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Author Topic: Coinbase steals and profits off customers via high risk transaction scheme  (Read 6548 times)
accord01
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October 31, 2013, 05:36:58 PM
 #1

Thought I should post this here considering the seriousness of this topic and how big coinbase is for USA people.

I bought 10 bitcoins, 4.5, and .4 on Oct 18/19 @ around $150-160.  

6 days later, within almost the hour that the coins were supposed to arrive, I receive the following email for all 3 transactions:

Quote
On Oct 18, 2013 you purchased 10.00 BTC via bank transfer for $1,556.76.

Unfortunately, we have decided to cancel this order because it appears to be high risk. We do not send out any bitcoins on high risk transactions, and you will receive a refund to your bank account in 3-4 business days.

Please understand that we do this to keep the community safe and avoid fraudulent transactions. Apologies if you are one of the good users who gets caught up in this preventitive measure - we don't get it right 100% of the time, but we need to be cautious when it comes to preventing fraud.

You may have more luck trying again in a few weeks. Best of luck and thank you for trying Coinbase.

Kind regards,
The Coinbase Team

I didn't think it was a big deal after doing a little research since they have squared things away with similar situations, and I've made a 10BTC transaction in the past, but i was a bit worried because of the size of the transactions and the movement of the market.  I ask this how could this be fixed?

6 days later, I finally get a response:

Quote

Sorry for the confusion on that. It looks like your recent purchases were canceled due to appearing high risk, and a refund has been sent to your bank account.

I know it must be frustrating to have this happen, but it's an unfortunate necessity that we exercise caution when selling bitcoin online in order to protect ourselves and the bitcoin community from fraudulent transactions. While bitcoin transactions from one account to another do not face this kind of cancellation, we can't guarantee the sale of bitcoin to every account due to the high risk nature of selling them online. If you try a purchase at a later time then you may have success getting it to go through. Please don't hesitate to shoot me an email if you have any further questions!

-Rees D. Sloan

Customer Support Specialist

This response really didn't tell me anything.  So I ask what my other options are and here is there next response:

Quote

Hi _____ ,

I am extremely sorry for the confusion on this. I've taken further steps to review your account and at this point we've been able to get you whitelisted. Any future purchases you make from this point forward will not encounter this cancellation. Unfortunately, since the refund has already been sent out on these original purchases, I'm unable to push through or re-create the original transactions.

Again, I apologize for the frustration this has caused. If you need further assistance please let me know and I'll be happy to help!

-Rees D. Sloan

Customer Support Specialist

Something really just doesn't add up here.  At the date and time that the bitcoins were supposed to be added to my account, the price was at like ~199 and 200+ on bitstamp and mtgox.  Thats ~$50 increase since the time i bought it, costing me nearly $7-800.  

So what did coinbase do with the ~$2500 that was in limbo for so long?  And what happened to the bitcoins that was purchased at much cheaper prices?

I mean coinbase could have just denied these transactions right away, and I could have went to another site to buy it right away.

The thing that really hurts about this is that none of this money was mine.  I am just a student and I finally convinced family and friends that bitcoin is a worthy investment and they finally trusted me giving me this money to invest.  Is there anyway that this could be reconciled?
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accord01
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October 31, 2013, 05:40:07 PM
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It's not too hard to see how it works.  I validate my bank account.  I initiate transaction on my end, they buy bitcoins on their end and wait few days for my money to reach them.  They tell you it has to take a week or longer and gives u specific date.  Since bitcoin is so volatile, big changes can happen in a week.

IF bitcoin goes up, they cancel my transaction and say it is "high risk" and initiate a return of my money.  IF bitcoin goes down they allow transaction to stay and they keep my money and give me the bitcoins.

It is common sense.  Obviously they're not going to steal from every transaction, and they can pick and choose how much they make. 

http://blog.coinbase.com/post/44046687068/high-risk-transactions

This blog post here is vague and a lie.  He cites that it is because ppl try to scam them with fake bank account #s and such.  That is such a lie, because you can never scam someone with fake bank account # if the purchase isn't instant.  because transaction won't go thru, DUH.  Same with fake credit card #s, it WONT GO THRU.

With the whole high risk transaction mechanism, coinbase can literally control exactly how much they can make off of the volatile market.  I was one of the people that got hurt REALLY bad.  some ppl might even benefit from a canceled order.  but the point is, coinbase CONTROLS everything.

I want coinbase to SHOW PROOF that they have been ripped off because people used fake bank account #s.  THEY CAN'T.  Because you can't get ripped off from a fake account #.  You cannot get ripped off if the purchase is not instant.

With the high risk transaction mechanism, Coinbase is GUARANTEED to make money.  In a market that is growing, all they have to do is have the system set to flag xx% of transactions, and they are GUARANTEED to make money off this. A LOT of money based on how many transactions they process.

