Bitcoin Online Poker Transactions Refused by Coinbase

August 22nd, 2014 | by Kaycee James
CoinBase logo

CoinBase does not allow its accounts to be used for funding online gambling.

Bitcoin seems ideal for online poker in many ways: it’s a virtual currency that usually comes with a high degree of anonymity, while also giving American players a way around financial institutions that can’t legally process most gambling payments.

But those features aren’t quite as present when the institution holding your Bitcoins wants to play by the laws of the land.

On Reddit, a player with an account at the Bitcoin-accepting online poker site Seals with Clubs (SwC) reported that popular Bitcoin exchange Coinbase had restricted access to the services on their site because he had used his Coinbase account to fund his SwC poker account.

Coinbase Services Withdrawn Due to Gambling

While Coinbase did not completely close the user’s account, they did place some restrictions on what the account could be used for

“Upon review of your Coinbase account, we have determined that we can no longer provide you access to Coinbase Services,” the exchange reportedly wrote to Reddit user lhr0909, who posted the email.

“Please understand that Coinbase is a regulated Money Service Business under the FinCEN division of the U.S. Treasury Department and as such, we are required to review accounts in order to ensure compliance with regulations.”

Because of that regulatory status, Coinbase would be subject to the same rules about financial transactions as any bank or financial institution.

In other words, the same Unlawful Internet Gambling Enforcement Act that made it illegal for American banks to process payments from PokerStars or Full Tilt Poker after the passage of UIGEA would seem to apply to Coinbase in this case.

This is laid out in the Coinbase user agreement. Under an area about “restricted activities,” users affirm that they will not violate (or assist in violating) laws related to “unlawful gambling” and other regulations.

Users Still Have Access to Bitcoins

While Coinbase did not completely close the user’s account, they did place some restrictions on what the account could be used for.

“Please note that we have not blocked access to the bitcoin balance currently in your Coinbase account,” Coinbase wrote. “While we can no longer process transactions of this bitcoin via our banking relationship, you may send this bitcoin to a local wallet or another bitcoin address.”

The company also told lhr0909 that they could have full access to their account again if he was “able to prevent such activity from occurring on your platform.”

For that user, there wasn’t much of a problem. According to his Reddit post, all of his Bitcoins are currently on the poker site, meaning he could use alternative means to cash out and none of his money was tied up in the Coinbase account.

But the story appears to be just one example of Coinbase’s crackdown on activity it isn’t comfortable having its accounts associated with.

In another post, Bitcoin gambling site said that they have had players report receiving similar notices after withdrawing Bitcoins from their site to Coinbase accounts.

Other users recommended that players who wish to get around such restrictions should use BlockChain accounts rather than a service such as Coinbase.

According to recent reports, PayPal and parent company eBay are in talks with Coinbase and other Bitcoin companies to possibly integrate the crypto-currency into their Braintree payments system.

However, an eBay spokesperson said that they currently have no announcements to make related to Bitcoin.


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