A US freedom of information request to the Securities Exchange Commission has revealed a raft of complaints against Coinbase from frustrated customers as it struggles to cope with the 2017 crypto boom.A report by Mashable built around a freedom of information request, has shone a light on 134-pages worth of complaints against San Francisco-based cryptocurrency exchange, Coinbase.
The information, obtained from the SEC and California’s Department of Business Oversight, paints a picture of “a company overwhelmed by and underprepared for its own success”, according to the site’s report on what they were given. The information, redacted of names and contact information – so Mashable had no opportunity to ask complainants for further comment – exposes a “recurring theme” of “seeming disappearance of a would-be trader’s money, and what is portrayed as an aggressive nonchalance on the part of Coinbase in response to the loss” the highly critical report goes on to allege.
Obviously, anyone driven so far as to formally complain to the SEC or another authority is likely to be in among the service’s most strident critics. On the flip-side of that, though, it also hints that there could be a vast pool of mildly disgruntled-to-extremely unhappy users that have not gone so far as to formalise their grievances.
The report goes into detail on many of the cases, including one tale of a customer who appeared to have lost $17,000+ in a wallet-to-wallet transfer via the site, and another who was unable to access his $21,000 account. Both of these customers, and apparently many others, assert their belief – and it is only their belief at the time they complained – that Coinbase is witholding money deliberately for its own purposes. It easy to see how they could believe that, even though the real explanations could be very different – especially when you add in another prevalent theme that permeates these and other complaints: the nonchalant nature of the exchange’s customer support.
Mashable claims that the amounts and gripes in those two stories are “not outliers in the document batch” it received as a response to a “narrowed” request for information, which outlined 115 individual complaints. That, of course, represents a tiny figure in comparison to Coinbase’s user number, which increased tenfold during 2017, and nigh-on doubled in December 2017 alone from 2.2m to 4.3m. That number, and the nature of the complaints, is enough for mashable to assert that “a troubling pattern emerged of customers claiming to be out thousands of dollars due to alleged Coinbase mismanagement.”
Other reports in the tranche of information, involves numerous cases of technical errors leading to customer lockouts, coupled with frustrating, extended waits for customer support responses – which then ended up being inadequate.
Coinbase, via a spokesperson, responded by saying that it has “experienced a profound uptick in mainstream awareness and growth,” and that “As part of that, consumer demand for our services increased by 40x and we experienced transaction volumes in November and December of that year that grew by 295 percent.”
They declined to respond to questions about individual allegations, however, preferring to point out that:
“Over the last few months we have: Increased our support team by over 150 percent,” and “[decreased] our average time to first response to <10 hours for 95 percent of incoming volume today,” the spokesperson explained over email. “As a result, we are able to resolve issues faster and have decreased the backlog by 95 percent. We now have over 600 support agents working on our queues across three different locations and we offer phone support 24 hours a day, seven days a week.”
While it’s hard to call an article based on such source material a hatchet job, it is certainly a picture of Coinbase painted from the most damning palette of opinion Mashable could have possibly found. However, whether or not its FOI information is representative of a small slice of Coinbase users, or an indicator of more widely held animosity to its operations, the issues exposed here are exactly the kind of things that will need to be addressed as it begins to seek regulatory approval in the US and Japan, as it has begun to do in the UK, and increase its range of services over the coming months.