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."

"Coinbase users can store their cryptocurrencies in a digital “wallet,” as well as buy, sell, spend, and trade cryptocurrency. According to the claim, the company proclaims that it is “building the cryptoeconomy – a more fair, accessible, efficient, and transparent financial system enabled by crypto.” It also says that it is a regulated and fully compliant entity, registered with the United States Department of the Treasury’s Financial Crimes Enforcement Network as a Money Services Business."

"Coinbase is facing a class-action lawsuit in the United States which has been brought by users whose accounts were suspended by the exchange. Filed by six plaintiffs at a California district court, the lawsuit alleges that the San Francisco-headquartered crypto exchange has wrongfully suspended their accounts for several months."

"The nationwide class action lawsuit was filed in California on June 4 by lead Plaintiffs Michael Leone, Joseph Treseder, Travis Reece, David Beavers, Fazal Us Saboor Ali, and Keisha Pinkey. The group of Coinbase users allege the company locked them out of their accounts for no reason, stopping them from trading, investing or selling their funds, and even deleted accounts completely."

"Leone, who had $15,000 in his account, was locked out of his account in January for no reason, and despite sending more than 100 emails he has never received a response from the company, the claim states. Treseder, who had $30,000 in his account, was locked out arbitrarily in January and has failed to regain access to his account despite numerous attempts. Reece deposited previously-owned cryptocurrency into his Coinbase account, and after making the deposit he logged into his account to find it had disappeared, according to the class action lawsuit. He is yet to access his funds."

"Beavers says that he was locked out of his account after contesting a “mistaken” $100 fee. According to the claim, he has been locked out of his account for several months despite attempts to contact Coinbase and regain access. Ali has been locked out of his account since January for no reason, despite filing numerous complaints to Coinbase, the claim states. And Pinkey says that she has been locked out of her account, which had $6,000, since February and has not been able to regain access." "[T]hey alleged that their accounts were suspended after they made deposits to the exchange and could not even access their funds."

"One of the plaintiffs specified that he deposited $30,000 to purchase XRP, but later could not access his account as it was showing an error with invalid login details." "The complaint was filed on Friday to the San Fransico federal court by Joseph Treseder. Treseder claims that he deposited $30,000 in his account at Coinbase to purchase XRP; however, he received an error citing invalid login details. The complaint alleges that due to being locked out of their accounts, the crypto owners suffered losses at time – due to being unable to trade."

“Plaintiffs and Putative Class Members that Defendant locked out of their accounts or denied access to their funds were often unable to access their accounts for long periods of time, including but not limited to a span of a month or more,” the lawsuit stated.

"Those who were eventually able to access accounts found that the value of their cryptocurrency had dropped significantly in the interim and some had no ability to sell or use the cryptocurrency held in their Coinbase accounts, the class action lawsuit alleges."

"The traders want to represent anyone in the United States who was locked out of their Coinbase account. They are suing for negligence, unjust enrichment, breach of contract and fiduciary duty, conversion and violation of consumer laws. They seek certification of the Class, damages, disgorgement, injunctive relief, interest, legal fees, and a jury trial."

"Coinbase’s spokesperson had said the company is looking into the matter. Whether the lawsuit hold or not in court is another matter altogether but for the time being Coinbase’s reputation has taken a hit. The compliant has also highlighted the incompetency of the customer services department which has been the cause of many users’ woes."

A significant number of users in CoinBase report troubles accessing their funds or that funds have disappeared. They are putting forward a lawsuit in an attempt to get answers and resolution to account issues.

HOW COULD THIS HAVE BEEN PREVENTED?

Situations like this are tricky given the number of users and customers involved. The industry insurance fund could provide an additional avenue for a transparent and neutral resolution of some notable cases, and a counsel could discuss some strategies to resolve the backlog. Allowing more platforms would also increase competition and provide more options for traders to avoid negative experiences.

Check Our Framework For Safe Secure Exchange Platforms

Suspended Account Holders Bring Class-Action Lawsuit against Coinbase (May 8)
Coinbase Review 2021 (Aug 6)
Crypto firm Coinbase valued at more than oil giant BP - BBC News (Aug 6)
https://www.coinbase.com/ (Dec 4)
https://www.coinbase.com/about (Dec 4)
Morioh (Dec 4)
Coinbase Class Action: Suit Alleges Crypto Exchange Locked Users out of Wallets, Froze Assets (Jun 7)
Coinbase Randomly Locks Users Out of Accounts for Months, Deletes Funds, Class Action Lawsuit Alleges - Top Class Actions (Jun 7)
Coinbase tangled in a class action lawsuit - (Jun 7)
Over 20k locked. NO response. Class Action lawsuit started. Please join me. : CoinBase (Jun 7)
https://buzzle.com/crypto-markets/coinbase-account-restricted (Jun 7)

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