Coinbase stole $3965.55 from me (Update: Resolved)

[hello_good_sir]

Just to be clear up front: this is not about a cancelled transaction.

On March 22nd I sent 60 BTC to Coinbase:

Complete March 21, 2014, at 05:48PM PDT
Amount Received
60.00 BTC
From
an external account
To
Avatar You

After six blocks I sold the 60 BTC to Coinbase:

Complete March 21, 2014, at 06:57PM PDT
Amount Sent
60.00 BTC
From
Avatar You
To
Avatar Coinbase (transfers@coinbase.com)
Message

Sold 60.00 BTC for for $33,713.51.

Payment will be sent to Internet Credit Union ***** by Wednesday Mar 26, 2014.

Note that in the message Coinbase is acknowledging that I sold them 60 BTC for $33,713.51.  The money never arrived.  The transaction was not cancelled.  If it were, it would have said "cancelled" instead of completed.  If I had done nothing at this point I would have no money of either kind: the 60 BTC were permanently gone and I didn't have my $33,713.51.

So I went onto their tech support chat and here is the conversation that we had:

→hello, it says that my payment is complete but my bank account does not show the money

→I sold BTC on Saturday

Ken: Hm, what's the account email? I'll take a look.

→hello_good_sir@email.com

Ken: That's odd, it looks like the transaction was cancelled but I do see that we still took the BTC. We should be able to fix this for you, but you'll have to email support@coinbase.com about this due to the amounts involved.

Ken: Sorry about the confusion here, but it's something we should be able to correct.

→ok so I write and email and what will happen?

Ken: I can't guarantee anything since I won't be the person reviewing it, but most likely they'll be able to push through the original sale for you.

→ok, thanks

At this point the price had rallied.  If they had given me the BTC back then they would be losing money, because I would be able to sell the BTC for a much higher price, close to $40k if I remember correctly.  However I was content to get the money at the price that we originally agreed on.

Also this is how the Terms of Service say that things should be handled:

3.3. Sale Transactions. Once you have successfully completed all necessary verifications with respect to your Coinbase Account (as described at https://coinbase.com/verifications), you may sell Bitcoin to Coinbase (subject to applicable transaction limits as described at https://coinbase.com/verifications). Coinbase will instruct its bank to initiate a credit to your linked payout method, in an amount equal to: (a) the total number of Bitcoin you wish to sell multiplied by the Sell Price Conversion Rate quoted on the Coinbase Site at the time that you initiate the transaction, minus (b) the applicable Exchange Fee (defined below). Coinbase will then initiate a transfer of the relevant amount of Bitcoins from your Coinbase Wallet to Coinbase's own Bitcoin wallet. The related funds will thereafter be credited to your linked payout method. It may take up to two (2) to three (3) business days. Upon any sale of Bitcoin to Coinbase, all settlements or payments by Coinbase for such transaction shall be paid in local currency (e.g., USD) at the applicable Sell Price Conversion Rate quoted on the Coinbase Site at the time that you approved the transaction.

So I sent an email to tech support:

Mar 26, 2014 06:22PM Hello_Good_Sir's_Real_name
Hello, on March 22nd I attempted to sell 60 BTC from my account (hello_good_sir@email.com).
The website said that it would take until the 26th (today). The
dollars have not arrived in my bank account yet but your website shows
that the transaction has been completed and CoinBase has taken my BTC. I used your chat window to
speak with Ken and he told me to send an email to you due to the amounts
involved. Please fix this situation.


Thanks,
Hello_Good_Sir

Here is his response:

Mar 27, 2014 11:57AM Josh
Thank you for bringing this to our attention.

I'm very sorry for the delay, for some reason the bank transfer never started. I've gone ahead and returned the BTC to your account manually. If you initiate the sell again you should have the money in your bank account soon.

Again, our apologies for the delay!

So "some reason" being a bug in their software.  The problem with getting the BTC back is that prices had fallen quite a bit.  Here is the transaction of them giving us their BTC instead of our dollars.

Amount Received
60.00 BTC
From
Avatar Coinbase (internal@coinbase.com)
To
Avatar You
Message

Returning BTC from sell that failed to start.

Now one could argue that this is not a big deal, when trading you lose some and you win some.  I am not a trader.  I buy and hold and never sell because I am saving for my family's future.  I really, really need money right now to take a burden off of a loved one and so I forced myself to part with these bitcoins.

So I write back:

Mar 28, 2014 11:14AM Hello_Good_Sir
Thank you, Josh, for your help.

But on March 22nd I sold you 60 BTC for $33,713.51, please see the attached screenshot. It is not my fault that you did not transfer my dollars to my bank account. Giving me your 60 BTC instead of my dollars is not a solution to your mistake. Please initiate the transfer of $33,713.51 to my bank account.

Best wishes,
Hello_Good_Sir
Attachments | hello_good_sir_proofofsale.png

So now Josh should just recognize his mistake, take back Coinbase's BTC and give us our dollars.  Actually his coworker Alex just blew me off completely:

Mar 28, 2014 02:27PM Alex
Hi there Hello_Good_Sir,

Unfortunately we cannot initiate ACH bank transfers manually from our end.

Umm.... then who can?  What a blatant lie.  Maybe Alex can't initiate a bank transfer, but if that is the case then why is he dealing with my case?  Shouldn't someone with the power to fix things work on my case?

