Coinbase does not deserve to be in business

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Steve Sokolowski
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Coinbase does not deserve to be in business

Postby Steve Sokolowski » Mon Oct 15, 2018 2:50 pm

As a major financial services firm with a money services business license, Coinbase has a duty to provide a basic level of customer support, but the company has repeatedly shown that it is unable to meet that standard.

Lawmakers force exchanges to host servers in special datacenters, to hire security consultants, and to collect identity documents, and yet there are few or no regulations that govern how quickly money services businesses must deal with customers' money issues . It's time that these regulations mandate that Coinbase and other exchanges be required to respond to support tickets within a few weeks. But even if that isn't likely to happen, I think it's important to get this message distributed as widely as possible so that Coinbase's investors read it. Coinbase is constantly trying to close funding rounds, and their investors need to be made aware that the company they are valuing at over a billion dollars has shaky fundamentals.

Our latest saga with Coinbase began sometime in mid-September, when both the OAuth2 application that provides dollar payouts to customers for their mining rewards, and the API access that allows us to obtain receive addresses to send mined blocks to Coinbase, suddenly started to return error messages. In the case of the OAuth2 application, the error message states "OAuth2 application is disabled." In the case of the API calls, a 401 error is returned, with the text "Your account has been locked, please visit coinbase.com to resolve."

We are 100% certain that our system did not cause these errors, because there were no releases or configuration changes for days around the time the problem began. Our first step, of course, was for Chris to create what I thought was a pretty straightforward support ticket:

Code: Select all

Hello. I have been using an OAuth application through Coinbase to send money. It has worked fine until two days ago, when I began receiving the error "OAuth application has been disabled". I have not changed anything with the application, but Coinbase has changed something causing it to no longer work. Can you please fix this for me? Thank you for your help.


This ticket was submitted on September 22, and we have received no response to it 24 days later! The ticket was "updated" on October 2 at 4:16pm PDT, indicating that they did receive it and were purposely ignoring it. Next, Chris called Coinbase and they mentioned that they had added a verification requirement for sends and receives. Previously, verification was only required for buys and sells. We followed their advice and verified the account, but there were no changes. But now we were receiving a large number of support tickets ourselves, so we posted the following message to customers who requested dollar payouts:

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Coinbase payouts are offline due to an error in the Coinbase API.  We have contacted Coinbase to resolve this issue (Case ID #4881645), and we are still awaiting a reply from them.  We will issue Coinbase payouts as soon as they fix the issue.  Bitcoin payouts to wallet addresses are still operating normally.


Some customers did contact Coinbase, and Coinbase reportedly ignored them too. One such example is documented at viewtopic.php?f=4&p=22432#p22349.

Our final attempt at contacting them was in an October 8 ticket. In this ticket, I reminded Coinbase of the previous ticket and asked them for assistance. I also gave them plenty of time to avoid our having to take the issue public:

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Hi,

At the end of September, we began to receive a message stating "Your account has been locked, please visit coinbase.com to resolve" when we attempted to query the Coinbase API to obtain a receive address. Nobody had made any changes to this account or to the code calling the API at the time the message began to be returned from Coinbase's servers.

The method being called is "account/generate_receive_address" and no parameters are being provided. It has been called this way and worked from 2014 until September 2018.  In ticket 4881645, my brother requested support on this issue and did not receive a response. Later, he called Coinbase and the support representative stated that the cause of the problem was a lack of identity verification. I successfully verified the account, but the error has persisted.

The level of support Coinbase is providing on this issue is unacceptable. It should not take multiple weeks to reply to a ticket like this one. All I want to know is what the issue is so that I can resolve it. If the problem is that my identity still is not fully verified, then please tell me what additional documentation is required to unlock the account. If additional investigation is required, then surely it isn't difficult to simply inform me when I can expect a reply.

If I don't receive a response by tomorrow, October 9, then I'm going to publicize this issue on the @ProHashing twitter feed, the Prohashing Blog, and on other social networking sites. I urge Coinbase to please reply to this message so that we can figure out what is wrong here, even if the reply is simply to provide a date I can expect the issue to be addressed.

Thanks,

-Steve Sokolowski


There are many tickets I submitted to Coinbase before I stopped using their services for personal use that were similarly ignored, but this one instance is sufficient to demonstrate the problem at hand. Just to recap this one case: it's been 24 days since Coinbase was first notified. There were two tickets and a phone call. Many other customers have also submitted tickets. In every case, Coinbase has either not replied, "updated" the ticket and ignored it, provided incorrect advice, or responded with a form response.

Coinbase is a company that earns billions of dollars in revenue, and their executives are pocketing millions. They write blog posts about how they are improving the quality of their support. Earlier in the year, when the price of every coin was exploding, it was reasonable for them to be given more time to hire and train more support agents - especially given that the economy was so overheated that it is very difficult to hire anyone. But it's been close to a year since exchange volumes peaked, and Coinbase is no closer to resolving its support tickets in a timely fashion than it was back then. The only reasonable conclusion at this point is that the company has made an intentional decision to hire only enough support representatives to post automated replies that often aren't related to the subject at hand. They are willing to pad their pockets while customers' money is in limbo because their support representatives are understaffed, untrained, and given too little authority to actually resolve issues.

