Bitcoin Exchange Sees Complaints Soar and Many Customers Say They’re Not Getting Funds When Promised
The U.S. Consumer Financial Protection Bureau has received at least 293 complaints about Coinbase Inc., according to data reviewed by Bloomberg. That compares with about six complaints for all of 2016, and makes Coinbase the biggest recipient of CFPB virtual currency complaints this year. The website has struggled to keep up with spiking volume and longer transaction processing times as the value of bitcoin and other cryptocurrencies soared to record highs.
More than a third of the grievances came from individuals who were unable to access their money when promised. Many people also complained about other transaction or service problems. Accusations of fraud represented less than 15 percent of the complaints.
“The funds were supposed to be transferred to my checking account within three-to-five business days,” one customer complained to the CFPB in May. “I need the money.”
Megan Hernbroth, a spokeswoman for San Francisco-based Coinbase, declined to comment on the CFPB complaints.
Since the beginning of 2017, the CFPB has received more than 250 complaints under the “virtual currency” category. About 60 percent of those were directed at Coinbase, while many of the others were aimed at PayPal Holdings Inc. and large banks.
Coinbase, which was founded in 2012, said in June that it’s working to improve customer support. The exchange has grappled with a slew of performance issues, including outages, slow load times and a flash crash in ether, the second most valuable virtual coin.
“Over the past few months, we’ve seen an unprecedented increase in the number of customers signing up to use Coinbase,” wrote the company’s co-founder and CEO, Brian Armstrong, in a June 6 blog post. “As a result, our systems have been pushed to the limit. This has caused many customers to have a negative experience.”
On its support page, Coinbase says transaction timing can vary depending on a customer’s location and payment method, and U.S. bank transfers can take up to five business days.
LendEDU, a New Jersey-based student loan marketplace, pointed out the increase in virtual currency complaints this year, in a report earlier this week.
Cryptocurrency startups have been overwhelmed with unusually high volume as the price of bitcoin has skyrocketed almost fivefold this year. This month, the debate over how to speed up transactions became so contentious that bitcoin split in two.
The CFPB, which didn’t respond to multiple requests for comment, started accepting complaints about virtual currencies in 2014, warning consumers about unclear costs, scams and lost funds. Three years later, the Securities and Exchange Commission saidthat cryptocurrency exchanges and companies that raise money through the sale of digital assets must adhere to federal securities laws, signaling a clampdown on the recent surge in virtual coin offerings.