After weeks of mounting pressure from the cryptocurrency community, ChangeNOW finally made a public statement, saying their exchange is no longer anonymous. However, it has come too late for at least two notable clients.
Privcoin, a multi-cryptocurrency mixer, and an individual, identified only as ni23457 on Bitcointalk.org and Reddit forums, are the well-known victims of ChangeNOW's selective scamming.
Their modus operandi seem to be seizing large deposits, then demanding KYC from the depositors. If the depositor refuses, they keep the coins. If they acquiesce, ChangeNow would shift the goal posts, and ask for something different. They keep doing this until the user gives up, and they never return the seized coins.
The Problem
In their public statement, made via their Medium channel, they stated the following:
“A number of changes has been made; for instance, we had dropped our anonymity back in April and implemented AML/KYC at the same time in order to comply to the requirements of exchanges, regulators, and legal authorities.” – ChnageNow (September 7, 2018)
The problem here is that, way back in April, there was no such announcement on the Changeonow.io website and other platforms detailing these new policy changes. Due to negligence on their part, the ni23457 case occurred in July 2018 and the Privcoin case surfaced on September 1st 2018.
ChangeNow made their public announcement about a very important policy update, six days after the second scam accusation. How were customers supposed to know they weren’t limitless and anonymous before September 7th 2018? An exchange that prioritizes its customers would not treat them in such an appalling manner. This statement seems to be an attempt to obfuscate the accusations against them. Some have said it helps them stay in the market longer to scam some more.
At the time of writing this article, there still isn't any notification indicating this shift in policy on the ChangeNow.io website. Users have to trawl through their T&C every time they want to use this service. Thus, it is very likely that clients, who previously considered ChnageNow an anonymous exchange, could still be entrapped by this selective scamming exchange. The ambiguity from this company to users very much exists.
What Should Happen to the “Seized” Funds of these Clients
ChangeNow claims that the "seized coins have not been stolen, but rather kept in cold storage, until the affected users pass their KYC process. As far as the public is concerned, ChangeNow's policy change came into effect on the 7th of September 2018. Consequently, all transactions preceding to the public announcement should not be subject to the new policy. This is the right thing to do.
Why the users have refused KYC:
It could simply be a matter of principle. Add to this the values that cryptocurrencies originally stood for. The community at large understand and has embraced anonymity and decentralization. This was a major draw to cryptocurrency for early adopters. Thus, both these users may could just be sticking to the original principles set by Satoshi, especially when Changenow.io was advertised as limitless and anonymous. In this case, if ChangeNow clearly notified users of their policy changes ni23457 would never have deposited with them.
How has ChangeNOW dealt with both cases of stolen deposits:
They said that if these users refuse KYC, their funds will continually be seized. This, after updating their T&C, weeks, after being accused of stealing. Furthermore, they say they will be reporting ni23457 to Interpol and other relevant authorities. This is still to happen, and one suspects it may never happen. They have proceeded to blackmail and defame the user while claiming defamation themselves. However, the community sees this, as a case of a user fighting for what rightfully belongs to him.
In retrospect, this fallout is good for the cryptocurrency community, as there has been doubts about the team behind ChangeNow for some time, and things are getting more interesting each day. Just as Interpol and the other regulatory bodies might be looking into ni23457 as suggested by ChangeNow, we encourage them to look into ChangeNow's activities too. This is a company that is hiding behind a shell company in Belize, operating illegally in Russia while demanding KYC from users.
This could be good for the cryptocurrency community in general, if it ensures that nobody falls for the selective scam tactics used by ChangeNow. What is not in doubt is that, if ni23457 and Privcoin didn't call out ChangeNow publicly, more people in the cryptocurrency community would have fallen victim to their selective scams. And this would have further discredited cryptocurrencies which have all taking a hell of a beating in 2018.