Coinbase is one of the most popular Bitcoin exchanges in the world and it is probably the most reputable exchange. Coinbase was the first exchange to obtain U.S. regulatory approval, it has operations in 32 countries where it serves more about 5.3 million customers. Coinbase also lay claim to being the most user-friendly platform for people cryptocurrency users, especially people new to Bitcoin. In fact, you can pay on Coinbase using EFT, ACH, SWIFT, credit cards, and PayPal among others.
One would think that Coinbase would have a smooth sailing to home because of the quality of its service. However, the firm always seems to find itself entangled in one controversy or the other as users find reasons to complain about some aspects of its service. This piece examines some of the major controversies in which Coinbase has been enmeshed in the recent past.
Sudden account closure and suspension
The first reason Coinbase doesn’t seem to have a good reputation in line with the quality of its service is the firm’s notoriety for freezing or closing user’s accounts. Coinbase tries to be compliant with necessary Anti-Money laundering (AML) and Know Your Customer (KYC) laws.
Hence, you can expect Coinbase to ask you to provide some personal information before you can use the full suite of its service. Ironically, many people use Bitcoin because of the privacy it offers on financial transactions; hence, they do not find it easy to corporate with the firm’s KYC efforts.
Accusations of Big Brother tendencies
Coinbase also tends to find itself in the blackbook of users who accuse it of having big brother tendencies in how it conducts its business. Many users accuse Coinbase of seeing your Bitcoin as its money; hence, it tends to track your spending to be sure that you don’t use its exchange for activities that it doesn’t endorse. For instance, you can’t use the exchange to pay for adult services, gambling is not permitted, and you can’t even resell your Coinbase Bitcoin on other exchanges.
A large volume of complains amplified by social media
Coinbase claims to have a user base of about 5.3 million users; hence, it is not surprising that the firm tend to have a huge volume of user complaints. However, many users have the misguided notion that coinbase support staff will be more inclined to expedite action on their complaints when made publicly via social media because any responsible firm will try to avoid bad press in the social media space.
The problem however is that every user with any semblance of complaint comes to air their grievances of social media. Hence, it is hard to filter out coinbase’s commendation from the condemnation amidst the din of social media.
Conflicts with the open source philosophy of Bitcoin
Nobody can lay claim to being the owner of Bitcoin or its underlying Blockchain technology. Blockchain technology and Bitcoin are firmly rooted in a philosophy that supports an open source nature. However, Coinbase management crossed the line when they tried to push 9 patent filings to lay claim to some important crytocurrency innovations. Their so-called innovations inclide “tips button”, “hot wallet” and “Bitcoin exchange” – these are applications that embody the very essence of Bitcoin and Coinbase was clearly overreaching in laying claim to the patents.