Consumer complaint received 2020-05-08
Product: Money transfer, virtual currency, or money service — Virtual currency
Issue: Fraud or scam — 
Company: Coinbase, Inc. ()

I started trading in the Internet-based platform of a merchant called XXXX XXXX ( hereinafter the Merchant ), available under https : https : //hyperlink.services.treasury.gov/agency.fincen? origin=https : //fxnobels.io. The Merchant claimed to be a financial investment firm dealing with regulated financial tools, such as CFDs, indices, binary options, commodities, etc. In addition, the officers and employees of the Merchant are also presented as experienced financial brokers. We contend based on our research in the available public registries that the Merchant is not licensed to offer regulated financial tools or to provide financial advice to third parties. Furthermore, our investigation in the case has discovered that there are warnings and citations by Government authorities for a lack of license issued against the Merchant. In light of this information, it can be concluded that the Merchants claims to have been a registered finance broker are a clear example of a misrepresentation of the Merchant. Acting in good faith and in reliance of the Merchants claims, I ordered a service-related opening of an investment brokerage account to be used for subsequent trading with financial tools in real time. Following this, certain amounts of money were withdrawn from my bank account. The Merchant undertook to provide me with an investment account and to keep my money on this account, which never happened and by lack of respective license. I should have been granted access to such account in order to be able to use it for trade financial products as listed. All this never happened as the Merchant lacks the license ( misinterpretation of the service ). Any trading services at that time were not connected to my funds. This is not the service that the Merchant is required to have provided ( service not as described ), XXXX AND COINBASE PART IN THIS CASE : There have been several digital currency transfers using e-wallets supplied by XXXX and Coinbase over the course of the agreement between me and XXXX XXXX. 

Because of the sensibility of the matter and with regards to considerations for protecting the public interest and financial stability such licenses are listed in publicly available registries. Especially banksXXXX shall be aware of the fact if a Merchant receiving payments for financial services and having declared before the bank/XXXX as a company main business provision of financial services ( or similar wording ) has the required license, or not. Such a business model should have been disclosed to you when the Merchant applied for your services. The due diligence would prerequisite in such case prior commencing processing payments of the Merchant you to have performed an initial and ongoing check-up of the Merchants  entitlement to provide financial services. By lack of license, the bank/XXXX should refuse processing payments for such Merchant in order to meet the mandatory regulations. 

An offence against the financial system stability is perpetrated by, not only the person acting directly without a licence ( i.e. the Merchant ) but also by any person ( s ) allowing and/or contributing in some manner to this occurrence ( i.e. Bank, or financial institution ). According to this, a registered payment institution and/or their officers in charge, need to be able to prove that they were compliant with the legal provisions applicable. Acting as such it is within their line of duty to request and verify the required Know-your-customer documents, including financial licence, and to perform the due diligence accordingly. Should a digital currency exchange fail to prove that their due diligence was duly complied with, they are in breach of their legal responsibilities to their clients. According to this in its capacity of service provided engaged with a money value transfer service and XXXX/ XXXX-XXXX custody management, XXXX and Coinbase, or their officers in charge with the claimed transactions, could under certain circumstances be considered as a person ( s ) facilitating provision of financial services by the Merchant or others, as the case may be, unless they prove that they were compliant with the legal provisions applicable for the transactions in question, for example, that they were presented with the required know-your-customer documents, including financial license, or if they prove successfully that their due diligence does not include the check-up of such publicly available information of substantial importance for the concerned transactions. 

Based upon the above we would like to be informed if XXXX and Coinbase has performed diligently check-up of the Merchant,  including inquiry in the public registries ( identity, license, activity, etc. )? Was XXXX and Coinbase ever in possession of a valid license of the Merchant in order to process payments for provided finance services? If not, why were the disputed transactions processed by XXXX and Coinbase? In any case, we demand disputed transactions made in favor of unauthorized Merchant, which makes such payments and transactions not grounded and fraudulent ( i.e. null and void ), to be remedied. 

Risk from a money-laundering : In order to mitigate the potentially higher risks which arise from entering into relations with unregulated Merchant, the following enhanced due diligence ( EDD ) measures may be implemented by a diligent provider of virtual currency exchange : a ) corroborating the identity information received from the customer, such as a national identity number, with information in third-party databases or other reliable sources ; b ) potentially tracing the customers IP address ; c ) searching the Internet for corroborating activity information consistent with the customers transaction profile, provided that the data collection is in line with national privacy legislation ; d ) intended nature of the business relationship, obtaining information on the source of funds of the customer, obtaining information on the reasons for intended or performed transactions, and conducting enhanced monitoring of the relationship ; In case of an initiated digital currency transaction when the recipient does not have an account opened at a web-based system of a virtual asset service provider, as a matter of good practice, the virtual asset service provider shall invite the recipient to open such an account. In this way the digital currency exchange operator will be able to fulfill his obligations to obtain, hold, and transmit the required originator and beneficiary information in order to identify and report suspicious transactions, monitor the availability of information, take freezing actions, and prohibit transactions with the designated persons and entities. With this regard, we would like to kindly inform ourselves what was the scope and the result of the customer authentication concerning the Merchant that XXXX and Coinbase should have performed both, prior commencing to receive payments on its behalf and subsequently after having started receiving payments for financial services on its behalf? Did XXXX and Coinbase underwriters ever access the web-platform of the Merchant, the sites of the financial conduct authorities and other sources of relevant information or the customer authentication has been made only based upon the formal provision of the Merchants application? What was the ultimate result of these measures, respectively was the Merchant ever assessed as being a risk from a money-laundering prospective? 

Finally I sent a letter to XXXX and Coinbase asking for their your support and understanding in the case concerning XXXX XXXX and they have been silent on the issues raised in the letter and refuses to respond after several attempts.