7 ms·

Desperate Coinbase customers turn to SEC with allegations of fraud

107 points by magnetic 8y ago

test6554 8y ago
Wow, I bought some digital currency through coinbase last summer and while I had some annoyances with the transaction limits, high fees and the delays, overall, I think they did a good job considering how fast they were growing. I can't imagine how many fires they had to put out over there, and how hard it would be to recruit knowledgeable and talented people. That said, the fact that I made enough money to get a new car rather than lost money probably skews my opinion.
- kurtable 8y ago
  As a Canadian customer, I was pretty steamed that I could buy coins, but they didn't tell me I couldn't sell them until after I'd already purchased. I managed to transfer to MetaMask so it ended up okay.
  - garmaine 8y ago
    > but they didn't tell me I couldn't sell them until after I'd already purchased Why would that not be the case?
    - chipotle_coyote 8y ago
      I can't tell if this is a genuine question or not, because if it's genuine you're giving the OP an extremely ungenerous reading. "They didn't tell me I couldn't sell them until after I'd already purchased" doesn't mean "I couldn't sell the coins until after I bought them, and I had no idea that was the case because I don't understand the basic concept of transactions." It means "I wasn't allowed to sell the coins, and they didn't tell me that until after I bought them."
      - garmaine 8y ago
        Ok. GP should reword because it seriously didn’t read that way.
        freeloop10 8y ago
        me as well
    - deleted 8y ago
      [deleted]
- joering2 8y ago
  In my opinion they did not put out most of their fires; they just let them burn, as I had multiple tickets that auto-response pretty much told me to fuck off and go to their FAQ look for answer, as they will most likely not answer at all (which was true) Congratulation on your new car; Ethereum bonanza made it possible for me to purchase 6 properties around Palo Alto and be able to rent those out BUT, even if you made only some $ for a car, I strongly advise (probably you did this already) to seek a knowledgeable accountant help as Coinbase share all your info with IRS and I am sure they will be crushing big time (or already started) on those newly minted millionaires (and anyone in between!) https://www.theverge.com/2018/2/26/17055264/coinbase-cryptocurrency-tax-irs-compliance-court-order https://www.theverge.com/2018/2/26/17055264/coinbase-cryptoc...
  - test6554 8y ago
    Congrats! I already reported all my short-term capital gains to the IRS. I'm not going to mess with tax dodging. I got the car with what was left over after taxes.
- drcode 8y ago
  I've dealt extensively with Coinbase and second this opinion: Whenever I've communicated with employees they appear to be dedicated to resolving any issues in a fair and appropriate manner. However, various parts of their software platform have been glitchy and confusing UX abounds. Additionally, significant mistakes regarding balances on their end definitely happen: At times, they fall well short of their aspirations to provide a professional platform to customers.
craftyguy 8y ago
tl;dr: folks fall for a scam, and are then upset when they are scammed.
deltateam 8y ago
That awkward moment when you appeal to authority, but it is the wrong authority. Coinbase doesn't trades securities, and had not even registered as a broker-dealer at the time of any of these complaints. Wouldn't the Federal Trade Commission be the more apt generic regulator to lodge these complaints to?
- joering2 8y ago
  That brilliant moment when you appeal to the authority to put some complaint on the record, before they eventually try to go public.
- sizzzzlerz 8y ago
  I'd suggest the consumer help reporter on your local TV station. The Feds don't care. Why should they? It's not like this involves real currency or stocks. "You pays your money, you takes your chances."
  - xkcd-sucks 8y ago
    Seems like somebody is missing a bunch of tax revenue if people can't cash out though
  - alasdair_ 8y ago
    >It's not like this involves real currency According to the US Treasury Dept. it's a currency.
- JumpCrisscross 8y ago
  > Wouldn't the Federal Trade Commission be the more apt generic regulator to lodge these complaints to? The best strategy would involve papering many agencies. The CFPB, SEC, CFTC, OCC, your state financial services regulator and attorney general, et cetera. Generally speaking, the SEC is still deciding whether Bitcoin is in its purview. Lots of complaints could cause it to classify Bitcoin exchanges as being subject to the Exchange Act or 1934.
