As we reported here at CCN on March 23rd, Twitter and Reddit were ablaze with angry Paybase users unable to make withdrawals for several days. Paybase started to experience trading issues in January when the Securities Exchange Commission (SEC) began an investigation (see the GAW Miners Official SEC Subpoena here). This led to accusations that Paybase and GAW Miners were executing “fraudulent conduct in the sales of securities” concerning the sale of their Paycoin digital currency. Now, Garza has also been contacted by Department of Justice representatives regarding Garza's GAW Miners operation, according to sources contacting Vice's Motherboard.
We attempted to contact Garza via Facebook, Twitter, and a phone call on the 23rd for Mr. Garza's side of the story, before running our piece, to no avail.
Paybase account holders were greeted with this ominous message on their dashboard upon logging into their accounts this week, provided by Paybase user TradesAce:
To reflect Paybase's checkered past, some users seem able to retrieve their funds, while some are not, and the clock is ticking before the forfeiture deadline.
“We found we could do more for the currency by working with other companies and having them merge Paycoin into their forums,” CEO Josh Garza told Vice's Motherboard when asked why the company shut down. “We never intended Paycoin to become its own world. We realize now it became that.”
While this clearly ties in with the withdrawal issues over the last few weeks, Garza remains defiant that it's apples and oranges. Fortunately, he has his reputation to fall back on. An enterprising user on GetHashing created a comprehensive list of the promises made by Josh Garza that were never fulfilled. (See list here.)
“We are still here,” he told Motherboard. “Most scams involve an exit. You don't rob a bank and sit around to count your money while the alarm is going off. We are here because we want to make it happen.”
Fortunately for users, Garza seems to see a light at the end of this tunnel for all that were affected by this situation. He has found a solution. He recommends users transfer their funds to Mineral, a Hong Kong-based digital currency platform. He states that he, not GAW, has anything to do with Mineral, but that is in question. BitcoinX, a Bitcoin exchange review site, says that GAW acquired the exchange Coin-Swap, and Mineral has the same code base as Coin-Swap does.
So another Bitcoin exchange has gone up in flames, with this one attracting direct government intervention. This is nothing but more bad publicity for the Bitcoin community, and we need to generate some form of oversight for exchanges, as I've written about before. They have too much access to new users and fiduciary responsibilities to be allowed to run amuck. Exchanges need to be rated, insured, and invest in their own consumer safeguards, as banks do.
For those who would still like to use Paycoin, it is seemingly unaffected by these proceedings to this point and is still traded on major exchanges as of this writing. Maybe that's what he meant when he said "We are still here."
Hopefully, all parties affected by Paybase's practices can regain their funds without any further delay or misinformation.
Images from Shutterstock.
Would you still use Paycoin? What is its future after April 30th? Share above and comment below.