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Author Topic: SEC documents detail scores of fraud allegations against Coinbase  (Read 98 times)
Hydrogen
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June 21, 2018, 08:43:11 AM
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Life savings lost. Desperate cries for help. Allegations of fraud.

In the six years since its founding, the San Francisco-based exchange Coinbase has established itself as one of the most trusted places to trade ether, bitcoin, litecoin, and bitcoin cash. It's also run up its share of critics: namely, its customers.

In 134 pages of complaints filed to the SEC and the California Department of Business Oversight obtained by Mashable following a five-month FOIA process, a picture emerges not of a responsible actor in the cryptocurrency space opening the market to new investors, but rather a company overwhelmed by and underprepared for its own success.

And the consequences — as expressed by Coinbase's own customers — are enough to give even the most diehard crypto-enthusiast pause.

Money gone and no one home
A recurring theme in the SEC complaint files Mashable obtained is the seeming disappearance of a would-be trader's money, and what is portrayed as an aggressive nonchalance on the part of Coinbase in response to the loss.

Notably, the SEC redacted the complaints to remove personally identifiable information. This, while an understandable privacy measure, makes it practically impossible to reach out to the complainants for follow up. As such, we'll mostly let their words speak for themselves.

And there are a lot of words.

***

(There are screenshots of individual complaints made against coinbase @ the source link below. All of the complaints look like coinbase freezing accounts or holding peoples money. All of the balances involved look to be larger customers with assets in excess of $5,000.)

https://mashable.com/2018/06/20/sec-coinbase-complaints-fraud/

Maybe I am biased but I remember using coinbase before it became regulated. It worked fine. I never heard a single complaint about coinbase when it was an unregulated exchange. It seems to me that coinbase didn't become a corrupt institution until after they became regulated which could hint @ regulation being a bad thing for bitcoin and crypto in general.

Also does anyone know the name of a good crypto exchange US residents can use to help decentralize the american crypto market away from coinbase's attempts @ centralization btw?

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June 21, 2018, 10:29:24 AM
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It is the first time that I hear complaints about Coinbase. I don't want to question the validity of these reports, but this does not mean fraud or scam.
Also, I do not know why you are linking between regulations and these complaints ?. "Everything has its pros and cons."
I do not know how many transactions performed by Coinbase, but perhaps 134 pages is a small number compared to the entire system.

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June 21, 2018, 12:19:41 PM
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Also does anyone know the name of a good crypto exchange US residents can use to help decentralize the american crypto market away from coinbase's attempts @ centralization btw?
Why not try localbitcoins? I think it is the best site to use in order to halt coinbase's attempt to centralize bitcoin trades there.
It is the first time that I hear complaints about Coinbase. I don't want to question the validity of these reports, but this does not mean fraud or scam.
If you go around and read sites that shows user reviews like trustpilot, reddit and bittrust you will see lots of complaints about coinbase's services and most of those complaints have been posted there for a certain while so this shouldn't be your first time hearing complaints about it. Nevertheless, you are right that a customer or two complaining about their services doesn't instantly mean that it is a fraud.
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June 21, 2018, 12:27:38 PM
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People's greed of 500% to 1000% profit. Bitcoin $50,000 etc.... when will people learn..
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June 21, 2018, 12:32:55 PM
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Why not try localbitcoins? I think it is the best site to use in order to halt coinbase's attempt to centralize bitcoin trades there.

An exchange is way more secure and convinient than local bitcoins...

I think the excess of regulations in us are becoming a problem that is acting like a barrier so new exchanges can't join the market.

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June 21, 2018, 12:43:38 PM
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People's greed of 500% to 1000% profit. Bitcoin $50,000 etc.... when will people learn..

What does your comment have to do with the topic we're discussing?
This is about people losing money at Coinbase, because Coinbase is holding their funds hostage or they were lost due to errors made by Coinbase

This isn't about greed in the slightest and I'm not even sure who you're responding to.


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The Pharmacist
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June 21, 2018, 12:43:59 PM
 #7

Hydrogen, again, thank you for posting an article such as this.  For whatever reason I tend to avoid news sites (all of them, not just crypto) and thus miss interesting tidbits when they come out.

I've told of my experience with Coinbase a few times here.  I had an account in 2015.  At that time I had moved to a different town and gotten a new bank.  I hadn't closed my checking account at my old bank, and there was a time when both accounts were linked to Coinbase.  One day I tried to buy about $3 worth of bitcoin and had accidentally picked the old checking account instead of the new one, and the old one had a zero balance.  Instead of canceling the trade or going to the new checking account, Coinbase just nuked me altogether and sent me a generic e-mail that didn't inspire me with confidence.

