Two competing Bitcoin forums on popular social media website strike a startlingly different tone when it comes to one of the most popular and influential corporations in the Bitcoin industry: Coinbase. Bitcoiners like to express disdain for leading Bitcoin wallet service and exchange Coinbase on…
Two competing Bitcoin forums on popular social media website strike a startlingly different tone when it comes to one of the most popular and influential corporations in the Bitcoin industry: Coinbase.
Bitcoiners like to express disdain for leading Bitcoin wallet service and exchange Coinbase on r/Bitcoin, the Bitcoin forum moderated by the controversial administrator Theymos, who faces criticism for censorship. R/btc, which sprouted as an alternative to r/bitcoin, strikes a more positive tone when it comes to the San Francisco startup.
On Reddit, where Bitcoiners love to engage in lively debate, post after post appears disparaging the San Francisco-based Bitcoin startup. For example:
Even on Coinbase’s own help Community, a post entitled “I hate coinbase” shares the sentiment.
Some have wondered if Coinbase is the victim of a PR attack.
With Bitcoiners expressing consistent skepticism – most recently people lobbied claims that the Bitcoin and ether exchange is bankrupt – CEO Brian Armstrong felt the need to allay fears that Coinbase is out of money. He did so with a tweet:
No cryptographic proof of funds was executed, a controversial move for an industry which prides itself on such verifiability. Skepticism remains among rabble-rousers within the Bitcoin industry.
r/Bitcoin – a central gathering point for the self-proclaimed “Bitcoin Community” – has long been unkind to Armstrong’s company, as users regularly complain about Coinbase’s interpretation of know your customer and anti-money laundering policies, which results in account closures. As a money transmitter, Coinbase has a duty to monitor its user’s transactions for suspicious activity. Bitcoin ideologists don’t like this.
One Reddit user recounted an incident which began in June 2015 when he began exploring the code to Coinbase’s multi sig vault, where the user held “anywhere from $2,500 worth of btc to $10,000.” He became interested in Coinbase’s “Vault” system and began experimenting with it. He purportedly found a “major exploit” which allowed him to put his account into negative balance while withdrawing the bitcoin, resulting in the user being able to cash out infinite bitcoins.
“Instead of abusing the exploit i have decided to help Coinbase fix the exploit by telling them step to step instructions on how to reproduce the bug on hackerone,” he wrote.
The Reddit user laments Coinbase’s “measly $5,000 bounty” for reporting the bug. “I was expecting to get upwards of $25,000,” he said.
The user reasons, “I helped them fix something that could have damaged them in hundreds of thousands of dollars, maybe even millions if the exploit was executed correct with the right amount of people.”
After the user received the bounty, Coinbase banned the user’s account The user could not withdraw bitcoins. After further investigation, the user discovered another exploit and notified them. It took Coinbase months to reply, according to the Redditor.
Whether Coinbase’s actions were “compliance and banking” culture (the likely answer)-or more sinister- is often debated on Reddit.
It’s not uncommon for posts to appear on r/Bitcoin lamenting how Coinbase shut down a user account. One of the more popular examples is a post entitled, “Coinbase stole $25,000 from me.” A series of complaints on Reddit even resulted in an article on Gizmodo wherein users discussed how hackers had stolen their bitcoin held on the Coinbase platform.
Reddit consistently upvotes posts on Coinbase’s lackluster service. “Sold ~$5800 worth of BTC through Coinbase this week. $2490 has never been deposited. Unresponsive support. Please upvote for visibility”, earned 3,629 upvotes, for instance.
BitBet.Us last month posted on Reddit its alleged discovery that Coinbase “has silently strated tracking how their customers spend the coins purchased on their site.”
The Bitcoin-based gambling site wrote: “One of our users was threatened by Coinbase with account closure after he placed a bet on our site,” according to BitBet.Us. “The implication is basically that Coinbase is now officially in the business of deciding of deciding what you can and can’t do with your own money.”
Many Bitcoiners decry how Coinbase is no different than VISA and Paypal. A movement to take Coinbase off bitcoin.org resulted in division and debate between bitcoiners.
Last month, headlines did not help Coinbase’s reputation within the Bitcoin community. In July, headlines detailed how Coinbase reportedly helped the FBI to shutdown Kickass Torrents and how the US Secret Service seized $13,000 from a Coinbase account. Armstrong has been very public about his belief that compliance is important for the future of digital currency.
Of course, the nature of Reddit makes drawing conclusions from posts on the site difficult to do. The site is routinely rigged, and even the Bitcoin space has taken note thereof. Still, Bitcoiners hold major debates there, and companies often claim posts on subreddits represent an opportunity for the Bitcoin “Community” to comment on the industry’s important issues.
On another popular Reddit Bitcoin forum, the subredit r/btc, users discuss the dislike for Coinbase demonstrated in r/Bitcoin. Some conjecture it began when Armstrong advocated for larger block sizes. But the distaste predates the block size debate, and is likely more rooted in Coinbase’s decision to abide by the law. Bitcoin’s anarchist sect, deeply rooted in bitcoin’s history, see Bitcoin above and beyond traditional financial regulation.
When I reached out to Armstrong for this post, he deeply criticized an earlier version. He called speculation on r/Bitcoin “wildly inaccurate.” He pointed to the deep divide between the two Reddit sub-forums, saying this caused “a lot of bias.” I suppose he considered I had fallen for the bias.
Six months ago on Reddit’s r/btc, a different tone than r/Bitcoin perhaps highlighted that divide: “Just want to say a big thank you to Coinbase for their professionalism over an issue that occurred lately. Were lucky to have you guys in the bitcoin community.”
Featured image from Shutterstock.
Last modified: January 25, 2020 11:50 PM UTC