  - 8y ago
desireco42 8y ago
Coinbase needs some serious competition. Their site is fine, until you ran into a problem. I didn't have one, but from what I can see, once people run into issues, they are just not resolved, hence frustration.
- rihegher 8y ago
  what's wrong with the existing competition? 1Broker 1BTCXE ACX Allcoin ANXPro Anybits Bibox Binance Bit2C bitbank BitBay Bitfinex bitFlyer Bithumb bitkk Bitlish BitMarket BitMEX Bitsane Bitso Bitstamp Bittrex Bit-Z BL3P Bleutrade Braziliex BtcBox BTCChina BTCExchange BTC Markets BtcTrade.im BTC Trade UA BTCTurk BTCX BX.in.th C-CEX CEX.IO CHBTC ChileBit COBINHOOD coincheck CoinEgg CoinEx CoinExchange coinfloor Coingi CoinMarketCap CoinMate coinnest CoinOne Coinsecure CoinSpot CoinTiger CoolCoin Crypton Cryptopia DSX Ethfinex EXMO EXX flowBTC FoxBit Gatecoin Gate.io Gemini GetBTC HADAX HitBTC Huobi ICE3X Independent Reserve INDODAX itBit jubi.com Kraken Kucoin Kuna LakeBTC LBank Liqui LiveCoin luno Lykke Mercado Bitcoin MixCoins NegocieCoins Novaexchange OKEX Paymium Poloniex QRYPTOS QuadrigaCX QUOINEX SouthXchange SurBitcoin TheRockTrading TideBit Tidex UrduBit Vaultoro VBTC VirWoX WEX xBTCe YoBit YUNBI Zaif ZB
  - eximius 8y ago
    With the exception of Kraken, Poloniex, and Gemini, I either haven't heard of these places or have heard nothing but terrible, terrible things (i.e., Bitfinex). And I'm sure people have bad things to say about the ones I listed as not being that bad. There simply isn't a well trusted exchange. Coinbase/GDAX and Kraken are the two I would recommend to people getting started, even with these issues surfacing.
    - russdpale 8y ago
      Preferably out of US jurisdiction as well.
      - eximius 8y ago
        Nope, wrong. Most people should prefer jurisdiction in their country of residence. Most people will want the ability to sue them if something goes wrong. They will value that more than the vague theoretical threat of a government crackdown or avoiding taxes.
keketi 8y ago
> A recurring theme in the SEC complaint files Mashable obtained is the seeming disappearance of a would-be trader's money Coinbase uses MongoDB, doesn't it? Asking for a friend.
- throwbacktictac 8y ago
  They do indeed use MongoDB for parts of the system. However, the transaction history and accounting is all stored in postgres.
- gordo4 8y ago
  https://www.mongodb.com/blog/post/multi-document-transactions-in-mongodb https://www.mongodb.com/blog/post/multi-document-transaction...
spaceandthyme 8y ago
I know several good people that have been locked out of Coinbase permanently - without any explanation of why - for over a year despite repeated unanswered requests to have accounts reinstated. I watched those people turn from advocates for coinbase into critics. Just a simple explanation would have helped prevent that scenario. This company is a terrible example of how to do business. It's as if they watched how Google handled AdSense publishers in the early days and decided to copy that model for customer service. I wonder how well that strategy will play out.
- pavlov 8y ago
  Coinbase is basically the PayPal of cryptocurrency. Arbitrary unexplained account freezes are part of the model.
  - kennxfl 8y ago
    Couldn't have said it better!
    - A2017U1 8y ago
      The first two sentences of the Bitcoin whitepaper: > A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required...
- adyus 8y ago
  Is it better to have reduced fraud and disgruntled customers, or viceversa? I'm genuinely curious. I suppose it depends on the ultimate goal, but seeing as Coinbase is VC-funded, well...
- existencebox 8y ago
  To add to sister comments, I'm also one of these people. My account became re-locked behind a 2 factor validation step, at some point, asking me for a token they claimed to have sent me. Asking to resend results in a server error. I went through 3 support ticket trains before I got "blacklisted." All 3 support agents stopped responding eventually, and after the third, I never got another response back to an initial bug (made with ~1 month increments). This was ~ a year ago. I made similar posts in the past and will echo the sentiment now. Coinbase is a fantastic example of how we've gotten into this state of the world where businesses, including ones touching the most sensitive aspects of your life (financial, private communication, private data storage) have almost no accountability to their users if you fall under their "not enough to care" epsilon. Unfortunately, that epsilon was likely derived by looking at the impact of failed tickets, so I'm pessimistic there will _be_ an impact. If there was, they'd be incentivised to change their behavior.
