to the local branch and asked them to send those documents to whoever it was that was requesting them.
Going to the local branch stopped them from sending any more demands for documents so it seems it really was Citibank who had sent those demands to me. But for them to ask for my password in a phone conversation is a huge Red Flag right? And they never sent me a confirmation that issue was resolved.
I should have reported them for asking for my password, but did not know where should I submit such a report.
> In the specific case of “Why did the bank close my account, seemingly for no reason? Why will no one tell me anything about this? Why will no one take responsibility?”, the answer is frequently that the bank is following the law. As we’ve discussed previously, banks will frequently make the “independent” “commercial decision” to “exit the relationship” with a particular customer after that customer has had multiple Suspicious Activity Reports filed. SARs can (and sometimes must!) be filed for innocuous reasons and do not necessarily imply any sort of wrongdoing.
> SARs are secret, by regulation. See 12 CFR § 21.11(k)(1) from the Office of Comptroller of the Currency:
> No national bank, and no director, officer, employee, or agent of a national bank, shall disclose a SAR or any information that would reveal the existence of a SAR. Any national bank, and any director, officer, employee, or agent of any national bank that is subpoenaed or otherwise requested to disclose a SAR, or any information that would reveal the existence of a SAR, shall decline to produce the SAR or such information, citing this section and 31 U.S.C. 5318(g)(2)(A)(i)...
I used to have a side gig as the CFO for a not-for-profit (an unpaid volunteer). Anyway, this organization was over 125 years old, associated with a larger organization 80 years older than that, and had the same primary bank for 70 years ... Anyway, my treasurer, who was very smart, insisted we keep enough cash to run for 3 months in a secondary bank. Just in case we were locked out of our primary bank.
Not quite the same scenario, but it makes me think of how a startup I know dodged a bullet with the Silicon Valley Bank collapse [0] partly due to having some other money elsewhere Just In Case. (But in a major part due to bailouts, of course.)
The most important lesson learned here is not to ever deal with retail banking at the branch. Not only do they not care they aren’t given the authority or autonomy to help you.
By trying to do this at multiple branches across the country OP likely made the problem worse as those actions raise suspicions even more.
With that much money after the first day of inaction by support he should have CC’d every department from legal@ to the C-suite.
At the small regional bank I used to work for accounts were assigned a home branch, typically where the account was first opened, and that branch had enhanced responsibilities in terms of servicing and maintaining the relationship.
Chase is big enough that their KYC fallout queues probably have an entire team working them, and it wouldn't matter who else you CC on the email.
("Hey Joe, come quick! Just got an email from someone claiming they need their money we just froze...")
> Chase is big enough that their KYC fallout queues probably have an entire team working them, and it wouldn't matter who else you CC on the email.
The trick is to become so incredibly annoying that some CxO / VP is going to bump you ahead in the queue and assign a dedicated customer experience manager.
Personally, if a bank were to steal $180.000 of my money, a few weeks in I'd probably start considering sticking "Chase is a criminal organization" posters on the doors of their regional headquarters, or getting tickets to industry events just so I can ask them at the Q&A where my money is. They may think "computer says no" is an acceptable answer, but that doesn't mean I can't make their life a living hell too - so why not make my problem our problem?
>The trick is to become so incredibly annoying that some CxO / VP is going to bump you ahead in the queue and assign a dedicated customer experience manager.
Hard to be annoying when they can just completely ignore and redirect it to /dev/null
There's quite a lot you can do which isn't illegal, but is incredibly annoying. Such as renting a billboard on the CxOs daily commute route or near their golf club. They might be able to personally ignore me, but can they also ignore their golf buddies asking questions about it?
But this isn’t a KYC issue and clearly escalating worked.
Any time I’ve ever had issues that weren’t resolved within 24hrs by t1 support I’ve sent a succinct, mostly emotionless email to anyone I could find and it’s worked every time. Phone companies, banks, hell even the government.
Can confirm KYC really helps (in reverse) at small/regional banks. Shout-out to Midfirst Bank https://www.midfirst.com/about-us for walking the walk.
I deliberately flow a higher percentage of transactions through my, literally 10 min walk away, regional bank branch. I also occasionally (~once/month), literally walk into the lobby (shocking I know) to say "hi!" when withdrawing cash at the ATM for travel.
They know me by name & face. I'm not just a number to the tellers, the manager, and the vp, and likewise back to them.
Shockingly, I get fees waived for wires the occasional cashier's check, and am appraised of anything else going on with the website, upcoming services, and pending transactions (even at high relative holding percentages from one-time routes) flow through like butter.
I would've had a lawyer on retainer within the first week and had them in touch with the legal department until I got my check. We've had similar weird issues with our home address and the mortgage company that suddenly got cleared up when we put our lawyer in touch with their lawyer and there turned out to be a very simple form and process for changing the address of the property.
