Last summer, Michael Pierre was sitting in his apartment in Brooklyn, New York, when he received a text message from an unknown number on his iPhone, then immediately lost the service. Concerned that his phone was being hacked, he quickly checked out his most expensive app, Coinbase, a cryptocurrency company where he kept $ 100,000 worth of digital coins.
Pierre could not enter. Panicked, he emailed Coinbase for help. The company later told him that the “attacker” had reset his password and hacked his account. Pierre said he was shocked that he expected Coinbase security to detect suspicious activity and stop the theft.
“I was thinking about retirement, family, having money for those rainy days,” he said. “And in a few minutes it was taken away from me.”
Pierre, a 47-year-old lawyer and co-founder of Coinbase, began urging his former colleagues to investigate the incident and compensate him for the missing cryptocurrencies, which today cost more than $ 400,000. He received little help, he said. In January, he sued Coinbase, accusing the company of negligent security measures for failing to protect its money.
His cautionary tale is one of dozens of Coinbase customers around the world who say their accounts have been looted by attackers, or that they have been blocked from saving their lives without warning, that the company has not been able to detect problems, and has done little to help. . As Coinbase prepares to go public in the next few weeks, strengthening its status as one of its largest cryptocurrency companies, its user experience shows how the company sometimes struggles to address key customer service complaints.
This raises questions for Coinbase at a crucial time. No major cryptocurrency company has ever gone public, with some investors estimating that Coinbase could be worth up to $ 100 billion. Its list should also have highlighted how cryptocurrencies became so widespread during the epidemic. The price of Bitcoin, the most popular digital currency, has broken records since November.
The ongoing Coinbase community is “important” for the cryptocurrency industry, says David Silver, an advocate for digital currency investors. But he added that if the company wanted to be “Goldman Sachs crypto”, “it is necessary to maintain the support of quality customers.”
In a statement, Casper Sorensen, Coinbase’s vice president of customer experience, said the company was struggling with a “24/7 cryptocurrency economy that, combined with significant growth in demand, has created unique customer experience challenges.” To address this, the company announced that in recent months it has added 2,000 customer support staff and reduced waiting times for assistance.
Coinbase added that it was never broken. It says 0.004% of its users attempted to “snoop” over the past year when someone hacked into their device and then logged into their Coinbase accounts. The company said it had taught its users how to keep their accounts secure.
Coinbase declined to comment on any particular case or lawsuit.
Compared to ordinary money’s banks, digital currencies և financial exchanges carry an additional degree of risk. Unlike money transferred through a bank, Bitcoin can be sold instantly, և transactions can not be reversed or, often, returned to the individual, which facilitates theft. Many laws that protect people’s money և require banks to be strictly safe do not apply to digital currencies.
Coinbase was founded in 2012 by Brian Armstrong, the CEO, among others. At the time, Bitcoin and other cryptocurrencies were just beginning to emerge as a way to decentralize finances, allowing people to send money to each other without the need for a bank.
But trading Bitcoin without the help of an institution was difficult. Thus, Armstrong created Coinbase as a “currency exchange”, essentially a place where people could buy, sell, and transfer cryptocurrencies, known as digital wallets. The company charged a fee each time a customer placed an order.
Coinbase now has 43 million customers, according to the prospectus. Last year, it had a profit of $ 322 million, while its revenue doubled to $ 1.27 billion. It was introduced to the public in December. It provides for a direct listing in which no new shares are issued.
As Coinbase grows, it appeals to customers. The concerns focused on two main issues, according to legal documents: interviews with more than a dozen Coinbase users, as well as social media messages and customer inquiries. That the company’s security was compromised by attackers who broke into their accounts and then stole their money, or that they were suddenly banned from their accounts, either because of a technical malfunction or for no apparent reason.
Coinbase rarely bans users from their accounts, he says, but it can do so if it investigates breaches of its terms of service or suspicious activity.
Losing access to an account can be distorting, as some people use Coinbase as a de facto bank where they enter their paychecks. Frustration has been exacerbated by the fact that the company often does not respond to requests for help, users say.
Problems have become so prevalent that the Reddit forum on Coinbase has been flooded with requests for help from people opening their accounts. A Reddit user who reportedly lives in Vietnam has left dozens of comments asking for help recovering his account, which he says has been frozen for more than a year.
“I have to open my account,” wrote the Reddit user, whose holder is kuromodzz. “Please reply to my emails, give me solutions. I can not lose my money. “
Gonzalo Maya, a 24-year-old web developer from Lisbon, Portugal, said he was blocked in January from his Coinbase account, which has about 27,000 euros or $ 32,000. In response, he created a Coinbase-related group on the Discord messaging platform. Since then, it has involved more than 300 people, many of whom regret not being able to access their accounts. Some said they had not been able to buy food or pay rent since.
“They offend people,” Maya said, adding that many felt “hopeless.”
After the New York Times asked Coinbase about Maia’s account, he received an e-mail from the company stating that he had violated its terms of service and would not allow him to use its platform. Maya said she did not know what she had done wrong. He added that he is happy that Coinbase allows itself to take its frozen funds first.
Financial crime expert Christine Duhaimen says Coinbase այլ այլ other cryptocurrency exchanges should do the same as large banks that need legal reasons to freeze assets արագ should quickly investigate missing or stolen funds. Coinbase listing, he said, could be a step towards bringing the cryptocurrency into line with the rules governing traditional financial institutions.
“Coinbase, by standing in front of the public with greater regulatory control, is moving more towards the light where there is or will be greater visibility and comfort,” he said.
Some users say that one of the most frustrating aspects of Coinbase is that the real person does not seem to read their complaints.
“There’s no one there,” said Cheryl Hang, a Los Angeles-based marketing consultant.
Hung said that he and his fiancé Paul Hwang started investing in cryptocurrencies in 2019 and chose Coinbase because it was a “big, reputable company” with security. But in January, someone stole $ 26,000 of cryptocurrency from his account. They said they had no idea how it happened.
“We just lost all the money we could have used to work from home or make a living,” Hwang said.
The Uyghur asked for help from Coinbase, but they said they received punitive e-mails. Trying Coinbase hotline received an automated response. After the Times inquired about their case, Hung said that they had received another letter from the company asking for more information about their account.
Coinbase said real customer support agents respond to inquiries.
For most Coinbase users, the legal application is also limited. Under the terms of the company’s service, users agree to settle disputes through private arbitration or small litigation, rather than suing. That did not stop Pierre from filing a lawsuit. Pierre, who worked at Coinbase from 2017 to 2018, said he initially found the decentralized digital currency “interesting”. But after losing Coinbase savings, he said he saw traditional, regulated institutions such as banks backtracking “for times like this.”
“I’m less excited now,” he said.