thisisit 8y ago
This is a settlement problem. Coinbase is unable to settle money between different accounts. And there is a perfect solution for this. We can use blockchain....Oh Wait. /s On a serious note, building a production level real time two book entry system is hard. Many times money just disappears because both legs of transactions don't match. The only way to track is some real good amount of sleuthing. But given the amount of customers Coinbase is adding left and right, it might be difficult to find time to get down to this sleuthing. It would have been best for Coinbase to temporarily hold new accounts to get their shit together. But I guess lure of money from constant trading was too much.
- mkirklions 8y ago
  How does money go missing? Ive been reading about money in a database and it seems pretty straight forward. Each transaction has an ID and a user ID, how does money disappear?
  - sanderjd 8y ago
    On the one hand, it's hard to scale a system without making it distributed at some point and consistency in distributed systems is really difficult; the system Coinbase is running is definitely not as straight forward as whatever you've been reading about. On the other hand, this is their core competency and it is absolutely not acceptable for money to go missing; it's a tough problem but its their business and they have to make it work or they're in for major trouble.
    - 394549 8y ago
      > On the one hand, it's hard to scale a system without making it distributed at some point and consistency in distributed systems is really difficult Banks have scaled systems like this with mainframes and COBOL for decades. It's probably not as hard as you think to get it right if you have your priorities straight. IMHO, for banking, you need to KISS and avoid all unnecessary complexity (especially in the name of "scale"), at least for your master source of truth.
eximius 8y ago
If you are a US customer and this happens to you, is submitting an SEC complaint really the best option or should you lawyer up and sue?
- mkirklions 8y ago
  Wait? I got locked out of coinbase and 2 months later BTC went up 2.5x. Thank god because I was going to sell 2 BTC. Only ended up needing to sell 0.5 + 3 shitcoin cash.
  - eximius 8y ago
    This is both off topic AND harmful advice.
starpilot 8y ago
What I think computer programmers tend to ignore are principles of real engineering in classical, high-consequence fields. It seems like Coinbase has been following the mantra of "move fast and break things," that would absolutely horrify any traditional engineer. Any civil engineer reviewing a bridge, any aerospace engineer designing a passenger aircraft that he himself may to have to fly on. When the work gets serious, it's time to move slowly and fix things. "Move fast and break things" is antithetical to any form of engineering.
- commandlinefan 8y ago
  Well, remember, we work in an industry managed by people who are convinced that programmers spend all their time browsing facebook and playing fortnight and develop "give me one good reason why I shouldn't fire you right now" methodologies like Scrum and "always looking over your shoulder" open offices. Working slowly, deliberately, and safely is indistinguishable from slacking to people who do nothing except look for slacking.
- himom 8y ago
  CB is a YC alum.
JackFr 8y ago
How is this even possible? I mean it's on the BLOCKCHAIN, right?
- desireco42 8y ago
  If it is in your wallet, then you own it, if it is not, you are not owning it. Blockchain.
- deleted 8y ago
  [deleted]
yoran 8y ago
I lost access to my Coinbase account when I lost my phone and got locked out due to 2FA. This was partially my fault for not being careful enough and not saving the recovery code. Anyway, they told me to create a new account. Their team would then verify that both accounts are matching, as you have to submit a copy of your passport. The funds would then be transferred from the old locked-out account to the new account. I did all this over 2 months ago. I am still waiting for the funds to be transferred. I contacted support twice now, and I'm always getting the same reply (we're still working on it). Fortunately, due to a mistrust of exchanges, I only have a small portion of my crypto-assets on Coinbase and keep most of it offline. However, it's still a non-trivial amount of money. I'm not sure what extra steps I can take now without it being too much effort on my part, because the amount is not that high.
largehotcoffee 8y ago
