Consumer complaint received 2022-08-23
Product: Money transfer, virtual currency, or money service — Virtual currency
Issue: Fraud or scam — 
Company: Coinbase, Inc. (CA)

I wish to report federal violations on the part of the cryptocurrency exchange Coinbase. 

I have an individual investor account with Coinbase registered under my name and email address as listed with the CFPB. I am a United States citizen currently living in XXXX, and my Coinbase registration is under my U.S. mailing address. 

The violations I wish to report are : 1. Coinbase has engaged in fraudulent conduct by using misleading information to induce me to invest in cryptocurrency, and then refusing to deliver the assets I purchased through its exchange. 

2. In multiple online conversations between me and Coinbase representatives, Coinbase has explicitly refused to tell me why it will not deliver my purchased assets. This is a complete lack of transparency. 

3. Immediately after I informed a Coinbase representative that I had filed formal complaints with the SEC and XXXX, Coinbase completely locked me out of my account and made it impossible for me to communicate online with its staff again. 

4. Coinbase appears to be XXXX  against me for being a U.S. citizen abroad. Since I currently reside in XXXX, my internet IP address shows as being in XXXX. Coinbase allows non-U.S. citizens living abroad with some base in the U.S. to invest in its exchange, so its system flags U.S. citizens abroad simply for being U.S. citizens. This is a form of XXXX  on the basis of national origin, which violates federal law. 

The sequence of events is as follows ( I am using dates in the time zone of XXXX XXXX ) : 1. XX/XX/2022 : I opened an account with Coinbase online. 

2. XX/XX/2022 : After the initial verification process, Coinbase sent me an email message saying : Youre ready to invest. Weve verified your account. Youre all ready to invest in XXXX. 

This message conveyed the false impression that I was fully verified and would be permitted to invest in and conduct transactions with cryptocurrency. Phrases like Youre all ready to invest in XXXX are clearly inducements to purchase assets. 

3. XX/XX/2022 : Coinbase sent the identical email again : Youre ready to invest. Weve verified your account. Youre all ready to invest in XXXX. 

4. XX/XX/2022 : I purchased {$3000.00} worth of XXXX on Coinbase ( minus the transaction fee ) using funds in my XXXX account, which I had linked to my Coinbase account. 

5. XX/XX/2022 : I received an email confirmation of this XXXX  purchase saying Your XXXX is now available to trade on Coinbase and You can send your XXXX off of Coinbase starting on XX/XX/2022. 

6. XX/XX/2022 : I purchased another {$3000.00} worth of XXXX on Coinbase ( minus the transaction fee ), also via my linked XXXX account. 

7. XX/XX/2022 : I received an email confirmation of this second XXXX  purchase saying Your XXXX is now available to trade on Coinbase and You can send {$1000.00} USD in XXXX off of Coinbase immediately, and the rest starting on XX/XX/2022. 

8. XX/XX/2022 : I attempted to purchase another {$4000.00} worth of XXXX on Coinbase through my XXXX account, but this time Coinbase blocked me from doing so and said my account was restricted. 

9. XX/XX/2022 : I contacted XXXX customer support to ask why a restriction had been placed on my account. The email reply from Coinbase said my account needed further verification ( even though Coinbase had earlier claimed my account was verified ), and that I needed to verify my identity further. I then carried out XXXX instructions for this verification, which included uploading my U.S. passport and having Coinbases system take a webcam picture of me holding up a paper with the handwritten words For Coinbase Trading along with the current date. 

10. XX/XX/2022 : I received an email from Coinbase saying : We have now reviewed and verified the identity documents you uploaded. 

However, even though Coinbase said my identity had been verified, the same email said : After taking a look at your account, we see that you're not eligible to purchase cryptocurrency or add cash using your linked payment methods. You may also have difficulty linking a new payment method. 

This email also said : You will receive a notification email if we're able to restore your purchasing ability. Please note, your review may take up to 14 days to complete. 

