Consumer complaint received 2024-12-09 00:00:00
Product: Money transfer, virtual currency, or money service — Virtual currency
Issue: Money was not available when promised — 
Company: Coinbase, Inc.
State: CA

Complaint narrative:
To the CFPB, 

I am writing in regard to suspicious and seemingly illegal business practices of Coinbase. In short, my money is stuck in their platform and Coinbase provides no means to return it to my possession. Though I am writing about my personal experience, this is not at all uncommon and a quick XXXX search will reveal hundreds, if not thousands, of similar situations faced by Coinbase users. While I want my own situation resolved, I believe this is a systemic problem affecting people en masse that should be addressed by some regulatory body or government agency. 

On XXXX XXXX XXXX, I created a Coinbase account. I created an account so I could exchange my cryptocurrency for US dollars, and subsequently withdraw it to a bank account. 

After I made the account, I sent approximately XXXX worth of XXXX  and XXXX  to Coinbase, where I then traded it for US Dollars on their platform. I kept my USD on the platform for the time being as I considered Coinbase a safe, US-regulated platform to store my property in. 

On XXXX XXXX XXXX, I received an email from Coinbases Compliance team which said my KYC information was missing or outdated and that if I did not take action within 15 days, my account would be restricted. This was odd because I followed all procedures required of me when making my Coinbase account, and Coinbase allowed me to use their platform up until this point without a problem. I did not happen to see this email within their 15 day period, so by the time I did, my account had been placed under manual review. As part of this manual review, my account was temporarily restricted from buying and selling crypto, but not withdrawing any of my holdings.

Even if I did see it, however, I likely would have thought it was a phishing email, as it is unprofessionally formatted and worded, uncharacteristic of a supposedly reputable financial company like Coinbase. It also requires the user to upload sensitive personal and financial information to a third party service. Anyone savvy to these sorts of phishing emails would have disregarded the email out of hand. 

Nevertheless, after verifying it was indeed sent by a legitimate department of Coinbase, I followed all the steps outlined by the email to prove my identity and the nature of my income. I uploaded every required document as per Coinbases specifications, and responded to each question asked of me in the email. I submitted my initial responses on XXXX XXXX XXXX. 

In the meantime, I attempted to withdraw my USD to a bank account. When I tried to do this, I would receive an error message, saying you cannot add a bank account at this time. 

Confused, I called Coinbase support to see if they could fix this or help me withdraw my money. Coinbase support told me on several occasions which I documented that there is no reason I should be unable to withdraw my money notwithstanding the manual review, and attempted to remove the restriction on adding a bank account so I could do so. I asked if there is any way Coinbase support itself could add my bank account information for me, or if there was some other process to liquidate my account either through them or another department. The support technicians I spoke to were more than willing to try assisting me, and reassured me that there was no reason I shouldnt be able to withdraw my money. Nevertheless they could not find a way to lift the restriction on adding a bank account or another way for me to liquidate my Coinbase account. 


I was told that my only course of action was to wait until the manual review process had concluded, and that there is no other department at Coinbase other than their technical support line that customers can speak to. Users must wait for an email response from Compliance, and can only communicate with them by email. This was and is totally unacceptable to me for a number of reasons. First, I was given no timeframe for a resolution, let alone a response from Coinbases compliance team. One support technician said to wait five days, while another said two weeks; neither proved to be true. After searching on the internet for similar situations (of which there are hundreds if not thousands) I found, almost unanimously, Coinbase users waiting months to years for the Compliance team to finally resolve their case. If you are curious to see how prevalent this is, do a XXXX  search for Coinbase manual review XXXX.  You will find countless examples of people who have had their accounts randomly and arbitrarily restricted, still to this day waiting indefinitely for Coinbase to resolve the situation, all while being unable to use or access their accounts. The prospect of being unable to access my money for an indefinite time period, probably lasting over a year, is simply untenable. This is my income I am depending on to pay bills and live. 

Second, my property rights were being violated. Even though I should have been able to withdraw my money, in effect I was unable to due to being unable to add a bank account, or otherwise liquidate my holdings through some other means.

Further supporting the fact that my account was not frozen, restricted from withdrawing, or anything else of the sort, is that I was able to withdraw crypto from Coinbase to an external crypto wallet. The problem was that 99% of my holdings were in US dollars, which I could only withdraw through a bank account, which I was unable to add for some indeterminate reason not even Coinbase support could understand. This is to say that, if all my holdings were in crypto, I wouldnt have a problem - I could just withdraw to an external wallet irrespective of Coinbases review. However, because I held primarily US dollars, I was effectively prevented from withdrawing due to this peculiar situation.

At this point I realized that Coinbase was holding my money hostage without cause and offering no means of restoring it to my possession nor telling me why. 

I decided to wait for the Compliance team to reply to my initial response sent on XXXX XXXX. I did not receive a reply until XXXX XXXX, 36 days later. I believe I only received a reply in the first place because I had initiated Coinbases formal complaint process shortly before, a precursor to legal action, but I cant know this for sure. 

