The Coinbase Dilemma: Regulations vs Customer Satisfaction

The advancement in technology has drastically changed the travel patterns of an average human. People cover more miles, across geographies due to the increased need to travel for business and pleasure. Bitcoin, being a truly global currency has emerged as a champion for those who are constantly moving.

While everyone praises Bitcoin for making it easy to spend money anywhere across the world without having to worry about conversion rates, few issues make people doubt the progress. Just because Bitcoin is a great instrument for the exchange of value doesn’t mean the platforms operating in the segment are also equally good.

Thanks to various regulations, technical issues and other problems, Bitcoin platforms have left people longing for better services and a responsive customer support. These very same issues have put one of the most popular digital currency platforms, Coinbase, at the receiving end of the customers’ ire.  While the San Francisco Bitcoin exchange continues to play ball with the existing financial regulations, many of its ‘loyal’ customers have started to bear the heat.

A Coinbase Customer’s Complaint

In a recent post, one of the alleged Coinbase customer reports that the platform has decided to punish him for travelling.  According to the available reports, the cryptocurrency company sent him a notice informing their decision to not to support his account, while asking him to withdraw all remaining Bitcoins.

The customer is stated to have opened his account with Coinbase while in Israel, using AML and KYC documents issued in the United States. However, when he tried to access his account from Ukraine (where he recently travelled to), the account was deactivated and a notice sent to him soon after.

Coinbase doesn’t operate in Ukraine at the moment and the company is believed to have tracked the IP to block his account for accessing it from a different location. While such mechanism is not unheard of, it was so far confined only to mainstream banking and financial institutions. And, even the banks don’t selectively close the accounts due to customer’s minor infringements.

The response from Coinbase read:

“I’m sorry for the trouble. I asked around about this, and someone is actively working on it. You should hear more from us by email shortly, if you haven’t already.”

It is quite possible that the platform decided to block the user in order to safeguard the platform’s security, preventing any hacking attacks from new and unknown actors trying to access the systems. The CEO of Coinbase Brian Armstrong also responded to the thread, His response is as follows,

“These post headlines are taking hyperbole to a whole new level.

I think what you mean is that we closed your account because you are living in a country where we don’t operate, and there is a bug on our close account page. In addition, our support team has been slow to provide you a solution. None of those things are good, but there is no reason to lie and say we took $12,000 from you.

We should have a fix out for you shortly for the bug you encountered, and apologies for the poor experience you had.”

The regulatory issues are stealing the global nature of digital currency away from Bitcoin, affecting the community and companies alike. However, there seems to be a need to improve the customer support’s response time as people get anxious when they are unable to access their own funds, and it may also end up damaging the company’s reputation.

Ref: Reddit | Image: Coinbase