Consumer complaint received 2023-10-06
Company: Coinbase, Inc.
State: MN
Product: Money transfer, virtual currency, or money service
Sub-product: Virtual currency
Issue: Fraud or scam

Complaint:
Re : : Complaint Report - Non-Compliance with Know Your Customer ( KYC ) Obligations I am writing to formally report a concerning and potentially incompliance of " Know Your Customer '' ( KYC ) principle, and as a result, I have suffered substantial financial losses. 

1. Incident Details : Company Name : Coinbase Website/Platform : https : //www.coinbase.com/ Date of First Interaction : XX/XX/2022 Financial Loss : XXXX USD Nature of the Complaint : I fell victim to a highly sophisticated fraud. I stumbled upon what seemed to be an investment platform called " XXXX XXXX '' on social media, with a website located at XXXX. In my early interactions with this platform, they assured me that a small investment would lead to significant returns through XXXX mining. However, it later came to light that the company did not possess the necessary licensing for such operations, despite claiming to offer investment opportunities. 

To invest, I initially transferred funds through Coinbase, a cryptocurrency exchange platform registered as a XXXX XXXX XXXX  with XXXX in the XXXX, before forwarding them to the alleged investment company.

This entity has been approached with the request of a refund, in light of the fact that I have a reason to believe this exchange has been negligent of current AML regulations causing me to lose a significant amount of funds. However, Coinbase refused to cooperate or take any actions regarding this matter. It is important to note that Coinbase has strict obligations regarding transaction monitoring and risk assessment. 

2. Legal Basis - Know Your Customer ( KYC ) Principle : The Know Your Customer ( KYC ) principle is a fundamental aspect of financial regulation designed to prevent money laundering, fraud, and the financing of criminal activities. In the United States, it is governed by various federal and state laws, including the Bank Secrecy Act ( BSA ) and the USA PATRIOT Act. KYC procedures require financial institutions and crypto companies to verify the identity of their customers, assess the risks associated with their financial activities, and maintain accurate records of customer information. 

Furthermore, Part 353 of BSA imposed a reporting obligation in a case where the institution detects any known or suspected federal criminal violation, or pattern of criminal violations, committed or attempted against the FDIC-supervised institution or involving a transaction or transactions conducted through the FDIC-supervised institution , and involving or aggregating {$25000.00} or more in funds or other assets, where the FDIC-supervised institution believes it was either an actual or potential victim of a criminal violation, or series of criminal violations, or that the FDIC-supervised institution was used to facilitate a criminal transaction, and the FDIC-supervised institution has no substantial basis for identifying XXXX possible suspect or group of suspects Non-Compliance with KYC Obligations : I would like to bring to your attention that the aforementioned crypto company has failed to comply with KYC obligations as required by U.S. law. During my interaction with the company, I observed the following instances of non-compliance : Lack of Identity Verification : The company did not request or verify third identity, personal information, or financial documentation, which is a clear violation of KYC requirements.

Absence of Risk Assessment : There was no indication that the company assessed the risks associated with my financial activities or provided any guidance on potential risks, exposing me to unnecessary financial harm. 
Inadequate Record-Keeping : The company did not maintain proper records of my information, transactions, or communication, hindering any potential investigation into fraudulent activities. 
Absent Transaction Monitoring Obligation : The company failed to monitor the transactions of consumers, ask further questions in relation to the transactions and detect any anomalies, such as sudden large cash deposits, frequent withdrawals, or transactions with high-risk jurisdictions. The omission of the platform shall be considered as KYC violation.

Non-Compliance with Reporting Obligations : I would like to bring to your attention that the aforementioned crypto company has failed to comply with reporting obligation for the involving or aggregating {$25000.00} or more in funds or other assets, the institution has no substantial basis for identifying a possible suspect or group of suspects 3. Financial Losses : As a direct consequence of the company 's failure to comply with KYC obligations, I have incurred significant financial losses. The lack of due diligence on their part has made it impossible for me to recover my investments, and I believe their actions may constitute fraud.

4. Requested Action : I am writing to officially document our ongoing efforts to contact Coinbase, a business operating within our jurisdiction, with regards to their unlicensed business practices and their obligations regarding Know Your Customer ( KYC ) compliance. Despite our persistent attempts to initiate communication, we regret to inform you that we have received no response from the company to date.These attempts include, but are not limited to : Multiple Letters : We have sent formal letters to Coinbase outlining our concerns and requesting a response to clarify their business practices and KYC compliance status. 

Phone Calls : We have attempted to establish communication through multiple phone calls to the company 's provided contact numbers, but we have not received any responses or acknowledgment of our inquiries. 
Email Correspondence : We have sent emails to the addresses associated with Coinbase, as provided on their website and registration documents. Unfortunately, our emails have gone unanswered. 
Registered Mail : In an effort to ensure our communications were received, we have also sent official letters via registered mail to Coinbase with return receipts. However, no response has been received. 
Given the lack of response from Coinbase, we are left with no alternative but to escalate this matter further. I kindly request that you initiate an investigation into the activities of Coinbase to determine the extent of their non-compliance with KYC regulations. It is essential to protect consumers from further financial harm and to uphold the integrity of the financial system. 

Please keep me informed about the progress of this investigation and any actions taken against the company.I appreciate your prompt attention to this matter and your commitment to safeguarding the interests of consumers in the United States. 
I can provide evidence regarding the matter, if requested.

Company response to consumer: Closed with explanation