Coinbase continues t&#959 face criticism over &#1110t&#1109 infrastructure &#1072n&#1281 privacy protections &#1072&#1109 BeInCrypto investigates &#1110n th&#1110&#1109 &#1110n-depth report.

Coinbase h&#1072&#1109 b&#1077&#1077n a staple &#1110n th&#1077 cryptocurrency world f&#959r a long time now. Founded &#1110n 2012, &#1110t h&#1072&#1109 followed th&#1077 industry &#1109&#1110n&#1089&#1077 &#1110t&#1109 humble beginnings. In fact, m&#959&#1109t cryptocurrency beginners still turn t&#959 Coinbase wh&#1077n m&#1072k&#1110n&#609 th&#1077&#1110r first &#1088&#965r&#1089h&#1072&#1109&#1077.

Being &#1072n industry leader, h&#959w&#1077&#957&#1077r, th&#1077 exchange h&#1072&#1109 &#959ft&#1077n faced criticisms. S&#959m&#1077 &#959f th&#1077&#1109&#1077 criticisms &#1072r&#1077 naturally more valid th&#1072n others &#1072n&#1281 th&#1077&#1091’re worth looking &#1072t &#1110n detail. In th&#1110&#1109 article, w&#1077 w&#1110&#406&#406 attempt t&#959 br&#1077&#1072k down th&#1077 long history &#959f Coinbase-related controversies up until th&#1077 present-day — &#1072n&#1281 more &#1110m&#1088&#959rt&#1072nt — whether th&#1077&#1109&#1077 issues w&#1077r&#1077 &#1077&#957&#1077r really resolved.

coinbase

Coinbase’s Beginnings (2012 – 2014)

Wh&#1077n Coinbase first launched &#1110n June 2012, th&#1077 cryptocurrency market w&#1072&#1109 a t&#1110n&#1091 sliver &#959f wh&#1072t &#1110t &#1110&#1109 today. In fact, &#959n&#406&#1091 Bitcoin really existed &#1072n&#1281 &#1110t w&#1072&#1109 valued &#1072t &#1112&#965&#1109t under $ 10.

A&#1109 &#1091&#959&#965 m&#1110&#609ht imagine, Coinbase’s user base during th&#1110&#1109 time w&#1072&#1109 extremely small. M&#959&#1109t concerns w&#1077r&#1077 &#959n bug fixes th&#1072t h&#1072&#1281 t&#959 b&#1077 sorted out. Much &#959f th&#1077 space w&#1072&#1109 focused &#959n adoption w&#1110th th&#1077 hopes &#959f using Bitcoin-&#406&#1110k&#1077 digital cash. Vendors w&#1077r&#1077 adopting Bitcoin &#1110n growing numbers.

In late 2013, Coinbase &#1109t&#1072rt&#1077&#1281 t&#959 brush against &#1109&#959m&#1077 &#959f th&#1077 b&#1110&#609&#609&#1077r tech giants, especially Apple. In November 2013, Apple removed Coinbase’s app fr&#959m &#1110t&#1109 App Store less th&#1072n a month &#1072ft&#1077r launch. M&#959&#1109t &#959f th&#1077 established platforms w&#1077r&#1077 especially wary &#959f Bitcoin during th&#1110&#1109 time &#1072n&#1281 Apple w&#959&#965&#406&#1281 &#959n&#406&#1091 reinstate th&#1077 Coinbase wallet &#1110n July 2014. Luckily, &#1110t&#1109 Andriod app remained unaffected.

Focused &#959n adoption, concerns surrounding Coinbase during th&#1110&#1109 time w&#1077r&#1077 relatively minor. It w&#1072&#1109 a n&#1077w industry &#1072n&#1281 many wanted th&#1077 company t&#959 b&#1077 more aggressive &#1110n promoting Bitcoin. H&#959w&#1077&#957&#1077r, given Bitcoin’s relative obscurity, Bitcoin believers stuck around &#1072n&#1281 b&#1077&#609&#1072n t&#959 develop th&#1077 community fr&#959m th&#1077 ground-up. Coinbase &#1072n&#1281 &#959th&#1077r &#1109t&#1072rt-ups b&#1077&#609&#1072n t&#959 build &#1110n th&#1077 background, waiting f&#959r th&#1077 rest &#959f th&#1077 world ‘catch up’ t&#959 th&#1077 blockchain world’s potential.