It's definitely exacerbated by being a big bank though. If I have a problem with my local bank, I can literally walk into the branch and probably just talk to a VP about it straight-away if needed.
This is a legal thing - a vice president or above is required to sign off on a large loan (like a house loan which isn't all that big to a bank). Thus banks give lots of people vice president titles, but those people don't have any authority except to give the large loans. They get an impressive title though.
Add in the co-op network of credit unions, where you can go to any branch of any of the member unions (50k+ branches last time I checked, but it's been awhile) and it's hard for me to understand why people bother with these big banks.
FWIW, at least near me, credit unions seem to be providing their customers access to shared branching without providing shared branches.
You can't just go to any branch, you've got to confirm they do shared branching. And then they may likely have withdrawal limits that are pretty low. I recently tried to pull $2,500 cash to buy a project car, and couldn't get it done in one day. If I had a big bank, I don't think it would be an issue; or if I had an account at a local bank or credit union with a convenient branch.
The only reason I'm not currently banking at a credit union is because my wife prefers banks. I can't understand why she does, but ultimately marital harmony is worth more to me than using a credit union. If it wasn't for that, I would never have left my credit union in a million years. They rock.
Chase stole about $900 from me from an account I setup just for freelance income. This was during the pandemic when I had to take a 2/3 haircut in my day job to keep the company afloat (we did, and all is well now). Every time I'd try to reach out to try to get answers, I'd get bounced around among different foreign call centers. After months of trying to resolve it I just gave up. (I could and should seek legal recourse, but I just didn't have the emotional energy for it at the time)
I will never do business with them again, even though their many branches (literally have one across the street from my office) would make it convenient.
Chase really has the worst phone customer service. I foolishly used one of their 0% interest promos to buy some hardware and when I was charged interest anyway due to their screwup in how my payment was applied he told me:
> “since you have enough money in your account to pay this off I don’t know why you are using this plan at all. These are intended for low income customers”
I went to Chase Bank to withdraw cash for a Facebook deal, and they refused because I didn’t have their app. The teller couldn’t verify my driver's license or passport, insisting the only way was through their app's 2FA. This is exactly why I stick with credit unions—where I can work with real humans who actually help.
> I want to make it clear that Chase could've been an excellent banking partner. I never gave them the chance. I never told them what my business does or what I'd use the money for. I never talked to anyone (besides saying what I needed to get off the phone). This story isn't a cautionary tale about Chase, it is rather recounting my naivete as a young, first-time startup founder.
Entrepreneurialism and nanny states are fundamentally incompatible.
If Chase or any other bank has to know what you had for breakfast in order to hold your money for you, then you shouldn't bank with them as you'll never know when they randomly decide you took money from a bad man and then hold your financial life hostage from you.
Because banks deal in finance, which is an arena rife for fraudulent activities. For example, in the us, personal savings accounts with large transactions (deposits or withdrawals over $10,000) get flagged under the 1970 Bank Secrecy Act[0] as a way to curb money laundering and related events.
You're correct; a bank isn't your parent. And, you can choose where to put your money for safekeeping. As can businesses.
But, as mentioned before, finance draws in scammers and con artists (sometimes those aren't even the bankers!) and extra measures are taken to ensure that nefarious activities are mitigated. This includes actually knowing about a business and the ownership (or authorized representative) who want to bank with an institution since corporations can easily keep beneficiaries well hidden.
Further, as businesses grow they may need more capital and other financial instruments (eg - stocks), all of which present a risk to the lender if the business isn't well understood, which could lead to unfavorable rates or declination for the business. The business can shop around, of course, but the result might just be the same and then what?
I don't really know where I'm going with this comment, but I guess the point is that Chase, et al, have regulations to follow and some of them suck.
I'm also not out to necessarily defend Chase, but as a checking account holder i haven't had anything but a great experience. And, there's no one I'd rather have on my side than the douchebags at Chase when I need to cancel or retract some financial transactions.
Ah, you are right! it's been a while since I read the post, and I mis-remembered it as being more negative about chase than it was. I'll edit my comment as such, thanks for pointing it out
Word. Sorry if my comment came across as snide. I sometimes forget that inflection doesn't translate well to text-only discussions.
It was a great post and very informative, especially the part about bank account being open after transferring all the funds out. I guess this is why some of the seemingly useless planning meetings we all have are actually necessary.
Business or Personal, do not ever rely on a single bank. Ever. Have a backup, ideally far enough from your "main" bank that any issue doesn't bleed over.
If a bank suspects fraud, they can tell other banks about their suspicion, which will cause all banks to freeze your accounts and none will be able to tell you why.
