SurBitcoin is a bitcoin exchange based in Venezuela that allows Venezuelans to buy and sell bitcoins online with the nation’s local fiat currency, the Bolivar (VEF).
In the past few weeks, there have been several people on social media expressing frustrations that they have been unable to withdraw their funds from the exchange, raising concerns that something odd is happening with the exchange.
SurBitcoin is a white label exchange that works with white label provider BlinkTrade. White label is a term actually used traditionally in the financial sector where a provider purchases a product and/or service from a third-party, out of the box, and applies their own branding to it, and sells the product as their own. Customers rarely even know about the third-party, and only deal with the service provider, in this case SurBitcoin.
The problems with users not being able to withdraw funds from the Venezuelan exchange started in March of this year. Several users have voiced problems they have had recently, from March into April, of not being able to withdraw Bolivars from the exchange, citing long delays and no response from the exchange when asked for help. Some have speculated that due to banking issues from the devolving economic situation in Venezuela, are causing the problems.
Speculation running wild
In addition to the issues customers are facing with withdrawing funds, some are beginning to speculate more serious issues with the exchange. In a reddit post earlier this month, one user has claimed that SurBitcoin is under government investigation, and the owner of the exchange Daniel Arraez has been detained under investigation for several activities that are illegal under Venezuela law.
Unfortunately due to the silence from SurBitcoin about the withdrawal issues and the alleged government investigation, rumors are starting to run rampant with no one able to come to any sort of logical solution to what is happening. Due to other bitcoin exchanges in the past being accused of running fractional reserves, for example Cryptsy who did this for a year and a half or the infamous Mt.Gox, people in the bitcoin community are sensitive to these matters, rightfully so.
Rodrigo Souza, who is the founder of BlinkTrade, commented on the speculation debunking the rumors, saying:
“SurBitcoin is managed and operated by VK Inversiones ( Kevin Charles ).
There are no charges being pressed against Daniel Arraez. You can go to SEBIN and ask yourself.
Bitcoin is 100% legal in Venezuela, and SurBitcoin only deal with Banks. So, unless banks are not doing their AML properly, it is just impossible for SurBitcoin participate in any money laundry activities.
There are a lot of rumors being spread by SurBitcoin haters in Venezuela. We usually don’t comment on them.
Please, stop spreading rumors, you are not helping anyone. If you really want the truth, you should go to SEBIN yourself and question them.
BTW: SEBIN is nothing similar to FBI in USA. SEBIN is identical to the KGB in the old SSSR.”
In a separate interview just a few days ago, Souza said in regards to SurBitcoin:
“[…] the operations of the exchange were somewhat slow and erratic because the FIAT deposits and withdrawals were fulfilled manually by employees of the exchange.
SurBitcoin started to amass customers thanks to several give-away promotions, buying beersto Venezuelans that were starting to realize the benefits of using Bitcoins to protect themselves from double-digit inflation -67% in 2014, and 220% in 2015.
Operating an exchange in a country with capital controls is no easy, there is no law being broken in Venezuela, however, corruption of government officials in that country is the main enemy of Bitcoin adoption. KYC/AML policies are different among the exchanges, in Surbitcoin for example, the exchange only makes sure that Venezuelans are the ones depositing FIAT, and that they are in fact the account holders, sometimes they perform security checks on suspicious accounts, and they request the owners to take a selfie with their ID.”
It’s quite possible that due to the manual human processes on the SurBitcoin side, it could be causing withdrawal delays, versus possible banking issues, running on a fractional reserve, or worse, some sort of government intervention. Whatever the case though, their trading volume on the exchange is dropping dramatically, which also is an indicator to the problems they are experiencing.