Coinbase has been one of the driving forces in the growth of Bitcoin over the past two years. They have brought many major mainstream corporations into the Bitcoin fold recently, with Mozilla (Firefox), Time Magazine and The United Way among them. Now, it seems they…
Being an American corporation, located in the California’s Bay Area, brings certain positives and negatives to Coinbase users, and Coinbase corporate protocols. Quick and easy integration with the American banking system is a clear plus. Huge potential for government over-regulation and data mining is a huge minus. Many corporations, much bigger and more powerful than Coinbase, have been forced to succumb to the original “Big Brother” domestically. Is Coinbase becoming the next “chip off the old block?” Let’s see.
Coinbase has in effect banned Bitcoin use for online gambling websites, even though online gambling is not illegal. According to Reddit users, when Coinbase customers removed their BTC from SatoshiBet.com, a popular online gambling site, they found their Coinbase account would later be closed due to the ever-nebulous “Terms of Service” agreement violations clause.
According to another Reddit user, Coinbase has taken down the accounts of those who have allegedly bought cannabis products online with coins purchased from the service.
“I have been a long time Coinbase customer, buying 1-3 times per month, I got an e-mail today saying they are banning me from using their services because of a ToS violation. I emailed them back to ask what the violations were and they told me that they had evidence that I used some of the BTC I bought for cannabis/cannabis seeds. They gave me a specific BTC transaction and said it was for drugs and wouldn’t listen to anything I had to say.”
Did you buy and sell Bitcoins at LocalBitCoins.com? That was grounds for another closure according to another former Coinbase member.
“Because I buy a few bitcoins a week from Coinbase (although sometimes I will go months without buying any) I was flagged as having enough volume to potentially be a Money Services Business (MSB). The Coinbase ‘compliance team’ mounted an investigation against me. They determined ‘they had reason to believe’ I am selling Bitcoins on LocalBitcoins, even though they haven’t said what that reason is, and therefore are suspending my account.”
The explanation from Coinbase is that they’re just trying to comply with the litany of anti-money laundering and drug laws in the United States. Partaking in online gambling, using LocalBitCoins.com, or even buying marijuana online is not illegal everywhere. They may, in fact, be just playing it safe legally when doing business in the hyper-regulated United States. Coinbase may not want to be this invasive, but it may, in fact, be the cost of doing business in the good ‘ole U.S. of A.
A bigger question becomes has Coinbase slowly introduced the cancer of government regulation, or over-regulation, by osmosis? They work under an ever-growing domestic “Police State,” and may, in fact, be guilty by association. Is blaming government enough of an excuse? What is a Coinbase account holder to think? How should Coinbase users react to this new level of invasion?
Is this a manifestation of doing any Bitcoin business with an American corporation? Is this the “cost of doing business” in the U.S.? If you are going to use BTC, is this something you should expect and accept? Does this open the door to corporations overseas to offer similar service, with more privacy and consumer protections, not ever increasing and egregious “Terms of Service” agreements? Will this damage Coinbase in their market in the long run? Why has Bitcoin account competitor BitPay not micro-managed domestic regulatory issues in the same invasive fashion?
These developments may create more questions than answers. My opinion is you might want to find companies that offer consumers protection and convenience overseas. Find companies that work within jurisdictions that do without onerous micro-management and government influence. That may be your best bet, in the long run.
Coinbase used to be a trusted Bitcoin account holder, and seems to be heading towards being just a mother hen owned by government interests and unethical domestic regulations. Where did you go, Joe DiMaggio?
What do you think of Coinbase now and in the future? What should Bitcoin corporate account holders expect when it comes to regulation and oversight? Share above and comment below.
Images from Flickr and Shutterstock.
Last modified: January 3, 2020 3:29 PM UTC