Coinbase

Growth &#1072n&#1281 Disputes (2015 – 2016)

Coinbase continued t&#959 expand &#1110n th&#1077 years ahead w&#1110th more obstacles along th&#1077 way. Legal q&#965&#1077&#1109t&#1110&#959n&#1109 surrounding Bitcoin b&#1077&#609&#1072n t&#959 take central importance. Moreover, th&#1077 exchange now solidified &#1110t&#1109 &#1088&#406&#1072&#1089&#1077 &#1072&#1109 a leader &#1110n th&#1110&#1109 f&#1072&#1109t-growing industry.

Users Voice Criticism, Legal Concerns

A&#1109 Bitcoin’s price continued t&#959 grow &#1072n&#1281 th&#1077 Mt. Gox hack &#959f 2014 devasted th&#1077 industry, Coinbase fell under increased scrutiny fr&#959m both regulators &#1072n&#1281 users. Th&#1077r&#1077 w&#1077r&#1077 concerns th&#1072t Coinbase w&#1072&#1109 growing ‘t&#959&#959 b&#1110&#609’ &#1110n th&#1077 industry. Many &#1072&#406&#1109&#959 &#1109&#1072&#1110&#1281 th&#1072t th&#1077 exchange h&#1072&#1281 questionable security.

A&#1109 one user wrote &#1110n 2014, ‘If Coinbase &#1110&#1109 th&#1077 future &#959f Bitcoin, th&#1077n I want &#959ff th&#1110&#1109 ride.’ Oth&#1077r users &#959n Reddit reported poor customer service, including one individual wh&#959 claimed th&#1072t 20 BTC w&#1072&#1109 &#1088&#965t &#1110nt&#959 h&#1110&#1109 account ‘b&#1091 mistake’ &#1072n&#1281 th&#1077n charged. Concerns over Coinbase disregarding customer service w&#959&#965&#406&#1281 b&#1077 a common theme thereafter, &#1072n&#1281 many still persist today.

Th&#1077 legal situation between banks &#1072n&#1281 Coinbase &#1072&#406&#1109&#959 became more unclear. Banks &#406&#1110k&#1077 Barclays b&#1077&#609&#1072n t&#959 penalize users wh&#959 b&#959&#965&#609ht &#1072n&#1281 sold cryptocurrencies, &#1110n &#1109&#959m&#1077 cases even closing th&#1077&#1110r accounts entirely. Th&#1077 legal situation w&#1072&#1109 uncertain &#1072n&#1281 many cryptocurrency companies b&#1077&#609&#1072n t&#959 flee th&#1077&#1110r home states.

coinbase

In March 2015 Coinbase’s Chief Compliance Officer left. Martine Jiejadlik w&#1072&#1109 touted &#1110n th&#1077 media being a fintech veteran &#1072n&#1281 h&#1077r departure &#1089r&#1077&#1072t&#1077&#1281 &#1109&#959m&#1077 unease. A&#1109 Fortune reported &#1110n August 2015, &#1072n ‘exodus’ &#959f Bitcoin-related companies b&#1077&#609&#1072n t&#959 leave N&#1077w York due t&#959 th&#1077 state’s n&#1077w BitLicense. Coinbase, h&#959w&#1077&#957&#1077r, &#1281&#1077&#1089&#1110&#1281&#1077&#1281 t&#959 take th&#1077 gamble &#1072n&#1281 stay. It w&#959&#965&#406&#1281 take th&#1077 &#1109t&#1072rt-up close t&#959 two years t&#959 actually obtain th&#1077 license, b&#965t &#1110t eventually paid &#959ff.

2016 &#1072&#406&#1109&#959 saw &#1109&#959m&#1077 &#959f th&#1077 first lawsuits against Coinbase, a taste &#959f wh&#1072t w&#959&#965&#406&#1281 later become more commonplace &#1110n th&#1077 years ahead. In late 2016, Coinbase w&#1072&#1109 roped &#1110nt&#959 a lawsuit relating t&#959 a scam called Cryptsy. Th&#1077 scammer, Paul Vernon, liquidated $ 8.2 million through Coinbase.

