YrGrid denies allegations that it is refusing redemptions in order to profit from the recent spike in Bitcoin prices.
Instead, the problem is caused by their Bitcoin wallet service provider, said the grid, which is a Hong Kong-based commercial gambling-oriented grid with a Bitcoin-based virtual currency.
Residents and users have been unable to redeem their uBTC virtual currency with transactions marked simply as “pending.” In addition, Podex, a third-party virtual currency exchange, has shut down operations on the grid.
The problem is that the YrGrid kept some of its Bitcoin funds at BTC-e.com, a Bitcoin exchange that was fined $110 million and shut down by authorities last July on charges of money laundering. Its alleged mastermind, a Russian hacker accused of using the exchange to launder billions of dollars, has been arrested in Greece and is currently in the process of being extradited to the U.S. to stand trial.
“We have some funds deposited at BTC-e.com,” YrGrid grid owner Zhijie Wang told Hypergrid Business. “Since their website was down, we can’t cover all Bitcoin deposit. We try to recover ourselves before we have solution with them.”
The grid has been unable to cover residents’ losses out of pocket, Wang said. “The Bitcoin price has been rising too much last year, so it’s more difficult to get enough funds from investors to cover that.”
However, those users who have bought in-world currency recently are unaffected by the problem and will be able to redeem their currency.
In addition, other residents may see some progress in the next couple of months, Wang added. “We expect to get some refunds from the service provider and we will get more funds invested by shareholders.”
The price of a single Bitcoin was just under $800 this time last year. On Sunday, it was worth more than $19,000 and might rise even further as two traditional exchanges — the Chicago Board Options Exchange and the Chicago Mercantile Exchange — are launching Bitcoin-related futures contracts.
Meanwhile, the grid itself might be caught up in the anti-money laundering investigation.
“We received investigation requirements for some special account regarding money laundering,” Wang said. “Since many accounts connect together and it also very difficult to identify uBTC resource, so many accounts’ cash-out keeps pending. However, it won’t effect those accounts which have deposit records.”
The company may implement customer identification procedures in future to solve the issue.
Podex is off the grid
YrGrid residents also complained that Podex machines have been shut down on the grid. Podex is a third-party virtual currency exchange that has been offering currency purchases and sales for more than two dozen grids. It recently celebrated its tenth year in business.
The exchange has suspended repurchases of YrGrid’s uBTC currency and turned off its machines due to the problems.
“Let me start with the statement that my cooperation with YrGrid owners was always nice and I could not complain about it in the past,” Podex CEO Jacek Shuftan told Hypergrid Business. “But indeed, something strange has happened recently — there is no contact with them and withdrawals from the grid to personal Bitcoin wallets are pending. Because of this fact I decided to suspend withdrawals from YrGrid as well and locked Podex cashouts machines. I simply can not buy coins from users if I can not withdraw them.”
Unhappy grid residents and Podex users have been posting on social media, and have contacted Hypergrid Business directly.
“At first I noticed Podex exchange’s ATM’s were locked, then I asked Podex what was going on and they said that YrGrid’s support was not responding back to them,” one resident told Hypergrid Business. There was no response from the grid’s support team and online ticket service, and no word from the grid on social media or other channels, the resident said.
Currently, no other major OpenSim grids uses a Bitcoin-based virtual currency.
Even before the latest spike in prices, Bitcoins were too unwieldy for low-value in-world transactions. Plus, the price volatility has always made it difficult for merchants to set prices in Bitcoin. Ongoing problems with fraud, theft, and money laundering have also made the use of Bitcoin as a base currency very problematic.
Some grids to, however, accept Bitcoin as a payment mechanism, as an alternative to, say, PayPal or credit card payments. The way this works is that grids use a third-party payment processor such as Coinbase, BitPay or Stripe to accept the payments. The payments are typically converted to US dollars or Euros at the time of payment. Meanwhile, the grid’s own in-world currency is a traditional virtual currency that is not pegged to Bitcoin prices.
Residents have accused the grid of taking advantage of their deposits in order to profit from the current increase in Bitcoin prices.
“It’s even higher now and you guys are not cashing out anyone’s money anymore,” YrGrid resident KiKi Miranda posted on YrGrid’s Facebook page. “Looks like you’re taking advantage of the high Bitcoin rate and are just stealing all our coins. There are no notices or anything. No responses to tickets. Nothing. Just keeping our money.”
The grid denies the allegation.
“People saying we get advantage of Bitcoin price rising is nonsense,” said Wang. “Actually we work much harder to recover their balance.”
YRGrid, known as a Bitcoin-based gambling grid, brands itself as a Bitcoin economy in OpenSim and uses Bitcoin as their in-world currency meaning users and residents can spend and buy land or services with Bitcoin in the virtual world without having to exchange to Gloebits or Podex or other in-world currencies.
The grid’s weak response to the Bitcoin problems has created a lot of frustration for residents.
— YrGrid (@YrGrid) November 19, 2017
For example, on November 19, the grid simply posted a graphic on Twitter that said “YrGrid users be like cash outs gonna be coming any day now!!!” — and nothing since. The grid has responded by saying that the twitter account was taken away by their previous employee and they have been wanting to request the employee to give it back “nicely” without success. The employee has been using the account to attack the grid according to Wang.
“We didn’t announce that officially because we still want to ask the employee nicely to get back the account,” he said. “However it seems not work, we will announce that in facebook account for that. So can you certify this point?”
Users have also been experiencing frustration as the grid fails to respond or responds rudely to their posts and comments on social media. The grid has also not been getting responses via email and website support tickets.
One resident told Hypergrid Business they tried reaching the grid by responding to the Tweet several times, and then was told by the grid that they should try again in three months and “not to worry about it.”
YrGrid posted other unpleasant messages on social media, then deleted them.
“He [the YrGrid owner] said things like the money is his now, and to maybe to try back in three months plus said ‘but keep depositing money’ then laughed, and that Bitcoin wasn’t really money and not to worry about it, and that I gave the money to him, etcetera,” the resident told Hypergrid Business.
In a Twitter response on December 14, YrGrid said, “bitcoins isn’t money you lost nothing.”