Especially if/when a person or business goes into the ChexSystems "blacklist" [1] where that individual or business can't have a bank account in the US, Canada, and EU for five to seven years.
Would this also apply to credit unions? I feel like a credit union is less likely to give a f*** about what some bank tells them, and a bank probably doesn't want to help credit unions anyway. Am I wrong?
I think most are scared about the law. "You had information that X was linked to a terrorist organisation, and yet you still let them open an account and transfer $Ym?. Big fine and/or prison".
I have been burned by a bank (stagecoach in red field) very similarly.
I now only do my financial transactions with smallish credit unions. Big enough that they can have the services I need, but small enough that my business is a large-ish part of the Unions' business.
This works internationally, not just US or Europe. Most nations have some sort of a member-owned financial cooperatives, equivalent to credit unions.
Why would you say "stagecoach in red field" instead of Wells Fargo? I don't get why people are so coy about calling out terrible companies by name publicly. They're not going to kick your door in and shoot your dog. Do you think Wells Fargo (the terrible shitty bank) is going to actually search through HN looking for instances where users said their company name "Wells Fargo" and linked that company name "Wells Fargo" to their reputation "terrible and shitty"? When they find your username, are they going to scour the web to find your real name? And then, when they do, what then? You probably no longer do business with them so there's nothing much they can do in retaliation.
I presume you are either in the US or Europe. I understand your point. Alas, not everyone is based in countries where civil liberties are not completely eroded. That said, even in the US civil cases with or without merit can destroy a business and individual.
Happy to edit out my comment if you're actually personally worried about your safety. Although I can't imagine companies having that much free time, no matter what country you live in.
Yeah their abysmal handling of my wife's stolen checks convinced me that we need to dump them as fast as possible. One of the agents basically said "I'm not even going to bother asking my manager to expedite the funds. Don't even bother. They're just going to say no." My wife insisted, and so the agent went away for 60 seconds and came back and said "Okay those funds are back in your account have a nice day." Every interaction with their agents from their fraud department to the regular CSRs went like that. Even getting them to freeze the account didn't happen with the first or second agent she talked to.
It probably wouldn't hurt you to make a lawyer acquaintance and put one on retainer. A few hundred bucks upfront and you'll have someone you can call to help take care of things like this.
I can absolutely see myself falling into that same trap. Thinking that it's just a misunderstanding and that it'll get resolved any day now, just have to do one more thing. They can't be that unreasonable right? The unfortunate lesson that that you have to assume the worst and escalate right away.
You need access to a good lawyer or you're going to get run over. When you sue, you can sue for legal costs, damages to your business, and punitive damages.
there are some very few aspects that can be positives under some conditions (speed, informality, etc.), it is almost certainly outweighed by the negatives.
I've never used JP Morgan or Chase, but I recently inherited some stock. There was no way to transfer the stock in-kind to another brokerage, for some reason it needed to go from a JP Morgan account to another JP Morgan account. (I didn't want to cash the stock out immediately because I couldn't get info on the basis and what the capital gains taxes would be).
Anyway, sibling knew someone who worked at JP Morgan private bank and they were willing to do all the work so I said "sure".
Turns out Chase and JP Morgan are integrated on the backend but not Private bank. So the transfer couldn't go through.All in all this was 15-20 emails and multiple phone calls.
And then I was told to open a Chase individual investment account instead.
Not wanting to continue to burn time during work hours when I was super busy with a project, I drove 20 minutes to a Chase branch to open an account with an investment banker to make sure all went smoothly (instead of doing it online).
He couldn't open the account for me, couldn't get anyone on the phone, either. Turns out that the backend is connected enough with Private Bank that I had a profile in their system, but he couldn't "do" anything with it.
A few more emails and phone calls and the Chase investment banker sent me a link to open an account online. So I do that and let the banker that controlled the original stock account know the account details. But he still couldn't transfer the stock. That private bank profile still causing problems I guess.
I was given an 800 number to call private bank to get them to close the account. I spent about a half hour on hold before I hung up. I then contacted the banker I knew at Private Bank and informed him, he said he'd take care of it. Later that day he emailed me and said he had put in the order and I would get a confirmation.
I did get the confirmation but was informed it would take a few days. Once that was done I contacted the broker that controlled the stock account. He tried again, no dice.
He then decided to get licensed in my state so that he could create the account for me. That took another week or so.
And, I was told to close the Chase account. I did that, again, a couple days. By this time I'm 20-25 hours in with phone calls, emails, conversations with my siblings, have driven into the city twice, and so on.
Finally, after about an hour on the phone the next week, the broker creates my account and is able to execute the transfer. Of course, by this time the stock market had tanked and the stock had lost ~20% of its value, meaning I netted less than my siblings, and spent a ton of time.
> I didn't want to cash the stock out immediately because I couldn't get info on the basis and what the capital gains taxes would be.
