Never Trust Custodial Crypto
It should actually be a point of optimism that centralized technology tends to
destruction while decentralized tech can survive pressure…
Some highly attentive people might have noticed that
LandChad.net lost one of its articles: that on how to
set up a website with the Basic Attention Token (BAT) which is a crypto-currency
tied into the Brave Browser. I can’t even tacitly endorse this project due to
some recent personal developments that we’ll see below…
I’ve used the Brave Browser (in fact, I’ve even defended it as a browser),
but the BAT project itself is almost a perfect example of a poorly-designed
crypto project. Like most 💩coins, it is constructed to enrich a business behind
it, not to truly be an open standard.
To be clear, I’m going to talk about BAT, but this isn’t really just about it.
It’s about any kind of compliance cuck crypto project (i.e. effectively all of
them).
The main issue.
BAT is a browser-mediated system that allows users to view ads in the Brave
browser and collect their BAT cryptocurrency, which they can give to “creators”
(i.e. people with websites or social media profiles registered with them).
Forced KYC
The issue is, however, is that the entire system is a centralized one, not
just around Brave, but “creators” like me with websites cannot actually
receive their BAT earning in their own wallets. Instead, earnings must go to
a centralized Know-Your-Customer exchange that has a relationship with Brave:
Uphold or Gemini. Even the addition of the choice of Gemini is new—Uphold used
to be the only option.
Either way, I made an Uphold account when I registered my sites with Brave. I
would receive a small amount of monthly BAT and after several months, since I am
not braindead, I would transfer those funds to non-custodial wallets every once
in a while. I would have liked to transfer them immediately, but Uphold charged
obscene withdrawal fees ($15 + some percentage).
Aside from that, I never used Uphold for anything. I’ve never heard of anyone
using Uphold for anything other than BAT Rewards anyway.
Uphold emails me.
After several years of being forced to use Uphold for literally no reason,
this past month I began getting a flurry of vaguely worded emails asking me for
“more information about myself.” Here is the most recent (they have all been the
same in content):
We’re following up on our request for additional due diligence information
sent on May 27. As a regulated financial services business, we’re required
to perform ongoing risk and compliance reviews. Please note that if we do
not receive the requested information, we reserve the right to restrict your
account. Please provide the following information at your earliest
convenience:
- Purpose of your Uphold account.
- Estimated monthly activity.
- You previously mentioned that you are unemployed, please elaborate more
about your source of wealth. [sic, lol]
- Please explain the purpose of your withdrawals to different crypto wallets
and your relationship with them. You have withdrawn funds to X different
external wallets.
- Relationship with the users you receive funds from, as well as the purpose
of such transactions (Include supporting documentation, if any)
- Incoming $X — USD (X transactions from X users)
- Is your account used for activities related to a business?
Please use the following link to upload your files:
…
As the old adage goes, “Bitcoin fixes this.” Or at least it’s supposed to if
people actually used it.
As I said before, Uphold is a KYC exchange: they already know who I am and
have a picture of a photo ID of mine. They can also clearly see the origin of
100% of my incoming transactions from “Brave Software International.”
I respond to this email here.
- Purpose of your Uphold account.
The reason my account with Uphold exists is because you have some kind of
financial relationship with Brave Software International wherein you have nearly
exclusive rights to receive BAT payouts. The reason my account exists is
because I can’t just receive funds to—you know… an actual cryptocurrency
wallet, so I have to use your worthless non-service and pay $15+ dollar fees
every time I want to turn your fake custodial crypto into my own.
- Estimated monthly activity.
You are a centralized custodial exchange so you can easily see my mountly
activity and in my case, you will see that it is actually perfectly uniform
across months.
Not that this should matter, nor do I appreciate the tacit assumption that
irregular and variable income (which is extremely common nowadays) is somehow
bad.
I should add that the only other thing I’ve ever tried to do is there was one
point where I figured I’d bite the bullet and buy some KYC Bitcoin to slurp some
heckin’ dipperinos at short notice. Unfortunately, your site is so broken that
no transaction ended up going through.
- You previously mentioned that you are unemployed, please elaborate more
about your source of wealth.
Could you elaborate on which country you live in where four figures over the
course of three or four years in considered “wealth”?
(Not quite sure when I ever said I was unemployed. I may’ve answered that on a
questionaire to avoid questions on the level of stupidity I am dealing with
now.)
As in the question above, you, Uphold, are a custodial exchange that can clearly
see 100% of the transactions into my account come from “Brave Software
International” and considering Brave is Uphold’s only reason for existence, I
should not have to explain how they work to you.
- Please explain the purpose of your withdrawals to different crypto wallets
and your relationship with them. You have withdrawn funds to X different
external wallets.
I am interested in having cryptocurrency. I am not interested in having pretend
custodial crypto funds indexed to the price of crypto which ultimately I have no
control over. I can understand that you are upset that I would like to own my
own assets rather than letting you “just hold onto them” in exchange for an IOU,
but the fact that I am receiving this email illustrates why it is important to
keep 100% of my assets off of platforms like this.
In the previous case, you could hold my money against me. In this case, I am
laughing at you. I have $0 on Uphold and I will continue to have $0.
If the issue here is the fact that I withdraw to different crypto addresses,
I suggest you instead contact users who withdraw to the same wallet addresses
and chide them for reusing addresses and thus using cryptocurrency in a more
privacy-violating fashion.
- Relationship with the users you receive funds from, as well as the purpose
of such transactions (Include supporting documentation, if any)
As previously established, like everyone else who is forced to use Uphold, I use
it for BAT. As such, I know the identities of literally zero of the people
who may have donated to me through BAT. This should not be an issue for you
since you do know these user’s accounts and at least can exhaustively track
the movement of BAT payouts on your system.
So this is a question I should be asking you out of curiousity, if I cared
about it.
In the BAT system, anyone who stumbles onto my website can end up giving me BAT.
If you want me track everyone somehow and tell you, you are delusional.
Notice the Questions
Notice the issue at work here: they don’t just want to have my information,
but they seem very interested in:
If the addresses I withdrew to are my addresses or someone else’s…
What my relationship with other people on the network are…
What real-world business interactions might correspond to transactions…
To even answer these questions could put other people’s privacy at risk.
This is why people who say “I don’t care about privacy, I got nothing to hide”
need to remember that in fighting for free and open, yet private tech is not a
war we wage for our own selfishness, but to keep everyone else, including our
children safer and more private than we have been able to be.
Bitcoin fixes this.
What is so pathetic about this email, which represents the wider comply-cuck
movement in crypto—is that it is precisely what Bitcoin was developed to avoid.
The goal of a peer-to-peer currency is to make the “due diligence” of financial
“custodians” irrelevant since users have every technology sufficient to control,
hold and secure their own funds.
The two greatest unfortunate problems in crypto are that:
1. Scammers and “developers” realize that they can mimic the custodianship in
the traditional financial system to control users’ funds in centralized
exchanges.
2. Most people in cryptocurrency are simply not discerning. They talk about
self-custody, privacy and security, but they don’t actually do what they need
to get any of that.
I will just say, it’s quite a shame as well how little the overlap between the
free software movement widely and cryptocurrency is. These ideological strands
absolutely require each other, but for bizarre historical reasons, they are
separate, don’t understand each other and it is to everyone’s detriment.
On BAT and Uphold
I let my Upload account be closed. Who cares? I have to stand for something and
it’s easy to do so when it’s humiliating to comply.