I operate an adult comic book publisher and Coinbase shutdown our account without notice and blamed the bank they work with (despite the fact that we were not converting our BTC to USD). All support tickets took 3 - 5 weeks to get a reply and it was always unhelpful. For a company like ours the whole appeal of Bitcoin is the anonymity, so our readers don't have to worry about buying lewd comics and having it show up on their statements. Coinbase tarnishes what Bitcoin stands for and they do not protect artists/publishers. Do not use Coinbase.
- Obi_Juan_Kenobi 8y ago
  If you weren't converting to USD, why use Coinbase at all? I understand there might be a convenience factor for managing the BTC transaction, but there are many options for doing so that don't introduce such a liability.
- Casseres 8y ago
  > For a company like ours the whole appeal of Bitcoin is the anonymity, so our readers don't have to worry about buying lewd comics and having it show up on their statements. Might I suggest Monero? That way if your customers use Bitcoin for other things, others can't see the details of your customers' transactions with you. If you don't convert into USD, there are different plugins that allow you to collect the coins, if you do want to convert there's a service called Globee that also takes BTC as well as XMR.
Animats 8y ago
There's a law firm taking complaints against Coinbase and wrapping them up into a class action.[1] PACER shows multiple lawsuits against Coinbase. Arbitrations are confidential, but there are probably some of those, too; Coinbase puts an arbitration clause in their contracts. Arbitration clauses don't prevent a lawsuit where there is fraud. One of the cases against Coinbase was forced out of arbitration because of that. [1] https://www.silvermillerlaw.com/current-investigations/coinbase-class-action/ https://www.silvermillerlaw.com/current-investigations/coinb...
asciimo 8y ago
I could see a small firm offering one-on-one, high value cryptocurrency-to-cash-and-back transactions doing very well. They could jump through all the money exchange and KYC hoops just like Coinbase did, but offer top-shelf, direct service.
kennxfl 8y ago
It's the start of an industry. This is bound to happen before someone innovates around these mistakes.
yani 8y ago
I have said it before. I will say it again. Coinbase is a bad player in crypto world. It is a magnitute worse than PayPal during its blackhat days of freezen assets. Their license needs to be revoked yesterday and not SEC but FBI needs to be involved.
optimiz3 8y ago
Here's a non-nonsensically opaque mail I recently got. Blocking early-adopters and developers won't go well. Infuriating. Hello, Thank you for your interest in Coinbase. Our primary goal is to make digital currency safe and secure for our customers. Coinbase is a regulated Money Services Business under FinCEN (FinCEN.gov), and as part of achieving this goal, we are legally obligated to implement regulatory compliance mechanisms. Upon careful review, we believe your account has engaged in prohibited use in violation of our Terms of Service and we regret to inform you that we can no longer provide you with access to our service. We respectfully request that you follow the on-screen instructions presented when you log into your Coinbase account to send any remaining balance offsite to an external address. Should you have any questions or need assistance, please let us know and we'll be happy to help. Respectfully, Coinbase Customer Support And the follow up: Hello, Thank you very much for your phone call about your account restriction. There are a variety of factors which have been weighed in your case, and we unfortunately are unable to elaborate on our internal decision process. Please know that we do not make these decisions lightly, and do regret losing you as a customer. We wish you all the best in your future endeavors. If you have any additional questions, please reach out to us by directly replying to this thread. Regards, The Coinbase Team
arisAlexis 8y ago
really skeptical. seems like never ending FUD. majority of the cases are customers that lost keys or did something wrong. For sure coinbase is not scamming people because they don't have to!
mastermojo 8y ago
Personally I've used Coinbase since 2013 and apart from a couple transactions (in 2013) getting flagged for fraud and reversed I haven't had any problems. Despite whole bunch of personal horror stories, I don't think they are a malicious, just unprepared for last year's massive usage spike.
deltateam 8y ago
I realize this is more of a socioeconomic division, but I haven't used Coinbase in over a year, OTC is so much better.
globalrobin00 8y ago
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107 points by magnetic 8y ago

