BitPhone was one of the popular services that allowed any Bitcoin user to make global phone calls at a fraction of the cost. Even though the service was around for 1.5 years, and saw some moderate success, the company is shutting down its service due to regulatory requirements. As it turns out, quite a few people abused the phone service, and the carrier used for this project now wants BitPhone to collect user information.

No More BitPhone Thanks To A Few Bad Seeds

As is usually the case when a new and innovative service is launched, people are looking to take advantage of the situation. For BitPhone, it remains unknown what caused this abuse, but the option to make cheap phone calls with Bitcoin to anyone in the world can be used for many different things. Prank calls, fake bomb threats, and impersonation are just a few of the many unfortunate possibilities.

BitPhone relies on a carrier service to provide this service to users all over the world. As that – undisclosed – company noticed the service was being abused; they told BitPhone changes would need to be made. To be more precise, the service would have to log user identification for every phone call made. That means enabling a KYC procedure before users can make a call through their browser with Bitcoin.

This is not to the liking of the team, and they flat out refused to go ahead with this idea. Instead, they are shutting down the service, which is rather unfortunate. Then again, it is good to see some companies are not willingly rolling over when a request is made to collect user information. Some Bitcoin companies could learn a thing or two from this story.

All user accounts on the BitPhone platform are in withdrawal-only mode, and funds will need to be moved out as soon as possible. Users have until March 2017 to get all of their money out, which is more than enough time to settle all balances. Users who rented a phone number through the service scan get a partial refund for their order as well.

It is not the first time a Bitcoin service has to shut down due to regulatory requirements. Governments and third-party service providers are actively demanding cryptocurrency enterprises keep close tabs on their customers and pass along information to the government when requested. This is not the way Bitcoin operates and will cause many more companies to shut down services in the coming years.

Header image courtesy of Shutterstock

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