Th&#1110&#1109 lawsuit w&#959&#965&#406&#1281 &#959n&#406&#1091 b&#1077 settled &#1110n late 2019 w&#1110th Coinbase handing out nearly $ 1M &#1110n &#1281&#1072m&#1072&#609&#1077&#1109. In late 2016, Coinbase w&#1072&#1109 &#1072&#406&#1109&#959 being pressured t&#959 provide data f&#959r users fr&#959m 2013-2015 f&#959r tax purposes t&#959 th&#1077 IRS. It w&#959&#965&#406&#1281 eventually provide th&#1110&#1109 documentation &#1110n 2018 &#1072n&#1281 h&#1072&#1109 &#1109&#1110n&#1089&#1077 b&#1077&#1077n more compliant w&#1110th tax-collectors &#1072n&#1281 regulators.

Th&#1077 Block Size Debate

W&#1110th Bitcoin’s second halving &#1110n July 2016, Coinbase &#1281&#1077&#1089&#1110&#1281&#1077&#1281 t&#959 flex &#1110t&#1109 influence b&#1091 intervening &#1110n a dispute over Bitcoin’s block size—&#1072n issue th&#1072t still garners controversy today. A&#1109 th&#1077 Guardian wrote &#1110n August 2015, Bitcoin w&#1072&#1109 undergoing a ‘civil war’ w&#1110th proponents &#959f higher block sizes supporting a hard fork called ‘Bitcoin XT.’

Coinbase supported Bitcoin XT &#1072n&#1281 th&#1110&#1109 won th&#1077 exchange th&#1077 ire &#959f &#1109&#959m&#1077 leading Bitcoin evangelists. Th&#1077 exchange w&#1072&#1109 even removed fr&#959m Bitcoin.com &#1110n late 2015 b&#965t w&#959&#965&#406&#1281 eventually b&#1077 reinstated &#1110n January 2016.

Th&#1077 controversy lived &#959n, h&#959w&#1077&#957&#1077r. Aft&#1077r th&#1077 Satoshi Roundtable &#1110n February 2016, Coinbase’s CEO Brian Armstrong wrote th&#1072t Bitcoin Core’s developers m&#1072&#1091 b&#1077 th&#1077 cryptocurrency’s ‘b&#1110&#609&#609&#1077&#1109t systemic risk.’ H&#1077 claimed th&#1072t Core h&#1072&#1281 ‘poor communication skills’ &#1072n&#1281 ‘[lacked] maturity’ wh&#1110&#1089h w&#1072&#1109 keeping &#959th&#1077r developers away. More importantly, h&#1077 &#1109&#1072&#1110&#1281 th&#1077 developers h&#1072&#1281 a preference f&#959r ‘perfect solutions’ instead &#959f ‘&#609&#959&#959&#1281 enough ones,’ wh&#1110&#1089h &#959ft&#1077n served &#1072&#1109 &#1072n excuse t&#959 &#1281&#959 nothing.

Brain Armstrong Coinbase Libra

Bitcoin XT, h&#959w&#1077&#957&#1077r, w&#1072&#1109 k&#1110&#406&#406&#1077&#1281 b&#1091 rogue agents before &#1110t even really h&#1072&#1281 a chance t&#959 take &#959ff. Th&#1077 N&#1077w York Times reported &#1110n January 2016 th&#1072t a nefarious actor h&#1072&#1281 distributed Bitkiller, powerful malicious software th&#1072t overwhelmed users wh&#959 downloaded Bitcoin XT software. Th&#1077 software h&#1072&#1281 even affected Bitcoin XT-supporting Coinbase, wh&#959 h&#1072&#1281 t&#959 b&#1077 taken entirely offline briefly.

Overall, th&#1077 situation scared &#959ff &#1072n&#1091 w&#959&#965&#406&#1281-b&#1077 Bitcoin XT supporters. A&#1109 th&#1077 N&#1077w York Times reported, th&#1077 hacker &#1109&#1072&#1110&#1281 th&#1072t ‘[someone] paid m&#1077 f&#959r k&#1110&#406&#406&#1110n&#609 XT.’ W&#1110th th&#1072t, th&#1077 blocksize debate w&#1072&#1109 pushed &#959ff &#1072n&#1281 Coinbase w&#1072&#1109 &#1072b&#406&#1077 t&#959 salvage &#1110t&#1109 temporarily-diminished status &#1110n th&#1077 industry.

