$2 000 USD

OCTOBER 2021

GLOBAL

COINBASE

DESCRIPTION OF EVENTS

"Coinbase is a secure platform that makes it easy to buy, sell, and store cryptocurrency like Bitcoin, Ethereum, and more." "As the leading mainstream cryptocurrency exchange in the United States, Coinbase has become a standard on-ramp for new crypto investors. Coinbase offers a wide variety of products including cryptocurrency investing, an advanced trading platform, custodial accounts for institutions, a wallet for retail investors, and its own U.S. dollar stable-coin."

 

"Coinbase was founded in 2012 and is a fully regulated and licensed cryptocurrency exchange supporting all U.S. states except Hawaii. Coinbase initially only allowed for Bitcoin trading but quickly began adding cryptocurrencies that fit its decentralized criteria." "Its list expanded to include Ethereum, Litecoin, Bitcoin Cash, XRP, and many others with the promise of more as long as its requirements are met."

 

On October 1st, 2021, Reddit user Miserable_Earth5856 reported they "lost a lot money today using Coinbase and need urgent help from the Customer Support."

 

"Today I transferred funds from my Coinbase Pro Wallet to my Metamask Extension. I wanted to send back the money to my Coinbase later today so I copy pasted the ad[d]ress I received the coins from earlier today." "After I sent I noticed that Coinbase using another wallet to send the coins so I sent the coins to the Coinbase sending wallet called Coinbase 4 wallet."

 

"[I] definitely learned my lesson for the future. Still can’t afford this loss it’s a lot of money for me." "Totally agree with you it been stupid to not double check [the address]. Usually using Binance where sending and receiving is the same. Learned my lesson but still can’t afford this loss so I hope customer service can help me with this. Still thanks for your words sir!"

 

Reddit users destrukkt had a bleak outlook: "Sadly they don’t send funds received at that wallet and won’t do it. People have lost hundreds of thousands and they don’t help."

 

Reddit user TheHonestParrot was more optimistic: "If you had sent it to a regular person, it would be gone. But I am hoping that since you sent it to one of Coinbase's accounts, that they can figure it out, and send you majority of what you sent them. That is definitely a lot of money."

 

CoinBase responded on October 4th, "Hello u/Miserable_Earth5856 - Thanks for reaching out. We are sorry to hear you are having trouble transferring your tokens. If you would please a support case here, we can take a look. Thank you!" No further information is available.

Reddit user Miserable_Earth5856 reports sending 0.5 ETH to one of CoinBase's hot wallets directly, as opposed to sending the funds to their proper deposit address. Blockchain transactions are irreversible, however these funds were sent to a wallet actively operated by the CoinBase platform.

 

Different Reddit users had different guesses as to whether the funds were recoverable or not. CoinBase did request the user reach out to support in a response half a week later. There is no indication of the outcome of this case.

HOW COULD THIS HAVE BEEN PREVENTED?

Unfortunately, in the blockchain, the onus is on the user to triple check that they are sending funds to the correct address. It's a good idea whenever sending to a new recipient such as a wallet or exchange to always sent a test transaction for a smaller amount first.

 

Exchanges or wallets could assist by providing a prominent test transaction feature, and making a clear suggestion.

 

Check Our Framework For Safe Secure Exchange Platforms

Sources And Further Reading

 For questions or enquiries, email info@quadrigainitiative.com.

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