Poloniex withholds russian users' funds on grounds of new Terms of Use?
Artyom AbaevHello, my name is Artyom Abaev, I'm the founder of a blockchain startup for music industry. We came across a problem with withdrawal of our project funds allocated on our financial director's account from Poloniex exchange. As a result, our operational activity can be frozen soon as far as we're not allowed to withdraw funds from Poloniex exchange for uncertain reasons. The funds were raised during the private fund raising among our friends and we expected to spend it for the first round of project financing, team scaling and preparing public presentation. We're renting an office, we have to pay the rent and salaries to our employees. Nobody cares about our problems. Poloniex technical support does not respond to our requests.
We have analyzed public space in Reddit threads and other forums and we concluded that we're not the only ones who suffered and this is problem is widespread.
On the 1st of August Poloniex exchange has amended the Terms of Use and added two points.
"You represent and warrant that you are not:
(a) located in, under the control of, or a national or resident of any country to which the United States has embargoed goods or services;
(b) identified as a "Specially Designated National", or (c) placed on the Commerce Department's Denied Persons List", as mentioned in point 1 of the new Terms.
Our lawyers concluded that there is no law that can require from exchange to refuse providing services to individuals in embargoed countries. Limitations applied by Commerce Department are related to companies and list of specific individuals.
The situation is really troublesome as far as we are citizens of a country embargoed by the USA. According to the exchange rules, we have filled in a ticket to technical support in order to close the account and withdraw funds, and we received the following response:
We replied immediately and attached the screenshot showing inability to withdraw funds as far as e-mail confirmation links are not working.
After that, we haven't received any reply from the support. We do not believe that the biggest exchange that earns millions of dollars on fees can not organize normal operation of the technical support for the clients. User verification for increasing limits and following KYC/AML procedures can take weeks or in some cases months that in our opinion is unacceptable for such a big financial service. Based on our rough estimations, introduction of the new terms must result in closing about 15000 accounts and withdrawing funds from them. In the nearest future we are going to survey members of the biggest blockchain community in the Russian Federation – Decenter (more than 40000 members) and we'll publish the results about having an account at Poloniex exchange.
We applied with this problem for a preliminary consultation to Artyom Tolkachev from a legal firm Deloitte, our legal department also considers options to file a collective action in the USA or initiate an investigation in FBI, suspend the business license and freeze all exchange activities for the period of investigation. Recent situation with another exchange BTC-E, in particular seizure of company assets by authorities is really disturbing for us. The company has also included in Terms of use waiving the right to participate in a class action against the exchange, although in our opinion the exchange cannot be higher that US laws if the exchange abuses their authority and operates illegally towards their clients.
It is also worth mentioning that Terms of Use were updated against the background of numerous complaints about the exchange activities. E. g. one of Reddit users claimed that his $15000 account was frozen for a few weeks without any explanation.
At the moment we're developing a website in order to inform the community about the problem and we gather the information about exchange clients who suffered like us; we process applications at reg@soundchain.org in order to consider our strategy with lawyers and break new ground if the situation remains unchanged in the nearest future. We have prepared a form for everyone affected in order to collect and classify the information. We presume that the problem may have low percentage in the total number of users.
No secret that the exchange is one of the leaders in the trading market and many blockchain projects would like their tokens or cryptocurrencies to be listed there. I fully understand that owing to this letter the exchange management may never add our cryptocurrency for trading, however it is much more important to get back our legal funds in order to develop our project.
We do not use this situation for promotion, honestly I would never like to make this fact public, but we don't have any other option as to write this letter. We just want to withdraw the funds and develop our project. Please help us to spread out the information about our problem.
UPD.
About current situation with Poloniex
It looks like our letter to Decenter has provoked mass outflow of Russian funds from Poloniex exchange, the management has promptly contacted us (I wish they reply to everyone like that) and claimed they do not stop working with Russian citizens and the letter was an auto reply to our request about closing the account. Although it was not received immediately and it seemed like they have checked our citizenship and made it clear in their response that they don’t work with us as citizens of the Russian Federation. I would like to remind that the following point was introduced in the new Terms of Use:
“You represent and warrant that you are not:
(a) located in, under the control of, or a national or resident of any country to which the United States has embargoed goods or services;”
This point directly hints at serious risks for Russian users in the conditions of political tensions between Russia and the USA, in case of escalation of the conflict investors and traders may come across financial losses or freezing of their funds for an uncertain period. As far as Poloniex works with American companies it has introduced this point in advance in case US authorities impose sanctions directly on Russian individuals. It is also worth mentioning that today the US government has ceased issuing US visas in US consulates in Russia and suspended applications in Moscow till September, 1. Many internet users have reproached Media for publishing yellow press articles; moreover they blamed us and especially me for making up a hype. I’ve told my story in detail in the letter and I shared it with the Decenter community http://telegra.ph/Letter-08-21-2 as far as I didn’t have any other option and time to wait for months for a reply as many users have been waiting now. We have received first answers to our inquiry, some investors have been waiting for more than a month in order to withdraw their funds, at that the support does not reply at all. I do understand feelings of those who protect the exchange, I’m sure a lot of traders/investors can’t close their short and long positions at a loss and probably they won’t do it for their own reasons. But you should also understand us as far as we cannot develop our project without these funds, just because we need to pay rent and salaries.
Apart from that, the exchange informed us that they have restored access to fund withdrawal for us and that everything should be fine, although according to their Terms the account must be closed by themselves and the funds must be sent to the address provided by us. We have not checked yet if withdrawal is OK as far as our financial director is unavailable at the moment.
Thanks to everyone who have been supporting us. Owing to the new Terms of Use and political risks, we are not going to work with Poloniex exchange anymore as we are citizens of the RF. It’s time to learn Chinese.
p.s.
One lady left a comment today, she says that she’s been waiting for a month to withdraw her funds, for some reason the exchange doesn’t want to solve her problem.
Thanks to the community Decenter for the publication of our letter
Russian Decenter Community (40 000 members) (Ru)