COINBASE, if you are reading this.  Please respond and defend your case (i know, your answer would probably be "we can't disclose, blah blah blah.)
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October 31, 2013, 05:40:25 PM
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Not to be flip, but Coinbase is run by a Goldman Sachs forex trader. What did people expect?
Phinnaeus Gage
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October 31, 2013, 05:48:58 PM
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Not to be flip, but Coinbase is run by a Goldman Sachs forex trader. What did people expect?

Jamie!
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October 31, 2013, 05:49:38 PM
 #5

Has anyone encountered any issues SELLING to them?  I'm curious if the "high risk" flag goes both ways.  FWIW, I've used Coinbase many times without issue.

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October 31, 2013, 05:51:36 PM
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Jamie!

Jamie Dimon is JP Morgan.
haightst
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October 31, 2013, 05:52:19 PM
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Not to be flip, but Coinbase is run by a Goldman Sachs forex trader. What did people expect?

that explains alot of things !  Roll Eyes

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October 31, 2013, 06:11:36 PM
 #8

Not to be flip, but Coinbase is run by a Goldman Sachs forex trader. What did people expect?

that explains alot of things !  Roll Eyes

https://twitter.com/FEhrsam
nthoangga
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October 31, 2013, 06:15:13 PM
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Not to be flip, but Coinbase is run by a Goldman Sachs forex trader. What did people expect?

Coinbase runs by Goldman Sachs? Man then this is standard!

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LiteCoinGuy
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October 31, 2013, 06:28:07 PM
 #10

Not to be flip, but Coinbase is run by a Goldman Sachs forex trader. What did people expect?

Coinbase runs by Goldman Sachs? Man then this is standard!


then the US gov is okay with bitcoin  Wink

CBitz
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October 31, 2013, 06:31:49 PM
 #11

I had the same thing happen to me when I joined Coinbase a few months ago, but they eventually processed the transactions at my original purchase price after emailing and posting on here. The price had gone up around $30/BTC during that time. If you search the forums, you'll discover this is pretty common, and they normally right their wrongs.

It's odd they didn't process the transactions at the original purchase price for you or even mention that as an option in their email responses. Their customer service has always been shit, but it is a nice service to use once you're at Level 2 and can buy and sell instantly.    
dominicwin
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October 31, 2013, 06:44:38 PM
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I use coinbase for selling coins.

Haven't tried purchasing though. Don't like hearing this kind of stuff though.... Is the forex trader connection true?

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BUYING BTC HERE https://bitcointalk.org/index.php?topic=334920.0
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October 31, 2013, 07:11:23 PM
 #13

Not to be flip, but Coinbase is run by a Goldman Sachs forex trader. What did people expect?

that explains alot of things !  Roll Eyes

https://twitter.com/FEhrsam

haaa ~ya man just look what he tweetter'd LOL ====>



accord01
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October 31, 2013, 07:18:06 PM
 #14

basically, coinbase is using customers as insurance when they trade.  Also, i do have proof of problems when you sell on coinbase.  i will post it later with screen shots.
accord01
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October 31, 2013, 07:26:10 PM
 #15

Here's the kicker... I already successfully bought 10 btc from them with no problems in the past.
accord01
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October 31, 2013, 07:34:39 PM
 #16

all they would have to do is flag more high risk transactions when it goes in their favor then when it doesn't to make a nice profit.
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October 31, 2013, 07:36:14 PM
 #17

Here's the kicker... I already successfully bought 10 btc from them with no problems in the past.

when they were still in beta? or after?  Cool

imardern
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October 31, 2013, 08:13:51 PM
 #18

Coinbase buys instantly about 90% of what you "buy" when you do, and buys the other small bit when the money actually comes in. Thus, if a large price increase occurs they would take an overall loss on the sale due to the rise in price THUS they lie to you and say "flagged for fraudalent transaction" or some other BS to prevent a loss. Really wishing someone would sue them for this obvious and blatant lie and act of fraud against customers.
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October 31, 2013, 08:34:51 PM
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Yes, I agree. This exact thing happened to me when I tried to buy at $20 a year ago, right before it shot up to $40 and they cancelled my transaction also. Can anyone tell me where a decent exchange might be for the US right now. If I feel like selling my BTC I'd like to be able to do so.
accord01
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October 31, 2013, 09:00:51 PM
 #20

What is appalling are the people who don't understand what is going on, and even defending coinbase because they haven't gotten scammed yet.

If you understand how the process works, then it is as clear as day that the high risk transaction thing is not a "detection system" that they have or whatever other bogus claim.  It is a way for them to have insurance when they trade, at the expense of the customer.

because they make sure they receive the money from the customer 1st and then decide to cancel or approve, depending on bitcoin prices.
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