Coinbase had previously allowed me to use my linked XXXX account to purchase XXXX on XX/XX/XXXX and XXXX, but now was saying I was not eligible to use it. 

11. XX/XX/2022 : I sent a reply to the above email from Coinbase but immediately received a reply saying : In an effort to respond more rapidly to support requests, direct emails to this address are no longer enabled. To get a response from our support team, please visit the following page to submit a request [ a Coinbase website link was provided ]. 

Therefore, I could no longer contact Coinbase via email and needed to use its online support chatting system through my account. 

12. XX/XX/2022 : I tried to withdraw {$4000.00} worth of the XXXX I had purchased on Coinbase. However, I was blocked from doing so, even though according to the above messages from Coinbase, I should have been able to move {$4000.00} worth of my approximately {$6000.00} of XXXX off the exchange by this date. At this point, Coinbase had only told me there was a purchasing restriction on my account, but had never said I was also restricted from withdrawing my purchased assets. 

13. XX/XX/2022 : I had an instant-message conversation on the Coinbase website with a customer support staffer named XXXX. In this conversation, XXXX told me I was restricted from both purchasing assets and withdrawing my already purchased assets. Furthermore, XXXX said the current 14-day review was only to determine whether I was eligible to continue purchasing, not to determine whether I could withdraw my XXXX. XXXX said I could not even apply for a review to lift the hold on withdrawing my XXXX until XX/XX/XXXX, about six weeks after my first XXXX purchase. 

XXXX asked me to answer questions about my intention in opening the account, whom the account was for, and the destinations of withdrawals. I answered that the intent was to invest in cryptocurrency, the account was only my own, and destinations of withdrawals would be my bank account for XXXX XXXX  and either my electronic wallet or another exchange for cryptocurrency. 

I asked XXXX why Coinbase had restricted my account. XXXX refused to say why and said Coinbase could not disclose the reason. XXXX  said I could only cash my XXXX  in for XXXX XXXX ( USD ) and withdraw that, but I could not move my XXXX off Coinbase. I was dumbfounded at that moment, so I just said the review was fine only if Coinbase communicated transparently and professionally about it, otherwise I would file a federal complaint and publicize the matter on the web. XXXX and I mutually ended the conversation at that point. 

After researching federal regulations and thinking further about the matter, I determined that Coinbase had, by legal definition, committed fraud, and that I could not accept the situation. Coinbase had misled me into investing at the beginning. Even though Coinbase said I could cash out my XXXX as USD, I would not have invested with Coinbase had I known I would not be able to withdraw my XXXX  to my electronic wallet. By saying XXXX all ready to invest in XXXX at the beginning, Coinbase had misled me into thinking I was sufficiently verified and induced me to invest on its exchange, and then refused to deliver my purchased assets. 

I also reasoned that Coinbase was XXXX  against me because I am a United States citizen living in XXXX. 

14. XX/XX/2022 ( past midnight on the night of XX/XX/XXXX ) : I had an instant-message chat with another Coinbase representative, XXXX. XXXX I asked XXXX to tell Coinbases management it had committed fraud by misleading me into investing at the beginning, and that it was discriminating against U.S. citizens abroad merely for being U.S. citizens. I then said that if Coinbase did not release my XXXX and lift the restriction on my buying more cryptocurrency by the morning of XX/XX/XXXX, I would report these violations to the relevant federal regulatory bodies and set up a website to publicize the matter. 

XXXX then rapidly copied and pasted a flurry of conflicting and flip-flopping company replies. First, XXXX claimed the restriction on my account was just the normal waiting period between buying cryptocurrency and its availability for withdrawal and said I would be able to withdraw my XXXX  on XX/XX/XXXX, which contradicted what XXXX  had said ( that I could not even apply for a review to determine whether I could withdraw my XXXX  until XX/XX/XXXX ). I told XXXX that XXXX had said otherwise. 