Wow, I bought some digital currency through coinbase last summer and while I had some annoyances with the transaction limits, high fees and the delays, overall, I think they did a good job considering how fast they were growing. I can't imagine how many fires they had to put out over there, and how hard it would be to recruit knowledgeable and talented people. That said, the fact that I made enough money to get a new car rather than lost money probably skews my opinion.

kurtable 8y ago
As a Canadian customer, I was pretty steamed that I could buy coins, but they didn't tell me I couldn't sell them until after I'd already purchased. I managed to transfer to MetaMask so it ended up okay.
- garmaine 8y ago
  > but they didn't tell me I couldn't sell them until after I'd already purchased Why would that not be the case?
  - chipotle_coyote 8y ago
    I can't tell if this is a genuine question or not, because if it's genuine you're giving the OP an extremely ungenerous reading. "They didn't tell me I couldn't sell them until after I'd already purchased" doesn't mean "I couldn't sell the coins until after I bought them, and I had no idea that was the case because I don't understand the basic concept of transactions." It means "I wasn't allowed to sell the coins, and they didn't tell me that until after I bought them."
    - garmaine 8y ago
      Ok. GP should reword because it seriously didn’t read that way.
      - freeloop10 8y ago
        me as well
  - deleted 8y ago
    [deleted]
joering2 8y ago
In my opinion they did not put out most of their fires; they just let them burn, as I had multiple tickets that auto-response pretty much told me to fuck off and go to their FAQ look for answer, as they will most likely not answer at all (which was true) Congratulation on your new car; Ethereum bonanza made it possible for me to purchase 6 properties around Palo Alto and be able to rent those out BUT, even if you made only some $ for a car, I strongly advise (probably you did this already) to seek a knowledgeable accountant help as Coinbase share all your info with IRS and I am sure they will be crushing big time (or already started) on those newly minted millionaires (and anyone in between!) https://www.theverge.com/2018/2/26/17055264/coinbase-cryptocurrency-tax-irs-compliance-court-order https://www.theverge.com/2018/2/26/17055264/coinbase-cryptoc...
- test6554 8y ago
  Congrats! I already reported all my short-term capital gains to the IRS. I'm not going to mess with tax dodging. I got the car with what was left over after taxes.
drcode 8y ago
I've dealt extensively with Coinbase and second this opinion: Whenever I've communicated with employees they appear to be dedicated to resolving any issues in a fair and appropriate manner. However, various parts of their software platform have been glitchy and confusing UX abounds. Additionally, significant mistakes regarding balances on their end definitely happen: At times, they fall well short of their aspirations to provide a professional platform to customers.

craftyguy 8y ago

tl;dr: folks fall for a scam, and are then upset when they are scammed.

deltateam 8y ago

That awkward moment when you appeal to authority, but it is the wrong authority. Coinbase doesn't trades securities, and had not even registered as a broker-dealer at the time of any of these complaints. Wouldn't the Federal Trade Commission be the more apt generic regulator to lodge these complaints to?

joering2 8y ago
That brilliant moment when you appeal to the authority to put some complaint on the record, before they eventually try to go public.
sizzzzlerz 8y ago
I'd suggest the consumer help reporter on your local TV station. The Feds don't care. Why should they? It's not like this involves real currency or stocks. "You pays your money, you takes your chances."
- xkcd-sucks 8y ago
  Seems like somebody is missing a bunch of tax revenue if people can't cash out though
- alasdair_ 8y ago
  >It's not like this involves real currency According to the US Treasury Dept. it's a currency.
JumpCrisscross 8y ago
> Wouldn't the Federal Trade Commission be the more apt generic regulator to lodge these complaints to? The best strategy would involve papering many agencies. The CFPB, SEC, CFTC, OCC, your state financial services regulator and attorney general, et cetera. Generally speaking, the SEC is still deciding whether Bitcoin is in its purview. Lots of complaints could cause it to classify Bitcoin exchanges as being subject to the Exchange Act or 1934.
- 8y ago

desireco42 8y ago

Coinbase needs some serious competition. Their site is fine, until you ran into a problem. I didn't have one, but from what I can see, once people run into issues, they are just not resolved, hence frustration.