I don't gamble.  I don't buy shit on the dark web.  The only thing I was doing with bitcoin up to that point was buying & selling it and claiming from faucets.  It was my fault that I tried to buy a small amount of bitcoin from the wrong checking account, but I think their response was a bit too extreme and I've never been a big fan of them since.

Man I miss Circle.

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June 21, 2018, 01:15:13 PM
 #8

It is the first time that I hear complaints about Coinbase. I don't want to question the validity of these reports, but this does not mean fraud or scam.
Also, I do not know why you are linking between regulations and these complaints ?. "Everything has its pros and cons."
I do not know how many transactions performed by Coinbase, but perhaps 134 pages is a small number compared to the entire system.


Seriously? There are thousands of complaints about Coinbase and you can find a lot here on the forum. It's not something new. Coinbase is famous for having one of the worst customers support in the crypto exchanges. And it's like this before the company becomes regulated.
I am not surprised if the authorities are starting to look closely about the complaints

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June 21, 2018, 01:20:32 PM
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It is the first time that I hear complaints about Coinbase. I don't want to question the validity of these reports, but this does not mean fraud or scam.
Also, I do not know why you are linking between regulations and these complaints ?. "Everything has its pros and cons."
I do not know how many transactions performed by Coinbase, but perhaps 134 pages is a small number compared to the entire system.

I constantly hear complaints from us residents about this exchanger. Moreover, many exchanges do not want to register accounts of us residents. It seems to me that you should have thought about this in the elections and demanded that the candidates solve these problems. To use the exchange outside of the United States is not the solution to problems.
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June 21, 2018, 01:24:01 PM
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Maybe I'm not reading too much but this is just one of the few times I encountered a complaint against Coinbase. I still remember reading about their 10 BTC raffle back in 2015 wherein a 16-year old dude won, and back then, Coinbase was the most prominent BTC/USD exchange among others. Personally, I never used Coinbase or anything, but my colleagues in the US who used the said exchange conveyed that their (Coinbase) customer support takes an awfully long time to respond to their clients' queries, and that's already a bad thing. As for deposits being lost in the wind, this is the first time I encountered such. I don't think regulation is to blame for non-professional practices by a certain service but perhaps the management itself. After all, regulations are created to ensure that no illegal things or wrongdoings are done by the service to its peers.


Man I miss Circle.

You're not alone. It's easier to use Circle than any other established exchanges present nowadays.

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June 21, 2018, 01:38:23 PM
 #11

I was never a big fan of Coinbase and I still remember what happened on 2017 August. When the Bitcoin Cash fork was activated, all the other exchanges credited BCH coins to their users. But Coinbase refused to do so.

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June 21, 2018, 01:42:46 PM
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Life savings lost. Desperate cries for help. Allegations of fraud.

In the six years since its founding, the San Francisco-based exchange Coinbase has established itself as one of the most trusted places to trade ether, bitcoin, litecoin, and bitcoin cash. It's also run up its share of critics: namely, its customers.

In 134 pages of complaints filed to the SEC and the California Department of Business Oversight obtained by Mashable following a five-month FOIA process, a picture emerges not of a responsible actor in the cryptocurrency space opening the market to new investors, but rather a company overwhelmed by and underprepared for its own success.

And the consequences — as expressed by Coinbase's own customers — are enough to give even the most diehard crypto-enthusiast pause.

Money gone and no one home
A recurring theme in the SEC complaint files Mashable obtained is the seeming disappearance of a would-be trader's money, and what is portrayed as an aggressive nonchalance on the part of Coinbase in response to the loss.

Notably, the SEC redacted the complaints to remove personally identifiable information. This, while an understandable privacy measure, makes it practically impossible to reach out to the complainants for follow up. As such, we'll mostly let their words speak for themselves.

And there are a lot of words.

***

(There are screenshots of individual complaints made against coinbase @ the source link below. All of the complaints look like coinbase freezing accounts or holding peoples money. All of the balances involved look to be larger customers with assets in excess of $5,000.)

https://mashable.com/2018/06/20/sec-coinbase-complaints-fraud/

Maybe I am biased but I remember using coinbase before it became regulated. It worked fine. I never heard a single complaint about coinbase when it was an unregulated exchange. It seems to me that coinbase didn't become a corrupt institution until after they became regulated which could hint @ regulation being a bad thing for bitcoin and crypto in general.

Also does anyone know the name of a good crypto exchange US residents can use to help decentralize the american crypto market away from coinbase's attempts @ centralization btw?

This may be the first time I heard complaints against coinbase. This maybe a move taken by US to formally wage war against ICO and upcoming cryptocurrency to circulate on the market.