Then XXXX changed the answer and said I had to wait all the way until XX/XX/XXXX to apply for a review, which was even later than what XXXX had said ( XX/XX/XXXX ). 

XXXX further reiterated that Coinbase refused to disclose any of its reasons for restricting my account. 

I then told XXXX that XXXX had said there was an initial 14-day review for determining whether I could purchase further, and that I could apply for a review earlier than XX/XX/XXXX ( XX/XX/XXXX ). I further said that I was taking screenshots of this conversation. 

XXXX then changed the answer again and claimed the reason for the hold on my account was that my ID still needed verification. I replied that I had already gone through this verification and that Coinbase had said in its e-mail that my ID had been verified. 

I then told XXXX that s/he was recklessly giving me pre-written company replies. At this point XXXX asked for some time to check my account again, and then said I needed to wait until XX/XX/XXXX even to apply for a review to be allowed to do any cryptocurrency transaction, and then abruptly signed off and closed our conversation before I could reply. 

15. XX/XX/2022 ( past midnight on the night of XX/XX/XXXX ) : Having received no communication from Coinbase since my chat with XXXX and being still unable to withdraw my XXXX  or purchase more assets, I initiated a brief instant-message conversation with a third Coinbase representative, XXXX. I told him to remind Coinbases management that if it did not remove the restrictions on my account, I would report the issue to the relevant federal agencies. I then ended this conversation because XXXX and XXXX had mostly just copied and pasted ready-made company-written replies that evaded the key issues, often repeating each other, and I did not want to see copy-and-paste messages for the third time. All I wanted in this conversation was to give Coinbases management a final chance to rectify the situation before I reported the issue to federal authorities. 

16. XX/XX/2022 : There was no change in my Coinbase account restrictions, so I submitted complaints about this situation to XXXX ( File # XXXX ) and the SEC ( File # XXXX ). 

XXXX. XX/XX/2022 ( early XXXX/before XXXX ) : With no change in my account restrictions, I had an online conversation with a Coinbase customer support staffer named XXXX, which was later taken over by a person named XXXX. 

I asked XXXX to confirm that Coinbase had prompted me to invest and then was refusing to let me withdraw my purchased assets under the review. XXXX confirmed this, which is a direct admission of violating federal law ( and I have a screenshot of this ). 

I later asked XXXX whether I was allowed to deposit XXXX into my Coinbase account. XXXX said I was currently allowed to deposit XXXX into my Coinbase account but not withdraw it. This is essentially admitting that Coinbase will steal XXXX ( I have a screenshot of this as well ). 

Like other Coinbase representatives, XXXX refused to say why Coinbase had placed restrictions on my account. 

XXXX pasted a pre-written company statement that my account was under review. I told XXXX I had previously been told this review would be for 14 days but that it had now been four weeks with no communication from Coinbase. XXXX replied that my account had actually been placed on a 30-day review, which contradicted not only XXXX  claim that the review would be for 14 days but also XXXX  claim that a review could not even start until XX/XX/XXXX. 

XXXX said I still needed to answer some questions about my account. However, the questions XXXX gave me were essentially the same questions I had answered for XXXX on XX/XX/XXXX ( worded a little differently but still asking about my intention, whether anyone other than I was involved with the account, and the destinations of withdrawals ). 

I told XXXX I had already answered these questions in my conversation with XXXX. I told XXXX to look at the transcript of my conversation with XXXX to see my answers to those questions. 

At this point the chat window suddenly said my support agent was no longer available, and then XXXX took over for XXXX. XXXX acknowledged that I had responded to the questions but still asked about destinations of future withdrawals. I told XXXX to find my response in the transcript of my conversation with XXXX. XXXX then copied and pasted into our chat the answers I had given XXXX and asked me to confirm that these were my answers. I confirmed they were. XXXX said he was referring the matter to the relevant department, and that I would receive email correspondence from that department later. 

