The U.S. Consumer Financial Protection Bureau (CFPB) has experienced a dramatic rise in virtual currency-related consumer complaint reports in 2017. The majority of these complaints name Coinbase, one of the most widely-used U.S. cryptocurrency exchanges.
Cryptocurrency prices have exploded in 2017, sparking increased media attention and public interest in this burgeoning industry. According to a report from LendEDU, virtual currency-related consumer complaints are rising as well; in fact, they’re on pace to increase nearly 6,000% from 2016 levels. In 2016, CFPB received just seven complaints tagged “virtual currency.” Through August 26, the CFBP had received 277 complaints listed under this category and that number is on track to end the year at 425.
That said, the CFPB receives hundreds of thousands of complaints every year, so these numbers remain minuscule.
The worst offender, based on the volume of complaints in the CFPB database, is Coinbase. Last year, only six consumers complained to the CFPB about the San Francisco-based exchange. As of August 26, that number had swelled to 288 in 2017 (consumers often tag these complaints as “bank account” rather than virtual currency). This is a year-to-date increase of 4,700%, and the CFPB is on pace to receive another 154 Coinbase-related complaints by the end of the year.
Many of these complaints stem from the chronic outages the exchange experienced earlier this year during periods of intense market volatility. The outages coincided with dramatic declines in the bitcoin and ethereum prices, and Coinbase attributed them to high traffic levels. Indeed, the exchange has seen a surge in consumer demand, and it has sometimes struggled to scale quickly enough.
The bitcoin cash hard fork also created a public relations headache for the exchange. At first, Coinbase said it would not support bitcoin cash and that users must withdraw their coins before the fork if they wanted to receive a BCH air drop. However, some users complained they were unable to withdraw their coins in time, and others threatened to sue the company for the bitcoin cash. Eventually, the company reversed its decision and said it will integrate bitcoin cash support by January 2018, but some users continue to balk at having to wait that long to receive their coins.
Finally, users have complained that the company does not always respond to support tickets in a timely manner. However, CEO Brian Armstrong says the company has committed to using part of the $100 million it raised during its latest round of funding to expand its customer support team.
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Last modified: May 21, 2020 9:16 AM UTC