So it was Friday night and we realized that we weren't going to get this issue resolved in our favor at least until Monday, if ever.  Meanwhile we have an urgent need for the money and the price is falling fast.  We think about suing Coinbase but we don't have the money to hire lawyers and we don't have years to deal with this problem.  We need money now.  So we decide, as an emergency measure to recover some of our funds, to sell Coinbase's 60 BTC in this transaction:

Complete March 28, 2014, at 08:07PM PDT
Amount Sent
60.00 BTC
From
Avatar You
To
Avatar Coinbase (transfers@coinbase.com)
Message

Sold 60.00 BTC for for $29,747.96.

Payment will be sent to Internet Credit Union ***** by Wednesday Apr 2, 2014.

So we get most of the money that we need now, though it is going to be a hit on the bank account to make up the difference.  An additional benefit of doing this, is that the amount that they owe me still ($3965.55) is less than the maximum amount recoverable in my state's small claims court.

I decided to not post this until I got the $29,747.96 out of my Internet Credit Union account, just in case Coinbase tries to take the dollars back.

Update: Coinbase apologized and gave me bitcoins equal to the difference, so that I can sell the bitcoins and receive the dollars.  I consider this case to be suitably resolved.

[hello_good_sir]

I agree that it was an error to start with, just some bug in their software.

I just edited my post to include my initial chat with tech support, which is just more evidence in my favor.

[hellscabane]

This is quite unfortunate. Looking at this, upon first glance, in the best case this is incompetence and design flaws whereas in the worst case, this could be downright market manipulation and possible fraud.

That said, in terms of the legal aspects, if your coins were showed as confirmed in your Coinbase wallet prior to selling, then you should be entitled to the amount that you transacted that day. However, there may be a clause in the ToS in which if you accepted your coins back you “willingly” revoked the contract of the original purchase price that you were entitled to.

I will assume that the burden of proof (in alignment with the ToS that you agreed upon) is on you, but from what I can gather, you may have some sort of case.

Please do not take this as legal advice as this is not what I am providing you; consult an attorney on what your options are and provide as much evidence as you have.

[hello_good_sir]

Thanks for bringing up the Terms of Service, hellscabane.

So here is the relevant paragraph, with the key part in bold:

3.3. Sale Transactions. Once you have successfully completed all necessary verifications with respect to your Coinbase Account (as described at https://coinbase.com/verifications), you may sell Bitcoin to Coinbase (subject to applicable transaction limits as described at https://coinbase.com/verifications). Coinbase will instruct its bank to initiate a credit to your linked payout method, in an amount equal to: (a) the total number of Bitcoin you wish to sell multiplied by the Sell Price Conversion Rate quoted on the Coinbase Site at the time that you initiate the transaction, minus (b) the applicable Exchange Fee (defined below). Coinbase will then initiate a transfer of the relevant amount of Bitcoins from your Coinbase Wallet to Coinbase's own Bitcoin wallet. The related funds will thereafter be credited to your linked payout method. It may take up to two (2) to three (3) business days. Upon any sale of Bitcoin to Coinbase, all settlements or payments by Coinbase for such transaction shall be paid in local currency (e.g., USD) at the applicable Sell Price Conversion Rate quoted on the Coinbase Site at the time that you approved the transaction.

I updated the first post in this thread to include this information.

[lostshare]

Sounds like a case of greed on your behalf, I'd be pleased just to have a single bitcoin.

You had your coins returned, others such as myself haven't been as fortunate due to dishonest site operators.

You sent them virtual coins and received the exact same number of virtual coins back, they 'stole' nothing. It was an opportunity missed.

Greed....greed... greed.

[zenojis]

The problem is that you got the bitcoins back. If they were still holding the bitcoins I'd say that they are definitely stealing money. Hopefully you can work things out in court, it is quite ridiculous to need to do that though. I hope you keep everyone updated so we can learn from this. It is unfortunate that things like this happen but I guess that's just the way it goes when you are dealing with an entirely new type of currency.

[Bit_Happy]

Ken: Sorry about the confusion here, but it's something we should be able to correct

You got your coins back.
Coinbase said they were sorry.
That's a really good deal in Bitcoin Land. 

[hellscabane]

You may also need to be careful about 3.6.4 in conjunction with this issue. From your chat, it seems that the transaction was cancelled. Following that, you have clause 2.4 that gives Coinbase 48 hours or more after you request your Bitcoins to return them to you to initiate another transaction.

That said, your sale of 60 BTC may nullify your "right" to retrieve the difference as it can be argued that you willingly waived your right to the previous amount by performing another transaction. Once again, this is not legal advice, and I highly recommend you consulting a practicing attorney to see what your options are.

[hello_good_sir]

Update: Coinbase apologized and gave me bitcoins equal to the difference, so that I can sell the bitcoins and receive the dollars.  I consider this case to be suitably resolved.

[hellscabane]

Update: Coinbase apologized and gave me bitcoins equal to the difference, so that I can sell the bitcoins and receive the dollars.  I consider this case to be suitably resolved.

This is great news to hear. Thank you for updating us. I'm glad that you got what was rightfully yours and I'm glad that Coinbase did the stand-up thing!

You should change your thread's title to reflect this update. Once again, thanks for informing the community about this and providing us updates!

[saif92]

Its great news you have solved this issue with Coinbase now do one thing and lock this thread its better for you 

[grifferz]

Sounds like a case of greed on your behalf, I'd be pleased just to have a single bitcoin.

Sounds like a case of jealousy on your part that as long as it only negatively affects people who are better off than you, you don't consider it important that people stick to their agreements.

[dave111223]

Sounds like a case of greed on your behalf, I'd be pleased just to have a single bitcoin.
You had your coins returned, others such as myself haven't been as fortunate due to dishonest site operators.
You sent them virtual coins and received the exact same number of virtual coins back, they 'stole' nothing. It was an opportunity missed.
Greed....greed... greed.

Sounds like a case of troll...