You'd need to figure that out eventually anyway. Better sooner than later.
But in any case, you could have sold the stock, transferred the money, and then re-purchased the stock and simply reported it as a wash sale.
> by this time the stock market had tanked
That can go either way. I've had stocks that I wanted to sell get held up, and go up in value in the meantime. So you have to just chalk that up to fate.
>You'd need to figure that out eventually anyway. Better sooner than later.
100%
> That can go either way. I've had stocks that I wanted to sell get held up, and go up in value in the meantime. So you have to just chalk that up to fate.
My plan was to immediately sell 50% of the stock (it was at an all-time high) immediately but now plans have changed. Oh well.
That's basically what it is, but for some reason it took some time for the folks at Jp Morgan to figure it out. Probably because the person involved died years ago? I dunno....
I had a similar experience with US Bank. Business account, over $50k lost; they said that they can 'terminate their relationship with me at any time for any or no reason whatsoever,' and didn't have to return the money.
The Fraud and Trust VP seemed shocked when I mentioned to her that it wasn't a big deal for me, and that I had my personal accounts with a credit union.
Consider also that you probably could not sue your Bank if you wanted to. All the small print you agreed to.
This was brought to my awareness due to the recent news about how somebody could not sue Disney because they had opened a Disney+ streaming account.
We need financial reform customer protections. Let us hope the party that fights for big businesses and billionaires does not win in the next election.
Ugh, that lawsuit is the new McDonalds hot coffee.
Front line lawyers at megacorps will respond with anything and their argument about arbitration because of Disney+ (they also claimed arbitration because the plaintiff did in fact also buy a park ticket on their website) was withdrawn shortly after the media shitstorm.
Right, but there must be a reason why the Bank put that clause into the fine print. It must be beneficial to them, I assume, else they would not have included that clause right?
I feel bad for you and not a fan of Chase’s behavior here but I would never open a business banking account in a country different from the one I’m living in unless I had an extremely good reason (like a statutory requirement). Particularly if I hadn’t fully secured permission to be in that country.
Even then, if I was going to do it I would want to be sitting physically across from a bank officer to make it happen, not online. I opened business checking from BofA online years ago and it was a total nightmare even living a short walk from the branch, being a US citizen, etc. They did freeze it once or twice. Never again.
The real question here for the author is: What are the three banks that you now use? We use high availability and redundancy for everything else, why not business?
Mercury back isn’t a solution. They closed my account the first week it was opened. I didn’t need an extra bank account but I wanted to open 2-3 at the time and did so without any other issue at the different banks I chose.
I’ve used chase and other big banks to nonissue outside Zelle crap.
So I’ll wait to see the same thing with mercury. But my experience with them sucked and whenever someone Hails they were their savior I will post my experience.
I feel like these sort of corner cases likely can happen with any bank.
The real question is: why did it take months of having their vital money withheld before trying to go around the bottom rung support that was clearly not going to help? By like week 2 I’d be talking to an attorney and I bet a letter from them would get it cleared up fast. (Perhaps I’m wrong though.)
I was in Canada, and I was also quite stressed with some keynote presentations I had to give, planning my move back to the US, and applying for my O-1 visa.
I figured I'd sort it all out by the time I moved. However, I may have been a little too relaxed about the situation and stressed out about other stuff
I went with someone from my family to close a bank account. The bank teller received an error message that said something like "please visit the bank personally". It was a message on her computer.
Is that on the shitty bank rules, or shitty software? After 2 hours and the bank stuff calling some helpdesk they managed to do it.
Is there a bank you recommend? Mostly I use online banks but every now and then you just need to go to a physical bank. I am a bit nomadic so one with branches all over the country would be good, although I know those are the most likely to be terrible
Most credit unions participate in the credit union shared branching network, so I recommend joining your local credit union of choice. You can then go into the branches of several other credit unions to do most banking needs.
The caveat is if there's a major problem, like here, then you'd need to deal directly with your home credit union.
Oh wow, I had never heard of that. I already have a CU on the other side of the country that I still use for loans because they've always had the lowest rates. I'll have to see if they participate.
Let me explain this to those who are not familiar with the American system of kleptocracy: Banks freeze account to steal the money, not because they suspect wrongdoing. The protagonist in the article finally showed Chase it would be more expensive to keep the money than to give it back, so they gave it back.
I've had issues with both my personal and business accounts at Chase. Mostly due to the inept local branch manager. I've also had deposits flagged and delayed from clients that have been paying me for years with never an issue previously.
I'd love to switch to a new bank. Any recommendations?
