Coinbase is turning into some sort of anti-bitcoin Mordor

[gijoes]

Frankly, Coinbase is turning into a worst kind of fascist dictatorship. Not only is their service completely unreliable (many people report their bitcoin purchases being reversed, or their bitcoin withdrawals not going through). Now they have new AML/KYC policies in place which are the opposite of everything bitcoin stands for. And their enforcers have already started profiling their customers using KYC pretext, and refusing services to anyone they don't like.

Here is my story: I've purchased non-negligible amount of BTC via Coinbase lately. Even though I was fully verified with RL data, bank account, phone number, SSN and stuff, their KYC enforcers contacted me to get a full breakdown of who am I, what kind of business I run, where did I get the funds to purchase BTC, the purpose of my withdrawal transactions an so on. And this was not just a formality - they asked me a lot of questions, some of them suggesting that they studied my social network profiles carefully. Like: what is your role in Company A (the only way they could get any idea about my association with Company A is because it was in my social network profile). They literally demanded explanation for every single transaction and statement on the source of every purchase I made. They wanted to know EVERYTHING, and have all the supporting evidence! I mean, what the FUCK? Is this some kind of new Bitcoin Gestapo they are building there. If this is the case, WHY would anyone from this community support this Gestapo?!

What was the explanation for this outrage? Here you go: "Coinbase is a regulated Money Service Business under the FinCEN division of the U.S. Treasury Department and as such, we are required to review accounts to ensure compliance with regulations."

The experience I had with this questioning was, frankly, humiliating and sickening. After giving them a lot of explanations, they were still not satisfied and informed me that they are going to close my Coinbase account. Way to treat your customers who have paid you fat commissions on currency exchange. Comparing this experience with AML/KYC interaction in traditional banking system, I can only say that "Coinbase-style KYC" is so much worse. Banks are more subtle while Coinbase thugs come across as completely unprofessional, rude, capricious and extremely intrusive.

I suggest that anyone holding, or moving non-negligible amount of BTC through Coinbase, consider their Coinbase account exactly as traditional bank account - completely at mercy of an organization that is "holding your money", but working for regulators, not for you. Don't be surprised to be left completely without access to BTC you thought yours in the moment you least expect it. It would be even better to boycott Coinbase entirely - I repeat, the new policies they have in place are the opposite of everything bitcoin stands for.

[1715335900]

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[1715335900]

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[DarkKnight]

I suggest that anyone holding, or moving non-negligible amount of BTC through Coinbase, consider their Coinbase account exactly as traditional bank account - completely at mercy of an organization that is "holding your money", but working for regulators, not for you. Don't be surprised to be left completely without access to BTC you thought yours in the moment you least expect it. It would be even better to boycott Coinbase entirely - I repeat, the new policies they have in place are the opposite of everything bitcoin stands for.

It's against the BTC mantra to be trusting your coin in an online wallet service that is tied to traditional banking anyway. If you wanted to stay under the radar, you should have played the game. E.g. If you have $50k in cash to deposit in a traditional bank, expect to be grilled and reported if you walked to a teller with that. Instead, make ( deposits of $6,250 to different branches over a 10 day period, random amounts are better. By that same token, you should be purchasing your BTC from multiple sources, and using different addresses withdrawing it, consolidating it to your offline wallet.

The BTC legal landscape is changing daily. While the FED and IRS are slow to react (and even slower to understand) they are reacting. If Coinbase is to stay in operation, they need to be seen as actively following the regulations of their industry. If they get raided and your BTC is seized, what then? It sounds to me like you were just trying to take advantage of USD/BTC moves and got burned. Sucks for you. 

[gijoes]

If you wanted to stay under the radar, you should have played the game.

If I wanted to stay under the radar, I would not be using Coinbase to begin with. I mean, I understand AML/KYC and I had experience explaining source of funds to my banks. However, this experience with Coinbase was definitely much worse than any comparable interaction with regular banks. My point is that "Coinbase style KYC" as it is currently practiced by this company is extremely intrusive to the point of being offensive. Really, me calling them a Gestapo was not even too strong.

And remember, they keep private keys to your BTC - so they can block your access to them at any time and on any pretext. I would advise to be very careful regarding any balances you keep on Coinbase. You also cannot depend on their service in your business strategy as they can close your account on a whim, without giving any valid reasons. Just because they don't like you, or their KYC enforcer likes to play god. Anyone building on top of Coinbase API is wasting their time and shooting themselves in the leg, in my opinion. Long-term, their model is doomed to fail.  