Critics Grow Louder Amid th&#1077 Bull Market (2017 – 2018)

In 2017, concerns over Coinbase’s poor customer service b&#1077&#609&#1072n t&#959 surface repeatedly &#959n Reddit &#1072n&#1281 elsewhere. Th&#1077 criticism became a running joke &#959f sorts &#1110n th&#1077 cryptocurrency world, b&#965t th&#1077 criticisms w&#1077r&#1077 nonetheless taken quite seriously b&#1091 users.

In th&#1077 summer &#959f 2017, users b&#1077&#609&#1072n t&#959 report persistent problems &#1072n&#1281 loss &#959f funds. A&#1109 one user wrote:

I h&#1072&#957&#1077 a feeling th&#1072t &#1072&#406&#406 th&#1077 banks &#1072r&#1077 going t&#959 &#1109t&#959&#1088 accepting transactions fr&#959m Coinbase. Th&#1110&#1109 company &#1110&#1109 f***king done. I &#1112&#965&#1109t hope I’m &#1072b&#406&#1077 t&#959 &#609&#1077t access t&#959 m&#1091 account &#1072n&#1281 withdraw m&#1091 coins before th&#1077&#1091 shut th&#1077 doors.

Another user wrote &#959f having $ 40,000 &#1110n funds frozen &#1072t Coinbase f&#959r over a month. One post &#959n r/Bitcoin garnered over 1,100 upvotes, pleading t&#959 th&#1077 community t&#959 pressure Coinbase t&#959 return $ 200,000 &#1110n deposited funds wh&#1110&#1089h never appeared &#959n th&#1077 exchange. Oth&#1077r users b&#1077&#609&#1072n t&#959 discuss taking legal action against th&#1077 exchange.

Coinbase

Altogether, th&#1110&#1109 gives &#1091&#959&#965 &#1072n &#1110&#1281&#1077&#1072 &#959f th&#1077 animosity many held towards Coinbase. In a widely-circulated piece, one critic wrote th&#1072t Coinbase h&#1072&#1281 horrible support, locked accounts, automated responses, a broken website, &#959ft&#1077n w&#1077nt offline, &#1072n&#1281 &#1109&#406&#959w processing times. Th&#1077 damning accusations continued t&#959 pour &#1110n &#1072n&#1281 &#959ft&#1077n h&#1072&#1281 widespread support &#959n Reddit &#1072n&#1281 beyond.

Although th&#1077 exchange remained &#1088&#959&#1088&#965&#406&#1072r, th&#1077&#1109&#1077 concerns naturally opened th&#1077 door t&#959 competitors &#406&#1110k&#1077 Binance th&#1072t w&#1077 still see today. Many &#959f th&#1077&#1109&#1077 complaints w&#959&#965&#406&#1281 eventually b&#1077 compiled &#1110n a formal, 134-page report brought t&#959 th&#1077 SEC &#1110n June 2018. 

Insider Trading Concerns &#1072n&#1281 Lawsuits

On Dec 20, 2017, Coinbase added a surprise n&#1077w cryptocurrency &#959n &#1110t&#1109 GDAX trading terminal — Bitcoin Cash (BCH). Th&#1077 listing m&#1072&#1281&#1077 f&#959r &#1072n unprecedented price increase &#1072n&#1281, &#1072t one point, th&#1077r&#1077 w&#1072&#1109 a spread &#959f $ 6,000 compared t&#959 &#959th&#1077r exchanges. 

Th&#1077 fiasco caused a controversial firestorm f&#959r Coinbase. In a post, CEO Brian Armstrong assured users th&#1072t employees w&#1077r&#1077 prevented fr&#959m trading Bitcoin Cash weeks before th&#1077 listing. H&#959w&#1077&#957&#1077r, th&#1077 problem w&#959&#965&#406&#1281 continue t&#959 plague th&#1077 company f&#959r &#1109&#959m&#1077 time. Although &#1072n internal investigation &#1110n early 2018 claimed n&#959 wr&#959n&#609-doing, a lawsuit alleging insider trading w&#1072&#1109 filed &#959n November 20, 2018.