The main differences between banks and credit unions are that banks are for-profit institutions owned by shareholders, while credit unions are not-for-profit organizations owned by their member account holders. Credit unions typically have lower fees, higher interest rates on savings, and a focus on serving their members' financial needs, rather than maximizing profits like banks. Credit unions also have membership requirements, while banks are open to the general public. Lastly, banks are regulated by federal and state banking authorities, while credit unions are regulated by the National Credit Union Administration.
Credit union deposits are insured up to $250,000 per depositor by the National Credit Union Share Insurance Fund (NCUSIF), which is backed by the U.S. government. This means that even if a credit union fails, members' deposits up to the $250,000 limit are protected, similar to how bank deposits are insured by the FDIC. So credit union members generally do not have to worry about losing their money as long as their total deposits at a single credit union do not exceed the coverage limit.
A credit union is ultimately owned by its members, and generally serves internal interests over pure profit. As a result, they tend to usually be less cutthroat and have lower fees, but also lower interest rates on the flip side.
Everyone wants to open their first bank account in one of the big banks, I was one of those. Later I found out that not-so-famous big/small banks are far superior for SMBs.
Revolut, Mercury, Meow and Payoneer (Personally using myself) are all leading online businesses.
Payoneer should be not be on that list. They recently shut down our account with zero warning. Fortunately we did not funds with them, but the account was 6 years old and had processed a considerable amount of funds outgoing to contractors.
Have you tried contacting Payoneer to find out what actually happened?
Sometimes, their built-in protection system flags unusual activity and takes action but that doesn't mean businesses using Payoneer should stop promoting Payoneer.
good ole “anti-money laundering” (AML) system false positives. Generate too many of these and the risk departments can unilaterally close the accounts.
If you ever needed a reason for a decentralized finance, this is among the top reasons.
Diversify your banking. Every individual and business shoudl ahve at least two completely unrelated banks. I actualy reccomend one be a credit union. Ift gives you a fall back position to protect against this kind of situation.
These days, its best to always travel with a retained team of attorneys, ready to intimidate and threaten litigation against anyone that tries to treat you like a kafka protagonist.
I know someone who had an almost identical experience with CIBC in Canada: accounts (including payroll) completely frozen, nobody to contact, nobody who can help. Never found out the reason, either.
I think this situation, while extremely unfortunate, is just the natural consequences of how banks are regulated in the US. The big banks face a constant threat by the government: if your customer does something illegal with your product, YOU will be fined millions of dollars. Therefore, if your activities have any resemblance of money laundering, they'd rather lose your business than lose millions. Different banks have different "sensitivity", and Chase, unfortunately, is one of the more sensitive ones.
What are the solutions? Laws should be passed to protect customers' rights in the event of an account closure; banks should probably be provided some safe harbor so they aren't as skittish; and in the meantime, bank with a smaller credit union that have a smaller target on their back, and also if something breaks you can yell at someone who can actually fix it.
In 2008 Capital One did the same thing to me. It almost destroyed not only my business but also the rest of my life. They were completely unwilling to work with me and they said that they suspected fraud. There was no fraud, I proved there was no fraud, they still kept my account locked for over 30 days.
Yeah no one tells you when you start your business that your own bank is preying on you.
By day 2 I'd have filed a lawsuit seeking over $5-million in combined actual and punitive damages. You have to speak the language they understand, anything else is a waste of time.
When I read these kinds of stories, and the comments on them, I feel it would vastly more useful for people to document positive interactions with financial services.
Am I shilling for banks? I hope not. It just seems that at this point anyone who imagines the banks are going to work for you, the customer, has not been paying attention and/or is delusional.
Finding out that SolarFlower Bank in Hometown, Your State has provided exceptional banking services is massively more useful than hearing, once again that BigBankCorp are terrible.
Apparently banks can be tough to work with for obscure reasons.
Own little case:
While in NYS (US, New York State), did personal banking with, false name, XYZ Bank. Somehow I was assigned to a particular branch office of XYZ in NYS.
Moved to TN (Tennessee). Eventually ran out of paper checks, so ordered a new supply. The account was "joint" with my wife; thus, her name was also printed on the checks. Since my wife had been dead for 20+ years, I guessed (first mistake) that it would be more appropriate to have her name removed from the new batch of checks I was ordering.
Did get the new checks and used a few (mostly I don't pay with paper checks).
Then got some communications from "my" branch office of XYZ bank in NYS that I should come to the branch office and sign my name to show that I am the real owner or whatever of the account.
Apparently due to the new checks without my wife's name, someone at XYZ Bank was afraid that I was doing something nasty to my wife, to separate her from our joint money, etc.
Soooo, they wanted me to drive from TN to NYS for WHAT THE F????
So, I called and got sent to "my" XYZ Bank branch office in NYS.
On the phone to that office I explained:
"My wife died 20+ years ago. You are welcome to drive to Indiana, to the little town of Warsaw, take the main road south out of town, drive about 15 miles, turn left, east, to the little village of Claypool. There you will find a school and a church. The church has a graveyard. There you will find the tombstone of my wife ....