[Bit_Happy]

This is seriously bad, has anyone else had a similar experience with Coinbase lately?

[ajw7989]

This is seriously bad, has anyone else had a similar experience with Coinbase lately?

I have not bought from coinbase in about a month but from when I used to buy pretty frequently I never had any problems. I still to this day use their wallet to transfer bitcoin in and out at least once daily and I have had no problems.

[Bit_Happy]

@gijoes Sorry you had such a bad experience, I hope they are not doing that to a large % of customers.

This is seriously bad, has anyone else had a similar experience with Coinbase lately?

I have not bought from coinbase in about a month but from when I used to buy pretty frequently I never had any problems. I still to this day use their wallet to transfer bitcoin in and out at least once daily and I have had no problems.

Thanks for the input.
Maybe someone from Coinbase staff will see this thread and comment?

[Arvicco]

Maybe someone from Coinbase staff will see this thread and comment?

Don't hold your breath. The users are posting horror stories about their Coinbase experience on a regular basis, and there was not even a single squeak from Coinbase to address them:

https://bitcointalk.org/index.php?topic=654098.0
https://bitcointalk.org/index.php?topic=652707.0
https://bitcointalk.org/index.php?topic=654572.0
https://bitcointalk.org/index.php?topic=651712.0
https://bitcointalk.org/index.php?topic=144673.0
https://bitcointalk.org/index.php?topic=147341.0
https://bitcointalk.org/index.php?topic=145319.0
https://bitcointalk.org/index.php?topic=142409.0
https://bitcointalk.org/index.php?topic=120720.msg1526144#msg1526144
https://bitcointalk.org/index.php?topic=156616.0
https://bitcointalk.org/index.php?topic=155090.0

The list goes on and on, but everybody seems to blissfully ignore all the warning signs... what are people waiting for, another Gox-style blowout?!

[Bit_Happy]

Maybe someone from Coinbase staff will see this thread and comment?

Don't hold your breath. The users are posting horror stories about their Coinbase experience on a regular basis, and there was not even a single squeak from Coinbase to address them:

https://bitcointalk.org/index.php?topic=654098.0
https://bitcointalk.org/index.php?topic=652707.0
https://bitcointalk.org/index.php?topic=654572.0
https://bitcointalk.org/index.php?topic=651712.0
https://bitcointalk.org/index.php?topic=144673.0
https://bitcointalk.org/index.php?topic=147341.0
https://bitcointalk.org/index.php?topic=145319.0
https://bitcointalk.org/index.php?topic=142409.0
https://bitcointalk.org/index.php?topic=120720.msg1526144#msg1526144
https://bitcointalk.org/index.php?topic=156616.0
https://bitcointalk.org/index.php?topic=155090.0

The list goes on and on, but everybody seems to blissfully ignore all the warning signs... what are people waiting for, another Gox-style blowout?!

I was going to use Coinbase in the future. This list is a good resource, thank you for posting so many links.

[Arvicco]

I was going to use Coinbase in the future. This list is a good resource, thank you for posting so many links.

You might be fine if you only purchase small amounts of BTC at above-average prices, do not use the service for time-sensitive transactions (as in less-than-a-few-days time-sensitive) and withdraw any bitcoins you managed to purchase immediately.

[tvbcof]

This is seriously bad, has anyone else had a similar experience with Coinbase lately?

I had a correspondence with Coinbase recently.  I'm being screwed with by Wells Fargo and I basically just gave Coinbase a heads-up since Wells Fargo forbade me from using Coinbase by name.

Coinbase's response left me with the distinct impression that they would definitely prefer to not rock the boat and would rather stay on the good side of Wells Fargo even if Wells Fargo's business practices impact them negatively.  Right now it's almost certainly not a big enough problem to warrant alienating the big banks over and doing so would likely end up costing them more.  Only a few customers are in my category I would guess.

I have always labored under the assumption that Coinbase will ask 'how high' when the U.S. regulatory system tells them to jump.  It's just good business, and the longer they have a monopoly, the better positioned they will be in their chosen market segment.  Probably 'operation choke point' is not impacting Coinbase since it is a reasonable assumption that they would have to comply with the maximum reporting requirements for ALL of their customers already.  So it's already factored in to their revenue models.  Having a monopoly allows them to easily adjust by pricing in whatever they need to.

