We love Ethereum and were excited to hear about LocalEthereum.com. It was touted as the Ethereum version of LocalBitcoins.com. We happily signed up and right away we noticed that the default 2FA they require is through email.
It is awesome that they require 2FA. Email is a slow way to do it and if someone has your passwords it means they can likely also access your email so it isn’t very secure. We found that Account>Security>2FA allowed us to change it to Google Authenticator.
We decided to post some ads and waited. While we were waiting we got an email that we could sign up for a referral link but the https://localethereum.com/refer page didn’t work.
And waited. And waited. For the first few weeks or so, nothing.
Then the scammers came. There are 3 of us that have accounts on LocalEthereum. We have 7 ads between us. We have had 46 people start trades with us and only 2 of those were legitimate buyers/sellers. Then they website wouldn’t fund the trade correctly so that was an issue. The other 44 were scammers.
96% percent of our trades on LocalEthereum were scams.
We asked LocalEthereum about this and this was their response.
“Thanks for sending that list through, i can confirm they are all suspended from the platform, most were automatically picked up by our anti-fraud measures.
We are looking into many different ways of eliminating scammers, the biggest hurdle being that because the site is private we want to eliminate the ability of users to false report for personal gain.
We are working very hard behind the scenes to implement an easier way, until then we can be contacted here at any time.”
When we check the profiles they claimed were suspended, every profile was still showing. There is no notification on a profile that the account has been banned (like on LocalBitcoins and Bitrated)
When we originally contacted LocalEthereum they hadn’t prioritized banning scammers. They prioritize the appearance of the website over security and safe trading. Creating a support ticket, going back to your email and verifying the support ticket, then waiting for a reply is not a realistic solution.
On 3/14/18 a full 3 months after our first trade LocalEthereum rolled out the ability to report someone inside the trade. When we tried to report the scammers we received the following error
“On no, an error has occured
Cannot read property ‘toString’ of undefined”
A few traders we spoke with believe that LocalEthereum doesn’t want us to report scammers. That would be extra work for LocalEthereum or they are scammers themselves. They likened it to the Bitwallet.cc exit scam
We hope that LocalEthereum gets better. We really want it to work. Unfortunatey right now we just don’t trust a website that makes appearance a higher priority than protecting people’s money.
Pros
Ethereum Trading
2FA is required/default
Encrypted chats
Clean design
Cons
The website is very buggy and doesn’t seem to work.
The vast majority of trades started are scammers
Most of the professional traders we have talked to have not been able to complete a trade
Hi,
Thank you for your review. We welcome all criticism and will take your feedback on board as we improve the platform.
We are aware of bad actors on the platform and are continually evolving our anti-fraud measures to combat them. However, although scammers do exist on localethereum, the rate is nowhere near 96% — the vast majority of trades end with positive feedback and no complaints.
I believe that to say we don’t prioritise security is false. Security has been our number one priority from the very beginning, and that’s why we’re the *only* over-the-counter trading platform that offers full control over your wallet, smart contract escrows and end-to-end encrypted conversations. Localethereum is a security-first application. We have been and will continue to work tirelessly to make it harder for people to engage in fraud on the platform.
In regards to suspending users: When a user is suspended, all of their feedback is reversed, they are unable to create new trades and their offers are hidden (unbeknownst to them, at least initially). We don’t publish a notification currently because we believe that would only serve to aid them in creating new accounts faster.
We are unaware of any issues with funding the smart contract escrows. I suggest getting in touch with support so that we can look into that for you.
I apologise that you had a negative experience using the site. Thank you again for the review — your feedback and complaints are greatly appreciated and we hope you will re-visit the platform in the future.
Regards,
Michael
Co-founder
Yeah I had nothing but scams there so I gave up on it. I just convert my ethereum to Bitcoin and sell on localbitcoins.
We feel like saying you prioritize design over security is fair. You put time into pushing updates of your websites appearance but not adding the ability to report scammers.
It wasn’t until after we contacted you and pointed out the oversight that you fixed it. That was three months after you started accepting trades.
Yes, it is true that there was no convenient way to report traders without entering a dispute or contacting us via the support desk. However, the report button was far from the first step we took against fraud.
We’ve been implementing all kinds of automatic suspension filters, warning messages, auto-detection of account numbers and e-mail addresses in messages and offers’ terms, e-mail-related security (i.e. to prevent phishing attacks) and more since we launched, and this measures have been effective.
The cleaner UI came three months after our launch because we were busy focusing on security features. To reiterate, we are the only platform that uses client-side encryption for your wallet and messages, and an Ethereum smart contract for all escrows. This makes it impossible for us, or any potential attacker, to access your messages or ether.
Security and privacy is at the forefront of everything we do, and we plan to keep it that way.
Once again, thank you for the feedback — it is feedback like yours that helps to keep us on track to achieve our goal of being the most secure ether marketplace.
Thanks for the response. Regardless of our disagreement we do really hope that your website continues to improve and we get a few real trades out of it.