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June 21, 2018, 02:25:03 PM
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Coinbase is overrated exchange, even most of little exchanges are better than coinbase in terms of customer support. That may be arising from their KYC & AML processes.
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June 21, 2018, 02:52:16 PM
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I've heard a lot of bad reviews on Coinbase but it seems to me that this exchange is still popular for us residents. Not every exchange works with the residents of the country. For me, there was a serious reason not to trust Coinbase after they gave without warning and agreement the data about their users who traded with them in 2017. I think that such exchanges should not be. I hope it goes bankrupt and closes.

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June 21, 2018, 03:05:29 PM
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I was never a big fan of Coinbase and I still remember what happened on 2017 August. When the Bitcoin Cash fork was activated, all the other exchanges credited BCH coins to their users. But Coinbase refused to do so.

This was one of the major fuck ups by Coinbase. Brian Armstrong is probably a scammer and he didn't even have the funds to pay the forked coins back to creditors so he had to buy time. There are also very strange moments of possible insider trading during the BCash debacle with Roger Ver involved. Ver is a known scammer and said "insider trading is a not a crime". All that Armstrong needed to do is to let people trade their shitcoin but he held the BCH hostage for months...

Anyway the idiots that cry about how "Coinbase became regulated" are delusional. It was a matter of time they would go full KYC and demand your picture holding and ID and so on, if they wanted to stay a legal US business. Just don't use it if you don't like it, I know I don't.

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June 21, 2018, 04:38:34 PM
 #16

I bet most of those complaints were for last december and January where people were sending their money to their own wallets and it wasn't arriving.

Nothing to do with Coinbase and everything to do with how congested the blockchain was. I think some mempool backlogs didn't clear for three weeks.

But noobs wouldn't understand the technical reasons for the money being "lost". A big reason why the price tanked since Jan is the poor performance of the blockchain and mempool. People hadn't adopted segwit, people hadn't batched transactions. And blockstream blocked increasing the block sizes. It was the perfect storm and helped ruin bitcoin's reputation.

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June 21, 2018, 08:13:54 PM
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I bet most of those complaints were for last december and January where people were sending their money to their own wallets and it wasn't arriving.

Nothing to do with Coinbase and everything to do with how congested the blockchain was. I think some mempool backlogs didn't clear for three weeks.

But noobs wouldn't understand the technical reasons for the money being "lost". A big reason why the price tanked since Jan is the poor performance of the blockchain and mempool. People hadn't adopted segwit, people hadn't batched transactions. And blockstream blocked increasing the block sizes. It was the perfect storm and helped ruin bitcoin's reputation.

Most of the complains are about people receiving canned replies from the support. Or people get their credit card charged but don't receive the coins, or people waiting for the transfer to their bank account but get nothing for days. Add people who suddenly are asked to verify their ID with a selfie and with a system verification that doesn't work. And all contacting the support but get nothing else than a bogus reply after like 2 or 3 weeks or an automated message giving a reply out of topic Roll Eyes

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June 21, 2018, 09:17:07 PM
 #18

Or people get their credit card charged but don't receive the coins
I even read stories where people complained about their credit card to be charged twice, which if true is a horrible event but it may also have been incompetence from the financial service behind the cards.

I am glad that till this day I haven't had one single problem with Coinbase, but that with a high probability comes from me not dealing with fiat. All problems are related to fiat one way or another.

Coinbase was a great help at time the network was clogged up badly, but currently has less use for me due to the much lower network fees. We'll see where everything leads to, but Coinbase will remain unharmed.

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June 21, 2018, 09:20:22 PM
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Most businesses that are starting will be perfectly fine. However, as they get bigger and bigger, they start becoming more and more prone to problems as their customer base grows bigger and they try to roll out new features without solving old ones. They may also become fraudulent or whatnot, just as Coinbase is alleged to do.

I don't know if regulation in this case is a driving cause of this, simply because coinbase themselves made the decision initially to suspend accounts/not credit for forks, etc.

But why would you trust your BTC to a third party anyways? Bitcoin is supposed to be trustless, and doing so completely ruins the benefits of BTC. Get yourself a desktop wallet where you yourself hold the private keys.

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June 22, 2018, 12:14:25 PM
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I do not know why you are linking between regulations and these complaints ?

There could be a correlation between regulation and higher degrees of corruption. I'll give you an example. I think everyone has heard of stories where paypal confiscates or holds someone's funds for no valid reason.

With coinbase we could have a perfect example of a financial platform that was legitimate and never scammed anyone before it was regulated which became corrupt and dysfunctional after regulation.

It all depends on whether similarities can be drawn between post regulation coinbase and paypal. As far as coinbase goes, I remember reading many posts on this forum written by people who claimed coinbase did them wrong. I've been here since 2012. I don't remember anyone saying anything negative about coinbase or allegations of corruption until after coinbase became regulated.

That's my attempt at correlating a link between the two. Would be interested to know what people think on this.

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