How to Buy Bitcoin With Your Brokerage Account
After CNBC ran the news story that bitcoins turned $100 into $75 million in just a few years, I began researching and typing into the Google search engine how to buy bitcoin like everybody else.
I did not want to be used as a pawn for promoting bitcoin when I tried to sell. You know what I mean? Imagine having all this bitcoin but then having to go out and find someone willing to buy my bitcoin for US dollar. I did not just want to know how to buy bitcoin. I wanted to know how to sell bitcoin whenever I want in exchange for US dollars.
I found a company based in San Francisco that I thought would be a good way to buy and sell bitcoin. I uploaded a picture of my drivers license and went through all the security checks and hoops the company asked me to jump through. I’m not going to mention the bitcoin company name out of my respect for business in general.
I connected my US based bank account to my bitcoin account. To confirm my bank account and to make sure everything was working, the bitcoin company then did two very small transactions that I was supposed to enter into their system to confirm my bank account.
The transactions never showed in my US bank account. My bank called me a day later with a fraud alert. It turns out the transactions were international transactions ran through a foreign bank, possibly located in Latvia so my bank blocked the transactions and called me.
After researching the company further, I could find no evidence that they were based in San Francisco as their website claimed. As far as I know, they could have purchased a drop box in San Francisco to make it look like they were located there. Big red flags went up in my head about why a San Francisco based company would be running their banking transactions through a bank in Latvia.
One of the troubling things about this bitcoin website was that in their terms and conditions, it said they had the right to close down my account at anytime. I figured that the company would not have stayed in business since 2013 if they closed down customers accounts anytime they wanted.
It troubled me that my money was not FDIC insured. In fact, there was no insurance of any kind. The more I researched this bitcoin company, the more shocking information I found.
Here are a few of the complaints I found:
[NAME REMOVED] steals money from me
By Kotchanun Jittavanich, Ohio, May 24, 2017
On May 16, 2017, [NAME REMOVED] sent me an email that they are closing my account. If you used [NAME REMOVED], you will know that you also trade at GDAX with the same login information. Since the account is closed, I cannot log into GDAX and withdraw my remaining balance I traded in GDAX. They said in the email that I can withdraw all money to external address, but they trick a customer because they hold a customer’s money under a GDAX account. This is a tricky method that I guess they try to steal money from me. Otherwise, in the email, they should state that please log in to your GDAX account and transfer out all of my remaining balance.
I suggest get out from [NAME REMOVED] and GDAX while you still can, do it before ending up like me. My total balance is between 65,000 and 70,000 USD…
No customer service – very bad experience!
By Lubo, London, England, May 24, 2017
This institution is not trustworthy. I transferred funds to Latvia (wherever they are located), and it was kicked back without any explanation. I sent three emails to [NAME REMOVED] to understand the cause of this kickback, however, no response was received in the last two weeks. I lost £65 ($84.25) and got nowhere. This institution cannot be trusted.
[NAME REMOVED] closed account!
By Douglas Beck, Ohio, May 20, 2017
I had over $11k in [NAME REMOVED], which I’d gotten as it nearly doubled in the month since I bought at $900. I sent 1 BTC to my blockchain wallet on May 11, 2017, and then sent it back to [NAME REMOVED] on May 15th as “the spread” was $50 different, so why not make $50 for doing nothing? My “instant” send sat there as “pending,” and the next day I got “[NAME REMOVED] has decided your account should be closed for violations of the agreement,” Total BS!
Now it gets good as I only got 5.54 BTC out when I had to “close out” to an external wallet on May 17th, 2017. The send back from BLOCKCHAIN on the 15th was stollen, netting the scamming [NAME REMOVED] 1BTC or $1,700 off of me for some rule breaking they never named as I was ONLY sending [NAME REMOVED] to MYSELF. You sure can believe they NEVER answered a single email to their BS “support” email as to what the “violation” was. DO NOT store BTC in [NAME REMOVED] or you will be sorry!
I immediately called my bank and told them that I got caught up in the bitcoin mania and so I searched for how to buy bitcoins and picked a company. The banker told me that trading in bitcoins is a very risky venture because its unregulated and so you have no idea if individual bitcoin vendors are running pyramid schemes. My bank assured me that all international bank transactions against my account will be blocked.
Everybody plays a fool sometimes. I certainly played the fool by doing a search for how to buy bitcoins and then picking one of the first companies that came up in the search engine results. I can’t believe that I sent that company a picture of my drivers license and have now signed up to an identity theft protection company because I fear of what this company will do with the personal information that I sent them.
Companies have been trying to get a bitcoin ETF listed on a major US stock exchange and the SEC has denied them every time. The reason for the SEC denial is simple: Bitcoin is traded on an unregulated exchange. Think about that for a second. There’s no government oversight and protections in place. That’s why ransomware makers use bitcoin as their method of payment.
Think about what “bitcoin trades on an unregulated exchange” really means. There’s no laws or consumer protection agencies there to help you out if someone steals your bitcoins. You are relying on the honesty and good will of these bitcoin companies that run out of banks in foreign countries like Latvia. You have to be one big sucker to rely on other peoples honesty and character when it comes to the buying and selling of bitcoins. Folks, in business, always assume the worst of people. Everybody is out to take your money. US regulatory agencies and government oversight of banks and exchanges exist for a reason: people will rip you off and take your money and run faster than you can say bitcoin.
How To Buy Bitcoin In A Safer Way
There’s a better way for buying bitcoins. Any investment in bitcoin is going to be a high risk gamble that you shouldn’t do with money that you can’t afford to lose but there is a better way to do it for us stock traders.
There is an OTCBB stock called Bitcoin Investment Trust, ticker symbol GBTC. GBTC trades on the OTCBB market and so it’s a very risky play. If you don’t know what the OTCBB market is, please go and do lots of research on it before you buy any stock that trades on that market.
The chart of GBTC looks fantastic:
I was shocked to find that I could buy GBTC from my regular brokerage account with all the protections that my brokerage account offers for US clients. Buying GBTC through your regulated online brokerage account is a much safer proposition than searching the internet for how to buy bitcoins and then just jumping in head-first. You don’t have to send your driver’s license and bank account information to anyone. You have no foreign banks that you have to deal with. When you are ready to sell, you just sell GBTC through your trusted online brokerage account instead of trying to find a buyer or exchange to list your bitcoins on.
When I say buying and selling GBTC is safer than actually buying and selling physical bitcoins, it’s all relative. The OTCBB market is not a safe market compared to the major exchanges. But even the high risk OTCBB market is safer than searching how to buy bitcoins and then just going for it IMO.
Obviously as of May 25, 2017 with that huge doji warning candlestick, GBTC and bitcoin is not at a good entry point right now.
Keep it on your watch list and wait for a good pullback before you consider taking an entry.