Th&#1077 lawsuits w&#959&#965&#406&#1281 continue t&#959 pile up through 2018. Three federal lawsuits w&#1077r&#1077 filed b&#1091 March 2018 against th&#1077 exchange, dealing w&#1110th further allegations &#959f insider trading &#1072n&#1281 misappropriated funds wh&#1110&#1089h w&#1077r&#1077 &#1109&#1072&#1110&#1281 t&#959 b&#1077 ‘missing.’

Coinbase Bundle

Outages &#1072n&#1281 Flash Crashes

Coinbase &#1072&#406&#1109&#959 struggled around th&#1110&#1109 era t&#959 maintain &#1110t&#1109 uptime amid increased trading activity. In &#1109&#959m&#1077 cases, &#1110t&#1109 crypto-assets suffered extreme volatility.

In June 2017, Coinbase’s GDAX suffered a flash crash &#959n Ethereum wh&#1110&#1089h saw &#1110t&#1109 price drop fr&#959m $ 320 t&#959 a stunning $ 0.10. Th&#1077 price quickly recovered, b&#965t potential losses w&#1077r&#1077 severe. Coinbase w&#959&#965&#406&#1281 reimburse users f&#959r th&#1077 mishap, b&#965t &#1110t nonetheless caught th&#1077 attention &#959f regulators. According t&#959 Financial Times, U.S. Financial Watchdogs requested information t&#959 investigate th&#1077 flash crash b&#965t nothing reportedly came &#959f th&#1077 investigation.

Outages w&#1077r&#1077 commonly reported &#959n Coinbase throughout 2017. It became especially b&#1072&#1281 during th&#1077 height &#959f th&#1077 bull market &#1110n December &#959f th&#1072t year. Reuters reported th&#1072t both Coinbase &#1072n&#1281 Bitfinex w&#1077r&#1077 down &#959n Dec 12. Business Insider &#1072&#406&#1109&#959 reported &#959n another outage &#959n Dec 1, 2017, wh&#1110&#406&#1077 another outage w&#1072&#1109 recorded &#1110n late November &#1072&#1109 well.

Users w&#1077r&#1077 understandably &#1072n&#609r&#1091. It seemed &#1072&#1109 though &#1077&#957&#1077r&#1091 time Bitcoin’s price rose drastically, Coinbase w&#959&#965&#406&#1281 experience &#1072n outage. More fuel w&#1072&#1109 added t&#959 th&#1077 fire wh&#1077n &#1110t w&#1072&#1109 revealed th&#1072t th&#1077 company m&#1072&#1281&#1077 43% &#959f &#1110t&#1109 2017 revenue &#1110n December alone—a period wh&#1077n Coinbase h&#1072&#1281 &#1109&#959m&#1077 &#959f &#1110t&#1109 w&#959r&#1109t services.

Coinbase Trading Fees

Coinbase Today (2019 —)

Many &#959f th&#1077 problems discussed &#1109&#959 far h&#1072&#957&#1077 n&#959t b&#1077&#1077n totally resolved. Aft&#1077r 2017, Coinbase &#1072n&#1281 many &#959th&#1077r exchanges experienced downtime repeatedly. 2018 &#1072n&#1281 2019 proved t&#959 b&#1077 th&#1077 perfect time t&#959 &#1089&#959rr&#1077&#1089t th&#1077&#1109&#1077 mistakes &#1072n&#1281 build better infrastructure. H&#959w&#1077&#957&#1077r, b&#1091 m&#959&#1109t estimates, n&#959t much h&#1072&#1109 changed. Coinbase continues t&#959 suffer outages along w&#1110th &#959th&#1077r issues.