For my signature, you already have hundreds of copies of that. I will NOT drive to NYS. For more I will gladly talk to you. But I will not talk to lawyers. If you involve a lawyer, then I will immediately close out my account. If you want, I'll order a new batch of checks that again has my wife's name printed on the checks."
That worked. Otherwise I like XYZ Bank a lot. But, since XYZ Bank has no branch office near me in Tennessee, really I should get an account with a bank with an office where I live. Actually, while in NYS, I did open a "business" account at a branch of Chase. It was a small branch, small office, no Greek columns, just a few nice women, trying to be a local bank, for businesses, yes, but also for consumers. Likely gave them the form I'd just gotten from NYS "Doing business as". Checking, Chase does have a small branch where I live. And I have a small balance in that account.
Hmm. Sounds like anyone with a SMB (small, medium business) should have more bank accounts, not fewer!!! Sounds like, before my business starts getting revenue, I should get an account at a local bank where I can be known in person and use that as my main business bank.
Also lesson: Banks are legalistic, have too many rules, have low common sense, like lawyers too much, can be simplistic close to brain-dead, tend to be paranoid, and can generate expensive legal problems. Go slow on crypto, more than the necessary one LLC (limited liability company), etc.
Addendum:
For this discussion about banking,
we all should understand at least a little about financial institutions
See my comment above. My company did nothing wrong, nothing even remotely shady. We were a C corp with a typical mix of investors - angels, Sand Hill VCs and CVCs. We were subject to extensive due diligence by investors. I've never had an experience like I had with Chase.
Surely you can understand how a bank would be more skeptical about an account holder who lives in a different country, is a citizen of another country, etc? Not saying he deserved it (Chase sounds pretty infuriating) but similarly saying something is legal is not the same as saying it should not be a fraud/crime flag.
Crypto solves this. Well, eventually, after initially making it worse, because all your crypto-adjacent transactions in the meantime make legacy banks extra-hair-trigger suspicious.
My local credit union has gone from anti crypto to fully support; I was one of a dozen or so people who were able to provide legitimate datapoints to support bitcoin usages that weren't illegal.
So glad I was able to just walk in to the local HQ and have a sit-down with the person who ultimately authorized crypto exchange transactions. YMMV
This seems somewhat contentious, but having some assets outside of the banks is a pretty reasonable derisking mechanism. Bitcoin, and some stablecoins seem like a wise choice.
Not really. It just replaces this problem with a different but equally difficult problem: managing your crypto keys, which is a skill in and of itself. And if you hire someone to do it for you now you are right back where you started, trusting a third party.
The right answer IMHO is to do business with a bank that is small enough that you have a contact there whom you personally know and will pick up the phone when you call.
> managing your crypto keys, which is a skill in and of itself.
Um, depending on how complicated/paranoid you want to get?
Install the Phoenix wallet app and you've got your keys and Lightning node ready to go, pending added liquidity. Sure, it's not maximally secure, but a person can perform transactions outside the banking system pretty easily this way. No need to so consciously "manage" anything.
Phone not secure enough? Fine – then get a hardware wallet like Ledger.
But maybe I'm misunderstanding your point?
> And if you hire someone to do it for you now you are right back where you started, trusting a third party.
If, by hiring someone, you mean using a custodian like Kraken, then you're still solving a problem by not dealing with the traditional banking system. Sure, you're back to trusting a third party, but that's really not the issue at hand, but avoiding Big Bank.
> The right answer IMHO is to do business with a bank that is small enough that you have a contact there whom you personally know and will pick up the phone when you call.
Seems like a nice idea, yet very optimistic. Is everyone supposed to have a personal contact from within a small bank? Probably works for some people, but involves luck and wouldn't scale. The issue isn't really being solved this way.
The closest compromise might be to work with credit unions instead of banks.
It's not, Phoenix is a non-custodial wallet. They provide one shortly-custodial service to on-board on the Lightning Network (to provide a seamless experience, but you can do the process manually with your own node if you prefer). Once the channel on LN is open, it is non-custodial and trustless.
For Hardware Wallets, plenty of other providers exist, exempt of data breaches and dodgy services unlike Ledger. For Bitcoin Coldcard comes to mind.
For the risk of physically losing your keys, seems like a less random, more in your control, risk than trusting Chase Bank, see OP.
> trusting a crypto custodian
If that's your choice, at least you have the option to avoid this with crypto... that's one thing I will never get with people who systematically bash Bitcoin, nobody forces you to use it, it provides you optionality and full control of your assets, something traditional bank and fiat do not offer at all, you are forced by the state to pay your taxes with the currency they tell you, you are practically forced to use banking as a cash only life is pretty complicated these days... so why hate on a new option.
