Consumer complaint received 2021-01-30
Company: Coinbase, Inc.
State: CA
Product: Money transfer, virtual currency, or money service
Sub-product: Virtual currency
Issue: Other transaction problem

Complaint:
Coinbase, the XXXX XXXX-based cryptocurrency trading platform with over 35 million customers, funded by the most famous and reputable names in XXXX XXXX, and a valuation of nearly $ XXXX, is locking customers out of their accounts with no explanation and either preventing access to their funds or outright stealing them. I am now the victim of this myself and did not discover the extent to which this is happening until now. 

To take advantage of the increasing value of Bitcoin amid the shrinking value of the dollar, I purchased $ XXXX in Bitcoin through the Coinbase.com cryptocurrency platform beginning on XX/XX/XXXX. I chose the Coinbase platform as I believed it would be the safest and most secure given the high-profile XXXX XXXX investors including XXXX XXXX and XXXX who were funding and leading it. 

Coinbase has a fairly rigorous sign up process that requires new users to provide proof-of-identification and financial background information. After supplying this I was approved and began transferring funds from my bank account to my Coinbase account to facilitate purchases. Bitcoin was about {$18000.00} at the time. I was a little nervous, but went ahead with my first Bitcoin purchase on XX/XX/XXXX. The price of Bitcoin started to rise almost immediately and my nervousness quickly changed into excitement as my investment looked like it would pay off significantly. With this excitement and confidence, I invested another $ XXXX over the next 9 days in order to get in before the price took off completely. 

On the night of XX/XX/XXXX, I began testing my XXXX  XXXX  cold storage cryptocurrency wallet by making a small withdrawal of my Bitcoin from my account on the Coinbase site directly to the XXXX. This is a totally normal and standard practice that most cryptocurrency holders view as essential. The saying is : Not your keys, Not your Crypto. This means that unless you hold your Bitcoin or other cryptocurrency assets on your own personal device ( s ), then you dont really own itthe holding entity owns it. Taking this to heart, I had planned on withdrawing all of my Bitcoin to my personal cold-storage wallet as soon as the 10-day holding period expired on each new Bitcoin purchase. The test withdrawals of small amounts were successful, so I planned on withdrawing the rest over the following days. 

On the following morning of XX/XX/XXXX, I attempted to login to my Coinbase account. After entering my login credentials and hitting the sign in button, an error message popped up saying, Your Account has been temporarily DisabledPlease contact customer support. Being a bit shocked and surprised by this, I retried the login several times to make sure I hadnt done something wrong. Same result every time. I then did what they suggested and opened a ticket with Coinbase customer support to find out what happened and regain access to my account and the funds within. 

At this point I was totally freaking out. The cryptocurrency world if rife with fraud and hackers trying to steal your assets if they can find the slightest vulnerability in your security. The reason I chose Coinbase was to ensure that my money and resources were protected to the greatest extent possible, and given the enormous amount of money under management, the status of the funding organization, and the huge number of users on the platform, I thought I was safe. 

And the truth is I was/am pretty safe from outside hackers and scammers. Coinbase is a very tight and secure platform from outside attacks. What I didnt understand on that day was that I was being defrauded and scammed by Coinbase itself.

Upon submitting my Coinbase support ticket, I received an automated reply with my new support ticket/issue number and a note stating, Thank you for contacting Coinbase Support. Our team is working hard to answer customer inquiries in a timely manner, but you may experience longer response times. We appreciate your patience during this challenging time and hope you are staying safe. They werent kidding about the longer response times. After two weeks of submitting requests for an update or response, I received a follow up email from them on XX/XX/XXXX asking me questions about why I created the account, was I sharing my account with other people/third partys. I responded by indicating that the account was created for me exclusively and that I was the only person using it. After a few more days of back and forth, they said they would restore access to my account after I went through a reverification process which entailed submitting a picture of my drivers license and having my computer camera take a picture of my face. 

After the re-verification process on XX/XX/XXXX, my account was reinstated and I was able to log back in. At this point I was pretty relieved as I thought I was back on track and going to be able to get to my funds. Once back in, I could see that my Bitcoin was still there ; I had not been hacked. Thank XXXX! But after closer inspection, I noticed that despite the fact that my Bitcoin and funds were in the account, none of the account functions for buying or selling were available. At this point, I didnt care as I only wanted to safely withdraw my Bitcoin to my personal cold wallet, and it appeared that the withdraw function was still working. 

I went ahead and generated a withdrawal destination address on my XXXX  cold storage wallet and entered it into the destination field in the Withdrawal function on my account page. Everything seemed fine. I initiated the withdrawal and it was submitted for execution. Within 30 seconds of my withdrawal submittal, I received an email from Coinbase saying that my withdrawal had been cancelled. Thinking I might have done something wrong, I tried again with the same result. 

This prompted me to create a new support ticket informing Coinbase that none of my account functions including Buying, Selling, Depositing or Withdrawing fiat funds or Cryptocurrencies were working despite the fact that I could now get back into my account. They responded back by saying that they would need to send to a specialist for review. After some back and forth over a couple more days, they essentially told me that I was no longer eligible to use the Coinbase platform and that they could not tell me why. My ability to Buy, Sell, Deposit or Withdraw Cryptocurries was permanently suspended. They said that I needed to sell all of my Bitcoin and I could withdraw the dollar amount to my linked Bank account. I double-checked my account to see if I could sell my Bitcoin and even that function was unavailable.

I responded by saying that I did not want to sell my Bitcoin. Per the Coinbase User agreement, the crypto currencies in my account are my property, not that of Coinbase. They simply host my Bitcoin in the wallet/server space they provide and have no right to it whatsoever. Furthermore, selling my Bitcoin would subject me to either taxes on the gains or potential losses on the drop in price. I should be able to withdraw my Bitcoin at any time to either my own personal wallet or some other facility at my discretion. Again, this is my property, not theirs.

When I asked to get instructions explaining how to withdraw and recover my Bitcoin, they simply sent me a link to a complaint form. They will not allow me to recover my Bitcoin which, per the user agreement, is my property, not that of Coinbase. 

I began looking online to see what I could do and found that hundreds, perhaps thousands, of other people were either experiencing the exact same thing. There are countless users in XXXX forums suffering from the same fraud right now. Here is an example of a thread from XX/XX/XXXX : https : XXXX This is a massive fraud being perpetrated by Coinbase and the XXXX XXXX XXXX who run and fund this company. Please help us and investigate. Any other financial institution doing this to its customers would be put out of business, yet Coinbase is being celebrated and rocketed toward a public listing with a {$28.00} XXXX valuation. This is beyond disgusting. Please help me and expose this before they steal any more money or wreck any more people financially.

Company response to consumer: Closed with monetary relief