rihegher 8y ago
what's wrong with the existing competition? 1Broker 1BTCXE ACX Allcoin ANXPro Anybits Bibox Binance Bit2C bitbank BitBay Bitfinex bitFlyer Bithumb bitkk Bitlish BitMarket BitMEX Bitsane Bitso Bitstamp Bittrex Bit-Z BL3P Bleutrade Braziliex BtcBox BTCChina BTCExchange BTC Markets BtcTrade.im BTC Trade UA BTCTurk BTCX BX.in.th C-CEX CEX.IO CHBTC ChileBit COBINHOOD coincheck CoinEgg CoinEx CoinExchange coinfloor Coingi CoinMarketCap CoinMate coinnest CoinOne Coinsecure CoinSpot CoinTiger CoolCoin Crypton Cryptopia DSX Ethfinex EXMO EXX flowBTC FoxBit Gatecoin Gate.io Gemini GetBTC HADAX HitBTC Huobi ICE3X Independent Reserve INDODAX itBit jubi.com Kraken Kucoin Kuna LakeBTC LBank Liqui LiveCoin luno Lykke Mercado Bitcoin MixCoins NegocieCoins Novaexchange OKEX Paymium Poloniex QRYPTOS QuadrigaCX QUOINEX SouthXchange SurBitcoin TheRockTrading TideBit Tidex UrduBit Vaultoro VBTC VirWoX WEX xBTCe YoBit YUNBI Zaif ZB
- eximius 8y ago
  With the exception of Kraken, Poloniex, and Gemini, I either haven't heard of these places or have heard nothing but terrible, terrible things (i.e., Bitfinex). And I'm sure people have bad things to say about the ones I listed as not being that bad. There simply isn't a well trusted exchange. Coinbase/GDAX and Kraken are the two I would recommend to people getting started, even with these issues surfacing.
  - russdpale 8y ago
    Preferably out of US jurisdiction as well.
    - eximius 8y ago
      Nope, wrong. Most people should prefer jurisdiction in their country of residence. Most people will want the ability to sue them if something goes wrong. They will value that more than the vague theoretical threat of a government crackdown or avoiding taxes.

keketi 8y ago

> A recurring theme in the SEC complaint files Mashable obtained is the seeming disappearance of a would-be trader's money Coinbase uses MongoDB, doesn't it? Asking for a friend.

throwbacktictac 8y ago
They do indeed use MongoDB for parts of the system. However, the transaction history and accounting is all stored in postgres.
gordo4 8y ago
https://www.mongodb.com/blog/post/multi-document-transactions-in-mongodb https://www.mongodb.com/blog/post/multi-document-transaction...

spaceandthyme 8y ago

I know several good people that have been locked out of Coinbase permanently - without any explanation of why - for over a year despite repeated unanswered requests to have accounts reinstated. I watched those people turn from advocates for coinbase into critics. Just a simple explanation would have helped prevent that scenario. This company is a terrible example of how to do business. It's as if they watched how Google handled AdSense publishers in the early days and decided to copy that model for customer service. I wonder how well that strategy will play out.

pavlov 8y ago
Coinbase is basically the PayPal of cryptocurrency. Arbitrary unexplained account freezes are part of the model.
- kennxfl 8y ago
  Couldn't have said it better!
  - A2017U1 8y ago
    The first two sentences of the Bitcoin whitepaper: > A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required...
adyus 8y ago
Is it better to have reduced fraud and disgruntled customers, or viceversa? I'm genuinely curious. I suppose it depends on the ultimate goal, but seeing as Coinbase is VC-funded, well...
existencebox 8y ago
To add to sister comments, I'm also one of these people. My account became re-locked behind a 2 factor validation step, at some point, asking me for a token they claimed to have sent me. Asking to resend results in a server error. I went through 3 support ticket trains before I got "blacklisted." All 3 support agents stopped responding eventually, and after the third, I never got another response back to an initial bug (made with ~1 month increments). This was ~ a year ago. I made similar posts in the past and will echo the sentiment now. Coinbase is a fantastic example of how we've gotten into this state of the world where businesses, including ones touching the most sensitive aspects of your life (financial, private communication, private data storage) have almost no accountability to their users if you fall under their "not enough to care" epsilon. Unfortunately, that epsilon was likely derived by looking at the impact of failed tickets, so I'm pessimistic there will _be_ an impact. If there was, they'd be incentivised to change their behavior.