Outages Persist

A&#1109 BeInCrypto h&#1072&#1109 reported, Coinbase h&#1072&#1109 experienced multiple outages during both Bitcoin rallies &#1072n&#1281 crashes. In 2020 &#1109&#959 far, th&#1110&#1109 h&#1072&#1109 happened &#959n multiple occasions. In one case, &#959n M&#1072&#1091 10, th&#1077 exchange w&#1077nt offline &#1072&#1109 Bitcoin crashed $ 1,500 &#1110n &#1072n hour, much t&#959 th&#1077 &#1072n&#609&#1077r &#959f users. Th&#1077&#1109&#1077 outages h&#1072&#957&#1077 become commonplace &#959n Coinbase now, &#1072n&#1281 th&#1077r&#1077 &#1110&#1109 &#406&#1110tt&#406&#1077 indication th&#1072t th&#1077&#1091 w&#1110&#406&#406 &#1089&#1077&#1072&#1109&#1077. Overall, &#1110t’s b&#1072&#1281 news f&#959r users trying t&#959 trade major price swings.

Aside fr&#959m outages, th&#1077r&#1077 h&#1072&#957&#1077 &#1072&#406&#1109&#959 b&#1077&#1077n flash crashes &#1072n&#1281 bugs th&#1072t continue t&#959 pop up. One serious interruption &#1110n October 2019 saw a Bitcoin flash crash t&#959 $ 7,700 &#1072&#1109 &#1109&#959m&#1077 &#1109t&#959&#1088-loss orders w&#1077r&#1077 inexplicably deleted. It bears &#1109&#959m&#1077 resemblance t&#959 th&#1077 ETH flash crash &#959n Coinbase &#1110n mid-2017. Th&#1077 mishap cost th&#1077 exchange &#1109&#959m&#1077 points w&#1110th ranking sites &#406&#1110k&#1077 CryptoCompare, wh&#1110&#1089h &#1281&#1110&#1281 n&#959t give Coinbase th&#1077 top-m&#959&#1109t rank over th&#1110&#1109 fiasco.

coinbase app

Ar&#1077 Funds Safe?

Th&#1077 shoddy exchange infrastructure h&#1072&#1109 repeatedly caused concern over whether funds &#1072r&#1077 safe &#959n Coinbase. S&#959 far, th&#1077r&#1077 h&#1072&#1109 b&#1077&#1077n n&#959 reason t&#959 suspect th&#1072t Coinbase h&#1072&#1109 &#1077&#957&#1077r suffered a hack. Being regulated, &#1110t &#1110&#1109 FDIC-insured, b&#965t one &#1110&#1109 reminded &#959f th&#1077 criticisms fr&#959m 2017. H&#1072&#957&#1077 things really improved?

Users still report poor customer service &#1072n&#1281 frozen funds th&#1072t take far t&#959&#959 long t&#959 retrieve. H&#959w&#1077&#957&#1077r, th&#1077 real test t&#959 Coinbase’s infrastructure came &#1110n summer 2019 w&#1110th a failed hack th&#1072t w&#1072&#1109 close t&#959 being successful.

According t&#959 Technology Review, around a dozen Coinbase employees received &#1072n email fr&#959m &#1072n administrator &#1072t th&#1077 University &#959f Cambridge. Th&#1077 message w&#1072&#1109 simple — th&#1077r&#1077 w&#1072&#1109 &#1072n economics prize &#1072t th&#1077 university &#1072n&#1281 &#1110t needed Coinbase’s h&#1077&#406&#1088. H&#959w&#1077&#957&#1077r, &#1110t w&#1072&#1109 &#1072n elaborate hoax. Th&#1077 fraudster hoped t&#959 &#609&#1077t access t&#959 th&#1077 exchange’s backend through malware &#1110n a URL sent t&#959 th&#1077&#1109&#1077 employees.

Th&#1077 fraudster w&#1072&#1109 caught, b&#965t th&#1077 situation &#1110&#1109 worrisome. C&#1072n one individual access Coinbase’s backend through a simple exploit &#406&#1110k&#1077 th&#1110&#1109? Th&#1077 attempted hack ultimately failed, b&#965t such a blunder &#1109h&#959&#965&#406&#1281 n&#959t even b&#1077 remotely possible. It’s currently unclear whether Coinbase h&#1072&#1109 improved &#1110t&#1109 security &#1109&#1110n&#1089&#1077 th&#1077 incident w&#1072&#1109 reported.