As a side effect of corresponding with Coinbase, they asked me about how I came to have the Bitcoins I hold.  I answered honestly that I got them from Tradehill-I and invited them to use their technical skills to verify this.  Apparently they did since after a few days they told me to carry on...for now...

It is a complete pipe-dream to think that Coinbase, or any other player with mainstream connections or aspirations, is going to give two shits about the 'spirit of Bitcoin' or whatever...or such as said spirit is perceived in the community on Bitcointalk.org at least.  But mainstream adoption is what we all want, right?  Right?

[tvbcof]

Thanks for the input.
Maybe someone from Coinbase staff will see this thread and comment?

Don't hold your breath.  When an outfit gets a few attorneys on the team and get smart legally they clam the fuck up.  We are lucky to have had that guy with the Russian sounding name for support on more technical things here for as long as we had him.  Maybe he's still around.  I don't follow things that closely.

Oh ya, 'Olaf'.  Maybe it's Scandinavian and not Russian.  Dunno.

[marzalpac]

wondering if the "screening" has something to do with nationality/state you are in? like u.s. only etc?

[gijoes]

wondering if the "screening" has something to do with nationality/state you are in? like u.s. only etc?

Coinbase only links US bank accounts and in order to verify you need to send them your US SSN and answer a lot of questions to confirm that you are based in the US. I went through this process long time ago and there was no issue with it. I suspect their sudden "due diligence" was more due to me purchasing quite a bit of BTC recently - right around the bottom.

Many people reported previously that Coinbase becomes quite unhappy when people buy cheaply from them. To the point of canceling already confirmed trades. This is understandable - as a trading intermediary, they are only happy when their customers buy high and sell low. It is only natural that they try to eliminate smart alec customers they consider a threat to their casino.

[marzalpac]

wondering if the "screening" has something to do with nationality/state you are in? like u.s. only etc?

Coinbase only links US bank accounts and in order to verify you need to send them your US SSN and answer a lot of questions to confirm that you are based in the US. I went through this process long time ago and there was no issue with it. I suspect their sudden "due diligence" was more due to me purchasing quite a bit of BTC recently - right around the bottom.

Many people reported previously that Coinbase becomes quite unhappy when people buy cheaply from them. To the point of canceling already confirmed trades. This is understandable - as a trading intermediary, they are only happy when their customers buy high and sell low. It is only natural that they try to eliminate smart alec customers they consider a threat to their casino.

well that explains a lot.. cheers for an info

[jonsi]

Greedy companies like Coinbase distroy Bitcoin.

[tntdgcr]

Greedy companies like Coinbase distroy Bitcoin.

how do you figure? I'm usually all for the muck raking , but this piqued my interest.

I've sold 2000+ BTC with CB, never a hitch. Honestly, I have gotten some deposits a day earlier then projected, but never late. They operate in the US , the US has laws that deal with money, banking and every vertical of the process they service for clients.

Buys maybe fill a little slower, but they need Market Makers.

[smoothie]

I personally have never had a problem with selling BTC on coinbase with 10+ transactions.

But if you are having problem perhaps you need to stop using them and find a better avenue to buy/sell bitcoin.

[jonsi]

Greedy companies like Coinbase distroy Bitcoin.

how do you figure? I'm usually all for the muck raking , but this piqued my interest.

I've sold 2000+ BTC with CB, never a hitch. Honestly, I have gotten some deposits a day earlier then projected, but never late. They operate in the US , the US has laws that deal with money, banking and every vertical of the process they service for clients.

Buys maybe fill a little slower, but they need Market Makers.

They invested +30m dollars. How do you think they will get it back and with profit, just from transaction fees?

[Swordsoffreedom]

I guess this is worth asking a question

What are the best alternatives to coinbase moving the user-base in reaction to their policies seems like a logical choice.
Mainstream adoption is good and all but for users who want to have more privacy there must be a few good choices to choose from

Anyways another story from the reddit thread.
http://www.reddit.com/r/Bitcoin/comments/1pr4bt/why_i_think_we_shouldnt_promote_coinbase_to_new/

[galbros]

I think your bottom line nails it - Coinbase seeks to be as legitimate as a US bank.  Still, that sounds like an unnecessary level of questioning unless you were doing more than 10K USD worth of transactions in which case they probably have to file a report.

I have also heard of Coinbase "having issues" with trades, especially when the market is moving against them, but the two times I've used them for small transactions, there have been no issues.

I do appreciate hearing that at least they are not requiring verification for their btc wallet services.

Thanks and good luck!