thisisit 8y ago

This is a settlement problem. Coinbase is unable to settle money between different accounts. And there is a perfect solution for this. We can use blockchain....Oh Wait. /s On a serious note, building a production level real time two book entry system is hard. Many times money just disappears because both legs of transactions don't match. The only way to track is some real good amount of sleuthing. But given the amount of customers Coinbase is adding left and right, it might be difficult to find time to get down to this sleuthing. It would have been best for Coinbase to temporarily hold new accounts to get their shit together. But I guess lure of money from constant trading was too much.

mkirklions 8y ago
How does money go missing? Ive been reading about money in a database and it seems pretty straight forward. Each transaction has an ID and a user ID, how does money disappear?
- sanderjd 8y ago
  On the one hand, it's hard to scale a system without making it distributed at some point and consistency in distributed systems is really difficult; the system Coinbase is running is definitely not as straight forward as whatever you've been reading about. On the other hand, this is their core competency and it is absolutely not acceptable for money to go missing; it's a tough problem but its their business and they have to make it work or they're in for major trouble.
  - 394549 8y ago
    > On the one hand, it's hard to scale a system without making it distributed at some point and consistency in distributed systems is really difficult Banks have scaled systems like this with mainframes and COBOL for decades. It's probably not as hard as you think to get it right if you have your priorities straight. IMHO, for banking, you need to KISS and avoid all unnecessary complexity (especially in the name of "scale"), at least for your master source of truth.

eximius 8y ago

If you are a US customer and this happens to you, is submitting an SEC complaint really the best option or should you lawyer up and sue?

mkirklions 8y ago
Wait? I got locked out of coinbase and 2 months later BTC went up 2.5x. Thank god because I was going to sell 2 BTC. Only ended up needing to sell 0.5 + 3 shitcoin cash.
- eximius 8y ago
  This is both off topic AND harmful advice.

starpilot 8y ago

What I think computer programmers tend to ignore are principles of real engineering in classical, high-consequence fields. It seems like Coinbase has been following the mantra of "move fast and break things," that would absolutely horrify any traditional engineer. Any civil engineer reviewing a bridge, any aerospace engineer designing a passenger aircraft that he himself may to have to fly on. When the work gets serious, it's time to move slowly and fix things. "Move fast and break things" is antithetical to any form of engineering.

commandlinefan 8y ago
Well, remember, we work in an industry managed by people who are convinced that programmers spend all their time browsing facebook and playing fortnight and develop "give me one good reason why I shouldn't fire you right now" methodologies like Scrum and "always looking over your shoulder" open offices. Working slowly, deliberately, and safely is indistinguishable from slacking to people who do nothing except look for slacking.
himom 8y ago
CB is a YC alum.

JackFr 8y ago

How is this even possible? I mean it's on the BLOCKCHAIN, right?

desireco42 8y ago
If it is in your wallet, then you own it, if it is not, you are not owning it. Blockchain.
deleted 8y ago
[deleted]

yoran 8y ago

I lost access to my Coinbase account when I lost my phone and got locked out due to 2FA. This was partially my fault for not being careful enough and not saving the recovery code. Anyway, they told me to create a new account. Their team would then verify that both accounts are matching, as you have to submit a copy of your passport. The funds would then be transferred from the old locked-out account to the new account. I did all this over 2 months ago. I am still waiting for the funds to be transferred. I contacted support twice now, and I'm always getting the same reply (we're still working on it). Fortunately, due to a mistrust of exchanges, I only have a small portion of my crypto-assets on Coinbase and keep most of it offline. However, it's still a non-trivial amount of money. I'm not sure what extra steps I can take now without it being too much effort on my part, because the amount is not that high.