What difference does that make? You're still trusting them not to have put in a backdoor, and to have sufficient security in their development process that an attacker cannot insert a backdoor.
Also, what happens to your keys if your smartphone fails? Is there a backup? Is that self-hosted too? Is it adequately encrypted?
Unless you do everything yourself (which ultimately means running your own foundry) you cannot escape having to trust someone. It might as well be your banker.
> full control of your assets
Until your keys are lost or compromised. Then you are irredeemably screwed.
Controlling your keys (yes this implies a backup, all wallets guide/help you to do it these days), having access to the source code of your wallet, and being able to verify the data of Bitcoin's public and open blockchain is obviously much better than blindly trusting your bank and getting cut off from your assets at any point through NO fault of your own.
> Until your keys are lost or compromised. Then you are irredeemably screwed.
Yes, you have discovered the big secret everyone in crypto is "hiding"... when they say self-custody they very sneakily imply you, yourself, have custody and responsibility of your assets. If this NEW digital option is not for you, don't use it, go trust custodians. Before Bitcoin you had no such choice.
In the case of banks you are also pretty screwed... just slightly less iredeemably in some cases... in the worste cases you might need to find a lawyer willing to help you, depending the amount it might just not be worth your time or the time of lawyers/judge. Unless the bank decides to hear reason magically or gets tired of your nagging like in OP's case... seem like a lot of trust and no control at all, at any point.
> having access to the source code of your wallet, and being able to verify the data of Bitcoin's public and open blockchain is obviously much better than blindly trusting your bank and getting cut off from your assets at any point through NO fault of your own.
Maybe for you. Not for everyone. The vast majority of people don't have the technical chops to audit a code base. They have to trust someone else to do it for them.
> slightly less iredeemably in some cases
But that's significant. And if you learn how to work the human system, you can improve your odds much more than "slightly". That's a skill that many people have a much easier time picking up than coding or public-key crypto.
Hence why everything tends to be public and open source for Bitcoin, so anyone who is conscientious and capable *can* do this.
Trustlessness is a scale, not a binary. It just so happens that in traditional banking you start at the very bottom of the scale and you pretty much stay there. With Bitcoin you get about as high as you can get on this scale for a form of money.
> That's a skill that many people have a much easier time picking up than coding or public-key crypto.
As much as they learn about the meanders of the traditional banking system, it still won't make them more in control of their assets, the more custodians and regulators you add between you and your assets, the less in control you are of them. And we aren't even talking about another form of control you lack with fiat currencies, their almost constant expanding supply.
> anyone who is conscientious and capable can do this
Anyone who is conscientious and capable can navigate the traditional banking system too. In fact, that's pretty much what "capable" means.
> in traditional banking you start at the very bottom of the scale and you pretty much stay there
You don't have to any more than you have to with bitcoin. You can even start your own bank, and then you can keep your deposits there and you will have a 100% guarantee that your bank will not screw you. It's not easy, but neither is writing your own bitcoin client from scratch.
A very plausible route to that kind of security is joining the board of a credit union.
> As much as they learn about the meanders of the traditional banking system, it still won't make them more in control of their assets
That's not true. The more you learn about how the system works the more in control you can become. It is exactly the same in both cases. The only real difference is:
> almost constant expanding supply
That is a real difference between fiat and bitcoin (though not crypto in general). But that has nothing to do with control, and it has nothing to do with crypto, it has to do with policy. It's easy to make an inflating crypto currency. You could even fork an inflating bitcoin. You could likewise make a non-inflating fiat currency, e.g. the U.S. dollar during the Great Depression. But there is a reason this isn't done very much -- it's because a return to the Great Depression is not generally considered something to aspire to.
> Anyone who is conscientious and capable can navigate the traditional banking system too. In fact, that's pretty much what "capable" means.
This is a funny contrast, under the article above... and the thousands of similar horror stories with centralized custodians ignoring their "customer" and never being held accountable for their shortcomings.
It seems to be more than being capable when it comes to banking, it might just be that you need to be rich/powerful enough for the banks to actually care. Another difference with Bitcoin, the same access is provided to anyone. The almost 2 billions of unbanked people on this planet are not this way because banks can't reach them, but because they are seen as liabilities/risks they don't want... Bitcoin does not make such discrimination.
> You can even start your own bank, and then you can keep your deposits there and you will have a 100% guarantee that your bank will not screw you.
I do not understand how this is supposed to address my point about trustlessness on a scale. You don't describe a system as Bitcoin by holding you own deposits... it is a full system for transfers/payments/messaging. It seems like a diversion to not address the fact that the trust put in custodian is not comparable to a system based on self-custody and self-sovereignty like Bitcoin.
