Criticisms are being leveled at U.S. crypto exchange Coinbase for allegedly being underprepared and overwhelmed by the pace of its growth, Business Insider reports today, June 22.
Business Insider cites documents obtained by Mashable through a five-month Freedom of Information Act (FOIA) process, which comprise 134 pages of complaints filed by Coinbase users with the U.S. Securities and Exchange Commission (SEC) and the California Department of Business Oversight.
Recurrent among the complaints are users’ reported difficulties in accessing funds, with Mashable providing evidence of widespread frustration at either being locked out of access, seemingly not receiving due funds, or facing difficulties transferring funds between accounts.
One user cited by Mashable went so far as to accuse Coinbase of acting “criminally,” while another alleged that they “believe the company is holding my funds to make money on top of my investment.”
Mashable writes that reviewing customers’ filings revealed a “troubling pattern” that indicated that many users were attributing their losses to the exchange’s alleged mismanagement.
At the very least, the documents suggest a failure to keep up with customer queries, which, as Business Insider notes, could be attributed to the company’s sky-rocketing growth: in October 2017, Coinbase reported 11.7 million users, up 148 percent from 4.7 million users the preceding year.
A Coinbase spokesperson responded, explaining that:
“…consumer demand for our services increased by 40x [in 2017] and we experienced transaction volumes in November and December of that year that grew by 295 percent.”
Mashable’s review indicated significant delays from Coinbase in responding to system errors that prevented customers from either making asset transfers, accessing transaction histories, or trading on the platform.
One disgruntled user is quoted as writing that they believe the company is prioritizing growth over customers by “knowingly marketing a service it knows it cannot actually provide.”
Coinbase told Mashable the company has increased its support team “by over 150 percent” in the past few months, and is now “able to resolve issues faster, decreas[ing] the backlog by 95 percent.”
Meanwhile, Coinbase continues to diversify its services and reach out to an ever wider user base, recently revealing plans to enter the Japanese crypto market and launching a new suite of products that target major institutional investors.
The exchange has also made progress with its move become a fully SEC-regulated broker dealer via its recent acquisition of a financial services firm. This would allow it to offer blockchain-based securities on its platform and further expand its trading services, for which it has reportedly been pursuing a federal banking license in parallel.
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Author: Marie Huillet