In their response, they did not tell me if what I had sent was satisfactory or how far along in the resolution process they were. They merely asked for more sensitive personal information which I had either already submitted, was not part of the requirements outlined on their website, was not previously requested by them, or was totally superfluous. 

For example, their first reply asked for a business incorporation document, which I had already uploaded. Their second reply asked for a tax document, which they had not previously required or mentioned to me. Their third reply asked me how much I planned to trade a year. Their fourth reply asked me for a student ID card. Their fifth reply asked for a document showing my initial investments into crypto. They could have asked me all of this at the beginning or at once, but for whatever reason they chose to space out each batch of questions in separate responses, needlessly prolonging the resolution process. 

I replied to each and every email with exactly the information they were requesting, despite the fact their requirements seemed never-ending and ever-changing. They also became increasingly invasive, and at this point I had sent them extremely sensitive information containing, for example, my social security number. After doing some reading, I realized Coinbases compliance team is not even based in the United States and my sensitive personal information had been potentially seen by a faceless, unaccountable entity of non-US citizens in any number of foreign territories, whose only point of contact is an email account. The potential for this system to be exploited by malicious employees for identity theft and fraud is extremely high, but it is the only system provided to users to restore account access. 

In my response to them on XXXX XXXX, I reiterated that I had complied with every step of the process over two months, have been unable to access my money this entire time, and to resolve the situation or at minimum fix the inability to add a bank account so that I could withdraw my money. I have not received a reply and it seems they have ceased all communication. 

To date they have not explained exactly why my account was restricted other than the vague Your KYC information is incomplete, and at this point I have more than adequately proven my identity and the source of my income. They refuse to articulate any reasoning behind their failure to restore access to my property, nor provide a method of doing so. 

I have no idea what is going on here - is it negligence? Is there some kind of identity theft or fraud operation occurring inside of Coinbase? Do they randomly restrict so many accounts for some kind of liquidity scheme? Because this certainly doesnt feel like the normal business practices of a legitimate financial institution. Whatever is going on would certainly qualify as negligence, breach of contract, and conversion at minimum. 



I simply want my money returned to my possession. I have done everything Coinbase asked of me, proven my identity and legitimacy, and tried every which way to resolve this through Coinbase itself. This has dramatically affected my life; I cant pay bills and I had to leave school. I had to put my entire life on hold because almost all my life savings is trapped and I was depending on it to live. The XXXX  and XXXX  caused by not knowing what is going on or when this is going to be resolved has completely destroyed my mental well being. 

If I am forced into legal action for any reason, their terms and conditions contain a binding arbitration clause which, if it is indeed deemed binding, requires each side to provide for its own legal expenses. For me to simply gain back rightful access to my property would require paying exorbitant legal expenses out of pocket and going through the lengthy process of arbitration, a forum determined by and favorable to Coinbase. All of this could easily be avoided if Coinbase provided users recourse other than technical support, which is incredibly limited in its scope, or their Compliance email line, which responds at its own discretion (potentially months between replies) and seemingly has no obligation to inform or assist.

How many users have had their funds trapped in Coinbase but did not have the means (money, time, willpower) to fight them through legal channels, or who considered the amount trapped not worthy of action? These stories are very common. 

Recently Ive seen posts on XXXX of Coinbase users sharing their account restriction experiences. XXXX XXXX the CEO of Coinbase, and other high ranking Coinbase employees, are replying to these posts apologetically, offering to personally intervene and rectify their situations.

Some examples: XXXX XXXX XXXX

Coinbase itself acknowledging and attempting to do damage control for this widespread phenomenon:

XXXX  


This begs the obvious question: if Coinbases restriction/compliance procedures are totally legitimate, why do its CEO and other employees rush in to unrestrict user accounts without even asking why they were restricted in the first place? 

Addendum: I received this email on XXXX XXXX from no-XXXX which states:

The ability to buy or sell digital currency has been disabled on your account until we can further verify your identity. In order to re-enable buying and selling, please verify your identity by providing a valid ID document.

In the first place, I have already uploaded an ID (drivers license). I did it again, verifying my drivers license and getting a confirmation that I had been verified, but still there is no change to my account. Clearly their system is broken or I am being lied to, as this email promises to remove the restriction if I verify my ID, which I did. I emailed Compliance about this and have not received a reply. There is not a single person or resource this company provides that will help. 


In summary:

I, like many people, have had their Coinbase account arbitrarily restricted. In my case, I am unable to withdraw my money even though I should be able to. I followed all procedures required and submitted all requested documentation to remove the restriction, as well as requested for them to allow me to withdraw my money, yet my account remains restricted and Coinbase has stopped communicating with me altogether.    I have consulted lawyers who have told me Coinbases conduct likely constitutes conversion, negligence, and breach of contract.

I want my money, or the ability to withdraw my money, returned to me. 

Please help me to resolve this. I would be so thankful to have this enormous emotional and financial burden alleviated.

Company response to consumer: Closed with explanation