A company with such poor support should not be permitted by authorities to ignore 6,128 users of this application for 24 days.

But even if we look at this issue from a business standpoint, they've already lost $5,000 in trade fees alone from us that have gone to Bitflyer in the past year; if we count the ten people who had accounts who I personally recommended switch exchanges, it's probably twice that - and that's just me. This is what potential investors in Coinbase need to know. The company is so poorly managed that they have lost a million dollars of trade volume and are giving the runaround to 6,128 other people who are becoming more and more negative about Coinbase in the tickets they submit to us every day - all because their support can't be bothered to reply. How do they value the cost of a support ticket? Any smart investor should know that it doesn't cost $10,000 or $20,000 to reply to four or five tickets over the course of a year.

Please join me in publicizing Coinbase's lack of support to hit them where it hurts - by losing customers, hurting investment, and attracting the attention of regulators. A company that holds customers' money but does not allow those customers to contact them does not deserve to be in business.

-------------------------

Here's a development about this problem, as of October 25.

I posted to several social media sites yesterday, including my least favorite one, reddit. For those who are unaware, reddit is a cesspool of disinformation and trolls. The reason is that their content policies promote it. They ban people who suggest that others upvote good content, and they also ban people who "doxx" other users, or refer to them by their real names. The end result, of course, is a place where anonymous trolls and outright criminals are allowed to run rampant, and anyone who tries to provide accountability to them is banned.

On reddit, I was contacted by a user who claimed to be from Coinbase support. He said that he was working on the problem and that I should call him. I called the number and everything seemed fine until he told me to go to a website (fastsupport.com) and download an executable file. He didn't have a clear answer as to why I would need to download an executable file on my computer when the issue is with Coinbase's database. I told him to send me an E-Mail from a coinbase.com address and I would call him back, and he never did.

Here is a log of the actual chat:

Code: Select all

cindy_coinbase_Staff
3:13 PM
is there anything else we can help you with?

MattAbrams
4:22 PM
Thanks for replying.  We're trying to get an issue resolved.   An API key is returning "this account is locked, contact Coinbase.com for support." 

The following is the text of one of the tickets:

At the end of September, we began to receive a message stating "Your account has been locked, please visit coinbase.com to resolve" when we attempted to query the Coinbase API to obtain a receive address. Nobody had made any changes to this account or to the code calling the API at the time the message began to be returned from Coinbase's servers.

The method being called is "account/generate_receive_address" and no parameters are being provided. It has been called this way and worked from 2014 until September 2018.  In ticket 4881645, my brother requested support on this issue and did not receive a response. Later, he called Coinbase and the support representative stated that the cause of the problem was a lack of identity verification. I successfully verified the account, but the error has persisted.

I think there is a bug in your system that has caused a problem with the account because there are missing checkboxes in that account's web interface that are present in other accounts

cindy_coinbase_Staff
4:24 PM
confirm your email please?

MattAbrams
4:25 PM
steve@prohashing.com

cindy_coinbase_Staff
4:28 PM
your case has been assigned to the concerne department we will update you soon. stay with us
thanks

MattAbrams
4:29 PM
ok, thanks - do you have an estimate of how long it will be?  is this something that will take a few days or were you asking me to stay in the chat?

cindy_coinbase_Staff
5:37 PM
update,
currently our concern team is reviewing the case and your old case has been closed#4881645.
Your new case id# 7307362. No action is needed till further update.
  thanks
You need to stay on chat

MattAbrams
5:50 PM
ok, I'll be here

cindy_coinbase_Staff
6:23 PM
your case is being process please contact concerning team at +1 805-308-4581 for additional info on case
thanks

MattAbrams
6:32 PM
ok, will call shortly


This conversation is remarkable. There are undoubtedly many people who don't understand that running executable files on your own system won't help Coinbase fix its problems, and certainly a few people have had bitcoins stolen due to this scam.

But the bigger issue is that Coinbase's customer service is so unbelievably poor that it has left an opening for criminals to steal money from their customers. If Coinbase replied to its support tickets, even within two weeks, its customers would not be posting on social media sites. Even if they did complain on social media sites, it would be because the initial contact was unable to assist them for whatever reason, and they were simply criticizing Coinbase's policies. There wouldn't be any opening for criminals to pretend to be Coinbase because they would already have talked with Coinbase.

In my opinion, this is unconscionable. How can a company stand by and allow this to happen? What kind of people are running Coinbase, that they are so greedy as to be rolling out all these new coins and features while desperate customers are left to be bait for scammers?