> But that has nothing to do with control,
It absolutely does for Bitcoin. Nobody is following the chain that changes the emission rate and supply cap. This is control by the participants of the network, and it isn't limited to miners, we have seen users and other economical actors signify this to miners when there was an attempt to fork to larger blocks. Please show me how you can make such choices with fiat, the end users have generally no direct say on the policies of their money's central bank.
The more important thing is that I don't have to be. Multi-Sig is still far less risky, complicated, and/or costly than the capriciousness or really -- let's just call it what it is -- outright criminality of fiat institutions. Some could try to explain behavior of fiat institutions as incompetence, but then we're just back at criminally stupid (courts are consistently clear that negligence is a form of criminality).
By professional crypto groups and smart users, for high dollar accounts Multi-Sig with hardware wallets from diverse vendors are used. None of them are by Ledger, because Ledger's firmware is closed source.
For Ledger specifically, I already do not trust Ledger.
This is why Bitcoin is ideal. You can hold and transfer any amount, any time of day, without fear of surprises like this.
Would I use it as a primary cash account for my business today? No, because of the obvious exchange rate/price swings. But long-term, moving toward Bitcoin as a settlement layer (i.e., a modern SWIFT) would solve a ton of problems and avoid situations like this. The more people that do that/normalize it, the more stable the price in other currencies, too.
I get that people like to hate on it because it's not a perfect solution to everything, but in a hostile unpredictable environment, it's a life saver.
This doesn't make any sense. The problems a business faces are:
- Receive money from customers. If the customers don't have Bitcoin, they're not going to pay you in Bitcoin.
- Pay your employees and suppliers. Very few of them will accept Bitcoin.
- Borrow money to cover differences between revenue and expenses. The entity loaning you the money may or may loan you Bitcoin, but what difference does it make? They're going to give you the same scrutiny and terms as any other lender in any currency.
- Security for your enormous wads of liquid assets. Banks have vaults and FDIC insurance. Bitcoin has nothing on its own, and if you use an exchange, they can do exactly what a bank does and freeze your funds, or in many cases, just steal it and spend it themselves.
You say later you just mean "well, you can withdraw some of your country's legal tender from the bank and store it as Bitcoin in case you need it later." You can just diversify the same way everyone else suggests by using multiple banks. If you trust zero banks, you can withdraw cash and stuff it under your mattress. You can loan it to a local drug lord. You can buy gold. You can buy forex and put it in a foreign bank. I guess some of these options are less liquid than others, but what advantage are you really claiming keeping your rainy day fund as Bitcoin has over anything else? Generally speaking, businesses tend to stick with things like commercial paper and treasuries and that has seemingly worked out fine.
I wish we had real verifiable base rates on the probability that a business will go under because it's cash and near cash equivalents line item was seized by authorities even though they legitimately did nothing wrong versus a business will go under because it decided to keep all of its funds in cryptocurrency and it either tanked overnight, they lost the key, SBF took their money because he felt like it, or whatever other reasons might happen.
Would you seriously bet the former is more likely than the latter?
In the current epoch, I'd cite Murphy's Law and say that anything is possible and it's wise for a CEO/CFO to plan ahead in case this happens. Bitcoin is one among several options and an excellent safeguard against corruption, political persecution, etc.
As for exchange hacks and lost keys, the business that relies on this will intelligently keep funds off-exchange/self-custody and use multisig wallets with signatures held by multiple officers of the company.
Today, it's the "nuclear option." But if enough people start transacting in Bitcoin routinely, it's the ideal future.
> because it decided to keep all of its funds in cryptocurrency and it either tanked overnight, they lost the key, SBF took their money because he felt like it
Tell us you don't comprehend cryptocurrency without telling us you don't...
Solana is centralized. The network should never go offline/have outages or be vulnerable to bad actors. At best, Bitcoin has the 51% attack problem which would require insane resources and convincing node operators to follow a fork of the network.
The Solana website itself says its decentralized on the frontpage.
from what I can see, the main difference is that solana is proof of steak the way etheream is going. while there is certainly a place for bitcoin's pow consensus, the electricity costs alone preclude it from being a serious contender to visa.
It removes the bank from the equation. The point here being that you keep some of your funds in Bitcoin so that, in the event you have to deal with something like this, you can still find a means to get people paid.
Long-term, if everyone does larger transactions in Bitcoin (e.g., payroll, invoice payments, etc), then problems like this never occur.
Strong recommend on using meow.com. You can get interest on your primary checking account, and easy access to high yield treasury management services.
I’ve been following the Evolve Bank fallout on the FinTech Weekly newsletter, and the whole situation scares me about Mercury. I used to bank with them, but the sanctions by the Federal Reserve and the continued disclosures about lacking KYC and money laundering controls has me worried there are other problems.
