Bitcoin Forum

After registering with Coinbase and verifying my banking information, I decided to make my first purchase on Feb. 17th for 1 BTC.  Total cost including fees was $26.24 USD.

My account told me that the transaction was in "pending" status and that the coin "will arrive" on Feb. 22 (tonight) after the bank transfer clears.

Result:  I received an email notification 6 minutes before the transaction deadline notifying me that my order was "cancelled" because it was found to be a "high risk" transaction.

I have emailed support and am awaiting an explanation.

My questions:

1)  Why was my transaction flagged as "high risk" when it was for such a low amount, and when my bank account is supposedly "verified"?
2)  Is it natural that I'm questioning whether the recent and continuous rise in BTC price may be the supposed "high risk" factor?

Just to see if there is a pattern that exists, I am curious about this ... did you verify using the "instant" verification or using the deposit verification?

Others reporting this seem to usually have also placed more than one order.  Was this your only order or had you subsequently placed additional buy orders?

I used the "instant" verification. 

This was the only order I had placed, though I had attempted to buy additional coins after I had placed the initial order (I was told I had to wait until the first transaction cleared after which I would be allowed to make multiple purchases).   I specifically wanted to purchase only a single BTC to make sure that everything checked out.

I just placed another order for 1 BTC in light of this little price dip, so we'll see what happens.

I've bought a few hundred bitcoins through Coinbase, and once had a order cancelled right after a large price increase. I don't know if the price increase is related or not, but I did note that the email notice they send you never explains precisely what risk they are talking about. It could be the risk of fraud, the risk of insufficient funds, the risk of Coinbase losing money on the exchange rate, the risk of alien abduction, the risk of running out of beer - they never specify.

Well, I specifically asked support to explain the criteria used to determine that my transaction was "high risk."  I'll forward the response if/when it arrives.

Update:  No response from customer support yet.  A support ticket was created Friday evening (it is now Tuesday afternoon).

Interestingly, my friend registered for Coinbase soon after I did.  He also went through the "instant verification" process for his bank account information, but instead of purchasing a single BTC, he purchased five.

My friend's BTC order cleared without a hitch.  The similarities between our purchase transactions include the following: 
1)  We both used instant verification for banking details
2)  We both registered accounts, were verified, and made purchases all in our first day of site usage.

Differences between our purchase transactions include the following: 
1)  The BTC price increased significantly after my purchase (my purchase was cancelled) while BTC price remained relatively stagnant after my friend's purchase (his purchase was executed)
2)  I purchased one BTC, my friend purchased five BTC

There is no human deciding which orders are high risk or not.A Their software is a bit on the fritz. But customer support, when, or if, it ever gets back to you, should clear it all out and whitelist your account so this doesn't happen often fo ryou.

Another update, Coinbase replied to my support ticket with the following statement:


I'm quite pleased with this response.  Hopefully everything will work out and I will receive my BTC tomorrow :D

Possibly Coinbase uses the same heuristic that credit card companies use.

When credit card info is stolen, the thief usually doesn't make a big purchase as his first action, it draws too much attention.  Instead, they do one or two very small test purchases at a gas station or drugstore, and if those go through ok, eventually they move to the big ticket item.

So perhaps, counterintuitively, people should only ever buy the maximum BTC allowed on Coinbase, especially in their first few transactions, in order to avoid triggering their fraud detection algorithm.

Think like a thief who has just stolen someone else's bank account...and then do the opposite. :)

Update:  Coinbase essentially reversed the cancellation on my transaction and credited my account with BTC at the rate I was originally quoted.  I was then told that I was now "whitelisted" to avoid similar complications in the future.