Money transfer, virtual currency, or money service -- Other transaction problem -- Complaint #8195847

Complaint Overview

Complaint ID: 8195847

Company: Coinbase, INC.

Product: Money transfer, virtual currency, or money service

Sub-Product: Virtual currency

Issue: Other transaction problem

State: New York

ZIP Code: 11209

Date Received: 2024-01-21T12:00:00-05:00

Date Sent to Company: 2024-01-21T12:00:00-05:00

Company Response: Closed with explanation

Timely Response: Yes

Consumer Disputed: N/A

Submitted Via: Web

Consumer Narrative

I am writing this letter to bring to your attention a matter of significant concern regarding the fair and just treatment of customers of the cryptocurrency exchange Coinbase. More specifically, this is related to a particular situation that has affected not only myself, but many unwitting customers attempting to utilize services offered by Coinbase, in the context of transactions executed on the XXXX XXXX. Over the past 2 years, numerous individuals, myself included, have shared their experiences on various social media platforms, outlining a recurring issue that has resulted in the loss of customer funds. In some situations, such as my own, the losses have been substantial. ( approximately {$20000.00} USD as per recent exchange rates ) The specific situation occurs around users attempting to send native XXXX existing on the XXXX XXXX to their Coinbase exchange wallet. While the intent is to facilitate the movement of XXXX on to the Coinbase exchange for liquidation to XXXX currency or to trade for other cryptocurrencies offered by the exchange, an extremely critical discrepancy occurs. It has come to the attention of those affected, due to unpredictable circumstances, while attempting to transact on the XXXX XXXX, the origin wallet, ( in my case named XXXX XXXX ) and the XXXX blockchain interact in a manner that sends a wrapped version of the XXXX token to XXXX XXXX wallet address. The intended transaction is to send XXXX on its native blockchain, however a wrapped version of XXXX gets sent on the XXXX blockchain. At no point during the sending process is the sender notified that the wrapped version of the XXXX token is being sent. It is important to note the userinterface of the wallet displays the transaction of sending wrapped XXXX identically to sending native XXXX on its native home blockchain. One can only deduce this transaction with indistinguishable charecteristics occurs because the sending wallet and the XXXX blockchain view native XXXX and wrapped XXXX in its home ecosystem as identical. Therefore as per the XXXX blockchain protocols, they can be utilized interchangeably. However this interchangeability is not recognized by Coinbase when it comes to crediting your account, which exclusively supports only native XXXX on its exchange wallets. This " selective " version of accepted XXXX and lack of interchangeability when it comes to crediting customer accounts seems to be done on purpose. Proof to this nefarious business practice can be obtained when typing in wrapped XXXX in the XXXX search tool built in to the coinbase user interface. This search for what Coinbase calls an " unsupported cryptocurrency '' directs users to their Coinbase XXXX exchange wallet and includes balance, transactions and history but only reflective of native XXXX. This is proof Coinbase understands the interchangeable nature of native and wrapped XXXX on the XXXX blockchain but lacks support for the wrapped version when it comes to crediting customer accounts. Even though Coinbase fails to provide any accounting related to recieving wrapped XXXX, irrefutable proof that the wrapped XXXX token is actually located in the customers Coinbase exchange wallet is available via XXXX, which is the built in utility that allows users to reference searchable parameters, in order to examine in detail, any transaction executed on the XXXX blockchain. Thus It can be confirmed by the XXXX XXXX that the Coinbase exchange wallet address successfully recieved the wrapped XXXX. To reiterate, the transaction is recorded as successful on the blockchain, however Coinbase does not credit the customer account. After seeking assistance from Coinbase customer support, including speaking with managers and their escalated technical support teams there has been nothing but stiff resistance to offering any type of help. Coinbase tech support has given the same useless information for almost 2 years. They proceed to tell me that wrapped XXXX is an unsupported cryptocurrency on the Coinbase exchange. They then proceed to remind me to always make sure I am sending the correct cryptocurrency on the correct blockchain and that they recommend to always do a test transaction worth very little money to ensure everything is correct before sending any significant amount. They then remind me that since wrapped XXXX is not supported by Coinbase exchange, the only way for those funds to be returned, is if in the future Coinbase decides to list wrapped XXXX on its list of exchange supported cryptocurrencies. I do not believe this situation has garnered the attention it is deserving of by Coinbase technical support. If they did look into the situation in depth, they would realize their recommendations lack any relevance and their XXXX size fits all remedy does absolutely nothing to address this problem. The recommendation to do a small test transaction would not have prevented this situation because the behavior of the origin wallet and the blockchain offer no distinction between the wrapped and native version of XXXX in all steps leading up to the execution of the transaction. At the time, I held a significant amount of XXXX in my wallet, I executed the transaction with the intention of sending native XXXX, the interaction with the graphical user interface was executed in an identical manner as other instances where native XXXX was sent. There was no way of knowing which version of XXXX was going to be sent on which attempt. Due to the amount of people affected by this unintentional, unsolicited switch between wrapped and native XXXX, including people that are very knowledgeable and experienced with cryptocurrencies and blockchain technology, it is evident that this occurence is not a result of user error, therefore their recommendations to avoid such a situation are not applicable. If Coinbase wants to conduct business with the public, and includes the XXXX blockchain in their offerings, at the very least, they should be obligated to function with full compatability to the XXXX blockchain. Additionally if there are discrepancies or situations such as this that can be described as " glitches " that are of an unforeseen nature, Coinbase technical support should be receptive to the complaint and always work towards a fair resolution. The number of affected customers that have voiced their grievances with Coinbase publicly on various social media platforms is truly staggering. Many customers, such as myself have XXXX XXXX XXXX of dollars held XXXX by Coinbase. Although, I personally am not aware of an instance where funds have been outright appropriated ( since blockchain at its core is the most transparent form of recording the movement of money ), it is reasonable to believe the existence of such funds within the corporate holdings of the vast Coinbase machine provide some sort of benefit. All businesses benefit from having assets on their spreadsheets.There is a growing consensus that Coinbase justifies holding customer funds by wrongfully attributing this situation to user negligence and error. However, this is not a situation where the wrong cryptocurrency was sent to a wallet address on an incorrect blockchain, nor is it the result of any other avoidable error made from haste or XXXX. XXXX posted to social media of the steps during the failed process of sending XXXX on its native blockchain absolve those affeccted from fault. The decision to not offer any support in this situation is strictly a policy issue that lacks logic or is motivated by other reasons. Other cryptocurrency exchanges have addressed this specific issue successfully for affected customers. Therefore, it is clear that it is within the realm of possibility to offer customers a resolution to this problem. In conclusion, I kindly request the representatives of the finacial regulatory institutions take the appropriate measures to ensure cryptocurrency exchanges implement safeguards to prevent such incidents and provide assistance to customers that are affected by situation. This will not only protect consumers but will add to the overall stability, strenthen the reputation and enhance the regulatory framework of this exciting new form of finance. Thank you for your attention to this urgent matter.

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This analysis is AI-generated based on publicly available CFPB complaint data. It does not constitute financial or legal advice.

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