Consumer complaint received 2025-02-22 00:00:00
Product: Money transfer, virtual currency, or money service — Virtual currency
Issue: Other transaction problem — 
Company: Coinbase, Inc.
State: WA

Complaint narrative:
I am submitting this formal complaint against Coinbase for failing to comply with Regulation E ( 12 C.F.R. 1005.11 ) in handling an unauthorized electronic funds transfer ( EFT ) from my account. Despite my prompt reporting of fraud and identity theft, Coinbase wrongfully denied reimbursement and failed to take the necessary actions required under federal law. 

Background of the Issue On XX/XX/year>, I discovered an unauthorized withdrawal in the amount of {$9600.00} initiated on XX/XX/year> from my Coinbase account, which was sent to a fraudulent XXXX XXXX account that was created in my name without my knowledge or consent. This was a clear case of identity theft. 

As soon as I noticed the unauthorized transaction, I immediately reported the fraud to Coinbase while the transfer was still pending. Coinbase advised me to contact XXXXXXXX XXXX to close the fraudulent account, which I did right away. 

Despite my proactive efforts and Coinbases acknowledgment of my prompt report, Coinbase refused to stop or dispute the transaction, allowing the unauthorized withdrawal to go through. Coinbase then conducted an inadequate investigation and wrongfully denied my fraud claim, stating that the transaction was processed using credentials that appeared valid at the time of the transaction. 

However, Regulation E does not allow a financial institution to deny a claim simply because credentials were used fraudulentlythey must determine whether I, the account holder, actually authorized the transaction, which Coinbase has failed to prove. 

I have attached my original complaint to Coinbase, their response, and supporting documents demonstrating their failure to comply with Regulation E.

Regulation E Violations by Coinbase Failure to Conduct a Proper Investigation Under 12 C.F.R. 1005.11 ( d ) ( 1 ) ( 3 ), financial institutions must investigate whether the consumer personally authorized the transaction. 
Coinbase merely concluded that the credentials appeared valid but failed to establish whether I actually authorized the transaction. 
The burden of proof is on Coinbase, yet they provided no evidence that I authorized this withdrawal.

Failure to Reimburse an Unauthorized Transaction Under 12 C.F.R. 1005.6, I am not liable for unauthorized transactions if I report fraud promptly, which I did. 
Coinbase has no legal basis to deny reimbursement unless they can prove that I personally authorized the transaction, which they have failed to do. 
Negligence in Failing to Act While the Transaction Was Pending Coinbase acknowledged that I reported the fraudulent transaction while it was still pending yet refused to intervene. 
Regulation XXXX requires financial institutions to take reasonable steps to prevent consumer financial harm, which Coinbase failed to do. 
Failure to Initiate a Dispute with the Receiving Bank XXXX XXXX has confirmed that they would return the funds if Coinbase initiated a dispute. 
Despite this, Coinbase has refused to contact XXXX XXXX or take any action to recover my funds, demonstrating further negligence. 
Improperly Shifting Liability to the Consumer Coinbases response suggests that I am responsible for securing my credentials.

However, Regulation E explicitly protects consumers against fraud, even when stolen credentials are used. 
The burden of proof is on Coinbasenot meto prove that the transaction was authorized. 

I have sent two emails to Coinbase explaining my situation and my plans to file a complaint after receiving their email stating they would not file a dispute. Despite this, I have not received a response, and they have decided to close the case

Company response to consumer: Closed with explanation