A Personal Experience — Kucoin & Paxful
Cryptocurrency trading can be a lucrative venture, but it’s not without its risks. I have been pretty busy writing for clients and my business over the past two years that I really didn’t get enough time to focus on my personal content especially my Medium, Blogger etc. I neglected my personal content so much, it’s starting to feel like a ghost town. I think the only readers left are tumbleweeds and crickets.
Note to self: Don’t quit your day job...yet.
Getting to the topic of this article…
I recently had a bad experience with two popular platforms, one decentralized and one centralized — Kucoin & Paxful. While the case with Kucoin was not my direct mistake, it was still something I could have prevented from happening, these incidents just reminded me of the valuable lessons about the importance of due diligence and caution when trading in the cryptocurrency market despite me having over 7 years of experience in this sector and after having cautioned and taught people from doing the same silly mistakes over the years.
If I can make these mistakes — anybody can!
Kucoin
My experience with Kucoin involved my account being locked for no goddamn reason. Despite numerous attempts to contact customer support, I received no response, and when I did get a response it was completely useless. My funds remained locked to this day and it goes without saying my business and personal finance suffered.
What exactly happened…
Kucoin isn’t my main CEX, I primarily stick to Binance but I work with a project that pays me every month in their token and that has the most liquidity on Kucoin. For the initial few months when I started working on this project, I received my monthly payment first on my personal wallet which I then transfer to Kucoin to exchange into a stablecoin or any other exchangeable asset, although mostly Ethereum (ETH) or Bitcoin (BTC).
After a few months of doing this, I thoughts of bypassing the first step — getting paid in my personal wallet first.
Instead, I started using the Kucoin exchange wallet address to receive the payments directly every month.
This was my big mistake.
When Kucoin decided to lock me out of my account with thousands of dollars worth of Stablecoins in it, I thought it was a regular security check. After all my account is verified and all. I’d have no trouble getting back in.
But no!
When Kucoin support finally responded, they wanted all my ID documents — again! But most importantly they wanted me to record a video of me showing wherever or whichever wallet was used to send the funds into my Kucoin account and also into which wallets I withdrew assets from Kucoin.
That doesn’t sound so ridiculous, right?
If only I had received the assets into my Kucoin account from my own personal wallet, I could have shown them such a video, but I used to receive the assets directly from the project’s marketing wallet. Asking them to show me such a video would be a security and ethical risk for the project. They might even doubt my credibility or just assume I’m trying to expose their budget to a competitor.
On the other hand, what about the funds I withdrew from Kucoin? Bit of silliness going on in this regard as well. If this is my mistake or not, you decide.
Typically from Kucoin, I withdrew my assets into a P2P exchange, no not Paxful but LocalCryptos, formerly known as LocalEthereum. The problem was, LocalCryptos had consequently decided to shut shop just weeks before this incident happened and they had locked out every user from logging in. Even though they did provide users with a wallet with the private keys, I had saved that information in a computer back at my home which is some 2000kms away from where I’m living. Even if I did make the journey, to show them a video of where I withdrew the funds to, I had no way to show them where the funds came from.
Yes, I did ask the project that I was working with to share that information but that request was justifiably denied. Obviously!
This frustrating experience made me realize the importance of checking for customer support responsiveness and reliability for any CEX that I trade in and whether they are customer friendly or have some rigid rules.
So to summarise here are the key takeaways
- Always withdraw and deposit into and out of a CEX to a wallet that you have full control to.
- Never store your funds for a long time in any CEX no matter how trusted they are or how safe your account is.
- Always do due diligence and find out if the customer support of the platform you are trading with is user-friendly and if they do random account locks for no reason.
- In hindsight, the only reason I could think of for them to lock my account would be because of my travels. Since I traveled thousands of kilometers away from my home, over the past few months I did log into my account from multiple destinations and with multiple IPs.
Paxful
My experience with Paxful was equally frustrating so much so that as of writing this article, I’m working on another piece to describe and summarise why P2P exchanges like Paxful suck!
The issue with Paxful for me was more straightforward and purely because of my oversight.
As I mentioned before, my main CEX is Binance and often I would withdraw from Binance and send it to a P2P for exchange into local currency for personal use and to pay the salaries of my staff. Once LocalCryptos shit down, I switched to Paxful.
So here’s what happened next, I was having a terrible day, decided to take a nap, and upon waking up, I decided to get my staff paid. I transferred that entire month’s salary to my Paxful account — as I would do normally. Binance recently introduced a new integration feature for BUSD. If you have certain Stablecoins in your account, it shows up or gets converted automatically to BUSD. You can also withdraw any of those certain Stablecoins despite having a BUSD balance.
While on the other hand, Paxful supports only USDT (Tether) and USDC Stablecoins.
So now, in a state of grogginess, carelessness, or stupidity — no, not excusing myself; I ended up confusing TUSD for USDT. While I still withdrew through the Tron network Paxful does not support TUSD and will not recognize those deposits. That’s exactly what happened and by the time I realized what had happened, it was too late. Now if this were LocalCryptos I would have been able to use my private keys to the wallet and easily reverse the transaction or use a decentralized exchange (DEX) to convert the TUSD into USDT, but in the case of Paxful, this is a hosted custodial wallet and users do not have control over their own assets despite their accounts being linked with that wallet.
I immediately got in touch with customer support and their callous response is documented on my LinkedIn, here’s a screenshot of that conversation.
And that was that. My funds still lay there locked in a different token form, out of my reach and Paxful can apparently deny me access to my own funds in my own wallet address. I know, custodial wallets are never truly your own addresses but seriously? No help in recovering whatsoever?
I got in touch with the CTO of Paxful Andrei Skopenko on LinkedIn and apart from just asking for my transaction hash one day, he has yet to respond again with a follow-up of any sort.
It seems like he’s more busy preaching about OpenWrt — whatever the hell that is.
I’m now hopeless and saddened by my financial loss, no clue how I’ll recover from these two mistakes of mine. But what amazes me is the sheer callousness of Paxful support towards their customer’s issues. Upon sifting through Re I’ve seen multiple instances where users are left with monetary losses when after initiating a trade with a scammy seller, the seller never releases the funds, they convince the users by saying the funds are in process and they must release the trade escrow funds in order to quicken the process, whoever is naive enough to fall for that trap end up losing their funds and left with no recourse. This reminded me of the importance of carefully vetting sellers and only engaging in trades with reputable and trustworthy parties. The scammy sellers on Paxful would have multiple microtransactions with multiple good reviews and usually quite high prices of assets, usually above 50% of the market rate for that asset. Enough to fool the uninitiated — or a groggy-ass idiot like myself.
Usual markers for such traders are -
- Nearly twice or at least 50% above the market rates for assets.
- Multiple good reviews but for microtransactions.
- Once funds are in escrow they will try to convince you to release the funds before your exchanged value arrives in your bank or another wallet that you are transferring to.
Overall, my experiences with Kucoin and Paxful were disappointing, but they served as valuable lessons in the importance of caution, triple-checking everything, and due diligence when trading in the cryptocurrency market. By conducting thorough research, carefully vetting sellers, and only engaging with reputable platforms, traders more importantly check yourself to avoid stupendous and very common mistakes.
Anyways, my rant about my shot luck is over. I hope this serves as a warning or a reminder for others. While I wait for a response from Andrei that may never arrive I hope to see you again and gain your readership for my future articles.
In case you want to hire my services you can visit www.blockbaroners.com and mail me at logan(at)blockbaroners.com to discuss the work.
