Cryptocurrency exchange Coinbase is considered by many to be one of the most trusted and widely used trading platforms. Currently, it only supports Bitcoin, Ether, Litecoin, and Bitcoin Cash and is quite selective when it comes to supporting additional cryptocurrencies on its exchange. Recently though, Coinbase has been heavily criticized by its customers. Notably, 134 pages filled with customer complaints have been sent to the US Securities and Exchange Commission (SEC) and the California Department of Business Oversight.
Information obtained from a Freedom of Information Act (FOIA) process has revealed a number of disconcerting complaints. One customer complaint reads:
“I have sent 17,023.00 from my Coinbase account to another Coinbase account on 12.21.2017. The other Coinbase account never received the funds as of 1/16/2018. I have contacted Coinbase over 7 times and all they say is that they have so many issues, they will get back to me and it is been a month.”
Meanwhile, another unhappy customer notes:
“Coinbase has been in possession of my funds ($21,000) since August 30th, 2017. They have effectively stolen my money at this point. They have no way to reach them by phone, and they are ignoring my repeated attempts to resolve this matter.”
Gross Mismanagement of User Funds
After reviewing most of the complaints, Mashable reports that Coinbase appears to be struggling to keep up with the increasing demands of its existing and new users. The names of the customers who filed the complaints and their other personal details have reportedly been removed by the SEC from the complaint documents provided to Mashable. So, it appears that they cannot be contacted in order to follow up on the issues.
However, after going through many of the complaints, it is evident that there have been some very strong allegations made against the San Francisco based exchange. One customer has said that they have lost $5,000 due to some system error. The user even alleged that, "I believe the company is holding my funds to make money on top of my investment." Moreover, many other Coinbase users claim that their funds are purposely being held by the exchange for unknown reasons.
Coinbase “Acting Criminally”
One of the most serious allegations against Coinbase is that the company has been “acting criminally” while another customer claims that the exchange has “stolen” most of their “life savings.” Many users also say that they have contacted Coinbase numerous times in order to talk to a company representative, however, they have only gotten back generic form emails. In addition, most of the complaints filed to the SEC allege that the exchange has grossly mismanaged their funds, which have reportedly resulted in a loss of thousands of dollars.
When contacted to address the serious issues, a Coinbase representative said that due to a dramatic rise in the popularity of cryptocurrencies, the exchange has been working really hard to accommodate and better serve their growing number of customers. The representative noted that in 2017 there was a “profound uptick in mainstream awareness and growth” of digital currencies. This, the spokesperson claims led to a “40x” increase in demand for the company’s services, while also experiencing a “295 percent” increase in daily transactions during November and December of 2017.
Complaints Piling Up Since Last Year
It’s true that the cryptocurrency market reached record-level highs toward the end of last year, and it is understandable to be overwhelmed by such a dramatic rise in demand. However, the exchange seems to be acting quite irresponsibly to meet such a challenge. Also, these complaints have reportedly been piling up since last year. One user notably informed the SEC back in November 2017 that they had deposited 10 bitcoins in their Coinbase account, and were then locked out from their account. The customer stated:
"I am prevented from selling, buying, transferring or accessing my property and also cutoff from all transaction history and other information. After repeated prompting via emails and phone calls, Coinbase advised me that I am locked out of my account as a result of a security software error on their end and that they would look into it. That was a month ago."
The customer also revealed that Coinbase was not responding to their complaints, and seemed to be focusing a lot more on expanding their operations instead of properly serving their existing customers. In February of this year, there was also reportedly a glitch on the exchange’s website which made it appear that many of their customers’ accounts were empty. Due to this, a number of Redditors even threatened that they would go to Coinbase’s headquarters armed with guns.