largehotcoffee 8y ago

I operate an adult comic book publisher and Coinbase shutdown our account without notice and blamed the bank they work with (despite the fact that we were not converting our BTC to USD). All support tickets took 3 - 5 weeks to get a reply and it was always unhelpful. For a company like ours the whole appeal of Bitcoin is the anonymity, so our readers don't have to worry about buying lewd comics and having it show up on their statements. Coinbase tarnishes what Bitcoin stands for and they do not protect artists/publishers. Do not use Coinbase.

Obi_Juan_Kenobi 8y ago
If you weren't converting to USD, why use Coinbase at all? I understand there might be a convenience factor for managing the BTC transaction, but there are many options for doing so that don't introduce such a liability.
Casseres 8y ago
> For a company like ours the whole appeal of Bitcoin is the anonymity, so our readers don't have to worry about buying lewd comics and having it show up on their statements. Might I suggest Monero? That way if your customers use Bitcoin for other things, others can't see the details of your customers' transactions with you. If you don't convert into USD, there are different plugins that allow you to collect the coins, if you do want to convert there's a service called Globee that also takes BTC as well as XMR.

Animats 8y ago

There's a law firm taking complaints against Coinbase and wrapping them up into a class action.[1] PACER shows multiple lawsuits against Coinbase. Arbitrations are confidential, but there are probably some of those, too; Coinbase puts an arbitration clause in their contracts. Arbitration clauses don't prevent a lawsuit where there is fraud. One of the cases against Coinbase was forced out of arbitration because of that. [1] https://www.silvermillerlaw.com/current-investigations/coinbase-class-action/ https://www.silvermillerlaw.com/current-investigations/coinb...

asciimo 8y ago

I could see a small firm offering one-on-one, high value cryptocurrency-to-cash-and-back transactions doing very well. They could jump through all the money exchange and KYC hoops just like Coinbase did, but offer top-shelf, direct service.

kennxfl 8y ago

It's the start of an industry. This is bound to happen before someone innovates around these mistakes.

yani 8y ago

I have said it before. I will say it again. Coinbase is a bad player in crypto world. It is a magnitute worse than PayPal during its blackhat days of freezen assets. Their license needs to be revoked yesterday and not SEC but FBI needs to be involved.

optimiz3 8y ago

Here's a non-nonsensically opaque mail I recently got. Blocking early-adopters and developers won't go well. Infuriating. Hello, Thank you for your interest in Coinbase. Our primary goal is to make digital currency safe and secure for our customers. Coinbase is a regulated Money Services Business under FinCEN (FinCEN.gov), and as part of achieving this goal, we are legally obligated to implement regulatory compliance mechanisms. Upon careful review, we believe your account has engaged in prohibited use in violation of our Terms of Service and we regret to inform you that we can no longer provide you with access to our service. We respectfully request that you follow the on-screen instructions presented when you log into your Coinbase account to send any remaining balance offsite to an external address. Should you have any questions or need assistance, please let us know and we'll be happy to help. Respectfully, Coinbase Customer Support And the follow up: Hello, Thank you very much for your phone call about your account restriction. There are a variety of factors which have been weighed in your case, and we unfortunately are unable to elaborate on our internal decision process. Please know that we do not make these decisions lightly, and do regret losing you as a customer. We wish you all the best in your future endeavors. If you have any additional questions, please reach out to us by directly replying to this thread. Regards, The Coinbase Team

arisAlexis 8y ago

really skeptical. seems like never ending FUD. majority of the cases are customers that lost keys or did something wrong. For sure coinbase is not scamming people because they don't have to!

mastermojo 8y ago

Personally I've used Coinbase since 2013 and apart from a couple transactions (in 2013) getting flagged for fraud and reversed I haven't had any problems. Despite whole bunch of personal horror stories, I don't think they are a malicious, just unprepared for last year's massive usage spike.

deltateam 8y ago

I realize this is more of a socioeconomic division, but I haven't used Coinbase in over a year, OTC is so much better.

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