--------------------------------------

Here's another update as of October 30 - this issue has been resolved! You can read more about the final resolution at viewtopic.php?f=11&t=5967&start=20#p22566.
Last edited by Steve Sokolowski on Tue Oct 30, 2018 8:48 am, edited 2 times in total.
hobospices
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Joined: Thu May 31, 2018 8:52 am

Re: Coinbase does not deserve to be in business

Postby hobospices » Mon Oct 15, 2018 3:27 pm

Might the uphold API be a suitable replacement? They Provide similar services to Coinbase. I've always received good customer service from them in a timely manner. Check them out https://uphold.com/en/developer/api
alim
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Re: Coinbase does not deserve to be in business

Postby alim » Mon Oct 15, 2018 5:19 pm

Chris, i can't wait for the whole industry to have disruption levels of improvements applied.

Unfortunately for those of us in the UK, Coinbase is one of the few viable ways to obtain crypto and to receive Crypto payments in GBP into bank accounts - and that is a very recent occurrence. (prior to this SEPA payments had to be taken in Euros with an extraordinary amount of exchange rate loss.
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Steve Sokolowski
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Re: Coinbase does not deserve to be in business

Postby Steve Sokolowski » Mon Oct 15, 2018 5:55 pm

hobospices wrote:Might the uphold API be a suitable replacement? They Provide similar services to Coinbase. I've always received good customer service from them in a timely manner. Check them out https://uphold.com/en/developer/api


This is a great idea. I'm going to look into this. However, it takes 7 business days for business accounts to be processed, and would take a significant amount of time to implement this API, so it would probably be Thanksgiving before we could change over.

It still won't resolve the mess with customers who are owed dollars but would not be able to be paid because Coinbase isn't able to be paid. I'll ask Chris to create an account at Uphold and investigate their services.
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Splinter
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Re: Coinbase does not deserve to be in business

Postby Splinter » Wed Oct 17, 2018 1:09 am

I've never heard about Bitflyer before... searching for 'coinbase alternatives' in google, there isn't a single reference to Bitflyer in any of the top 30 sites of the results. Is it really reliable?
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Steve Sokolowski
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Re: Coinbase does not deserve to be in business

Postby Steve Sokolowski » Fri Oct 19, 2018 8:29 am

I want to add another comment to this post to show how poorly managed Coinbase is. Since the message about their poor support was posted to the site, there have been 106,201 impressions that Coinbase has not responded to our ticket.

Do they truly think that not one of these page impressions led someone to close a Coinbase account? How many customers are they willing to lose before they will finally resolve this issue?
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Splinter
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Re: Coinbase does not deserve to be in business

Postby Splinter » Sat Oct 20, 2018 2:29 am

Thanks for ignoring me, Steve... ;P but I couldn't create a bitFlyer account, they are not accepting new accounts at the moment. In addition to practically no support, Coinbase is charging very high fees. I'm using Mycelium now to sell btc then.
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CSZiggy
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Re: Coinbase does not deserve to be in business

Postby CSZiggy » Sat Oct 20, 2018 2:42 am

Splinter wrote:. I'm using Mycelium now to sell btc then.


I'd have no issues using them....If they had offices in a country other than Latvia.

Show me a BBB rated US exchange, or some EU place that has passed some sort of regs.
Please no camien islands BS countrys where all it takes is $1 to register a company and not be tied to any country's laws.
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Steve Sokolowski
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Re: Coinbase does not deserve to be in business

Postby Steve Sokolowski » Sat Oct 20, 2018 7:52 am

Splinter wrote:Thanks for ignoring me, Steve... ;P but I couldn't create a bitFlyer account, they are not accepting new accounts at the moment. In addition to practically no support, Coinbase is charging very high fees. I'm using Mycelium now to sell btc then.


I apologize. It's puzzling to me why there is so much demand for exchanges, compared to the rest of the industry. It frustrates me all the time how when I ask a company if they will accept bitcoin cash for whatever I want to buy, they will say no, but when people want to sign up for exchanges, the exchanges turn them down.

It could just be the fragile state of the economy, most likely. There is so much money floating around in the current economy that there are far too many customers for most companies. Plus, it's impossible to hire anyone. When the convenience store down the street is offering $13 to start with no experience and no education, you know that something is different.
derbagni
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Re: Coinbase does not deserve to be in business

Postby derbagni » Sun Oct 21, 2018 10:28 pm

Steve...

I have just started using prohashing, and I am definitely pleased with the service. To the extent the the Coinbase API starts functioning again, can you clarify how the USD payouts work? I have restrictions with my work on selling digital assets (I have a 6 month hold period) that doesn't apply if I am paid in USD. With those Coinbase payments does the mining account ever have control of the Bitcoin or other digital assets prior to prohashing selling them on Coinbase? If everything is handled by Prohashing through Coinbase, and I simply received USD in my checking account, then It would certainly make things much easier for me!

I am astonished at how poor their customer service is, especially considering their size. Is there any posibility you could do something similar with Kraken?

Thanks for your product!

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