I then informed XXXX that I had submitted complaints to the SEC and XXXX and gave him the file numbers, and I said that I would be happy to tell these authorities the matter was resolved if Coinbase rectified the situation ASAP. I then said I would wait for Coinbases email, and XXXX signed off and closed the chat. 

18. XX/XX/2022 : An hour and a half after the end of my conversation with XXXX, I received three automated and contradictory emails from Coinbase. 

The first email said : For security reasons, your Coinbase account has been locked. While it is locked, no one ( including you ) will be able to perform any activities or transactions from the account. 

The second e-mail said : Your photo ID has been verified. You're one step closer to investing in crypto with Coinbase. Sign in to check prices, add a payment method, finish setting up your account, and more. 

The final e-mail said : All account restrictions have been removed, and you may resume using your Coinbase account immediately. 

In sum, the final two e-mails from Coinbase said my ID was verified, all restrictions were lifted, and I could use my account immediately. 

However, when I then tried to log into my Coinbase account, the system told me my account was locked and that I needed to go through an ID verification process yet again to unlock it. This now makes me completely unable to chat online with a Coinbase representative because one needs to be logged into ones account to do so. Furthermore, since Coinbase has stated that it will no longer receive messages at its customer help email address, I can no longer send email to Coinbase. 

Thus, Coinbases final email to me told a falsehood ( that I could immediately use my account without any restrictions ). 

Now I am in an even worse situation than before my last conversation with Coinbase, cut off from even seeing my asset balance or communicating online with Coinbase. 

Although Coinbase provides instructions on how to re-verify my ID when I try to log in, there is no reason to trust that this will resolve the issue given Coinbases conduct thus far, including its fraudulent invitation to invest, multiple flip-flops concerning my account status and reviews, twice saying my ID was verified but asking for another verification, and reneging on its final written word that I could immediately resume using my account without restrictions. 

Furthermore, I will not validate Coinbases illegal, unethical, and XXXX  conduct by repeating an ID verification when Coinbase has already and admittedly verified my identity. Coinbase has no right to discriminate against a U.S. citizen abroad while refusing to be transparent about its actions. However, I am willing and happy to verify my identity with any federal officer who may need it when reviewing this case. 

In summary, Coinbases malfeasance consists of the following : 1. Fraudulently saying it had verified my account and inducing me to invest by saying I was all ready to invest in crypto. 

2. Refusing to deliver the assets I purchased on its exchange. 

3. Still claiming my identity needed to be verified after twice saying it had been verified. 

4. Giving multiple contradictory and false messages about the status and reviews of my account. 

5. Twice asking me essentially the same set of security questions. 

6. Discriminating against a U.S. citizen abroad simply for being a U.S. citizen, hence violating federal law against discrimination on the basis of national origin. 

7. Explicitly refusing on multiple occasions to say why it restricted my account and withheld delivery of my purchased assets, which is a grave lack of transparency. 

8. Locking me out of my account and cutting me off from my assets while falsely claiming I could immediately use my account with all restrictions lifted, and cutting off online communication with me, right after I informed it that I had filed complaints with the SEC and XXXX. 

I can provide the following documentation : 1. Email correspondence from Coinbase including account confirmation, invitation to invest, XXXX purchase confirmations ( showing amounts of payments from XXXX ), both ID verification confirmations, account restriction notice, notice of lifting of all account restrictions, and notice that the account is now completely locked. 

2. Extensive screenshots of each online message chat I have had with Coinbase representatives on the Coinbase website, and the full Coinbase-generated PDF transcripts of all of these conversations ( which show the few parts missing from the screenshots ). 

3. Screenshots of my Coinbase account before it became locked, showing my XXXX balance and my being restricted from sending XXXX off the exchange or purchasing further. 

4. A screenshot of my attempt to log into my Coinbase account after the final email from Coinbase, showing that I am now completely locked out of the account and required to do another ID verification.