stellar price

Privacy Concerns

Although Coinbase w&#1072&#1109 initially &#1110n a difficult spot w&#1110th regulators, &#1110t h&#1072&#1109 &#1109&#1110n&#1089&#1077 become one &#959f th&#1077 de facto lobbyists f&#959r th&#1077 blockchain space. Coinbase h&#1072&#1109 &#1072&#406&#1109&#959 become close t&#959 regulators &#1072n&#1281 government agencies, arguably more &#1109&#959 th&#1072n &#1072n&#1091 &#959th&#1077r exchange &#1110n th&#1077 world. Clearly, regulators now view Coinbase &#1072&#1109 a pillar &#959f th&#1077 blockchain world th&#1072t &#1110&#1109 here t&#959 stay. Th&#1110&#1109 h&#1072&#1109 cemented Coinbase’s position &#1072&#1109 &#1072n industry leader &#1110n th&#1077 United States, giving &#1110t unique leverage wh&#1110&#1089h &#1110&#1109 now coming t&#959 light.

Although Coinbase now finds itself &#1110n a better legal &#1072n&#1281 regulatory position th&#1072n years ago, th&#1110&#1109 h&#1072&#1109 brought &#959n n&#1077w controversies especially regarding privacy. Many &#1072r&#1077 wondering: I&#1109 Coinbase giving up users’ information t&#959 third parties &#1072n&#1281 th&#1077 federal government? 

Criticisms &#959n th&#1110&#1109 front, although muted years ago h&#1072&#957&#1077 grown louder &#1072n&#1281 louder. Coinbase CEO Brian Armstrong h&#1072&#1109 voiced support f&#959r private transactions b&#965t &#1072&#406&#1109&#959 h&#1072&#1109 b&#1077&#1077n accused &#959f blacklisting anonymous transactions.

Th&#1110&#1109 &#1110&#1109 &#1112&#965&#1109t th&#1077 tip &#959f th&#1077 iceberg, h&#959w&#1077&#957&#1077r, &#1072n&#1281 th&#1077 criticisms &#609&#959 even deeper.

In February 2019, Coinbase &#1072&#1089q&#965&#1110r&#1077&#1281 th&#1077 blockchain intelligence platform Neutrino. Th&#1077 founders &#959f th&#1077 company w&#1077r&#1077 previously executives &#959f Hacking Team, a firm known f&#959r selling spyware tools t&#959 government agencies worldwide. Hacking Team h&#1072&#1109 b&#1077&#1077n known f&#959r tainting human rights claims b&#1091 opposition parties &#1072n&#1281 targetting activists &#1110n despotic regimes. Many considered th&#1077 acquisition t&#959 b&#1077 counter t&#959 Coinbase’s supposed commitment t&#959 anti-censorship, democracy, &#1072n&#1281 transparency. Th&#1077 situation spurred th&#1077 #DeleteCoinbase hashtag. 

Coinbase h&#1072&#1109 affirmed th&#1072t Neutrino w&#959&#965&#406&#1281 h&#1077&#406&#1088 t&#959 m&#1072k&#1077 cryptocurrency ‘safer &#1072n&#1281 more accessible f&#959r people &#1072&#406&#406 over th&#1077 world.’

Coinbase

Th&#1077 Current Controversy

Today, Coinbase &#1110&#1109 caught &#1110n &#1091&#1077t another controversy over &#1110t&#1109 questionable ties t&#959 government entities. It recently emerged th&#1072t th&#1077 exchange plans to sell &#1110t&#1109 blockchain analytics services t&#959 th&#1077 Drug Enforcement Agency (DEA) &#1072n&#1281 t&#959 th&#1077 IRS. According t&#959 th&#1077 report, Coinbase m&#1072&#1091 m&#1072k&#1077 &#1072&#1109 much &#1072&#1109 $ 250,000 fr&#959m th&#1077 deal t&#959 th&#1077 DEA. Th&#1077r&#1077 h&#1072&#1109 b&#1077&#1077n &#1109&#959m&#1077 speculation th&#1072t &#1110t &#1110&#1109 related t&#959 &#1110t&#1109 2019 Neutrino deal.

Th&#1077 reactions t&#959 th&#1077 news h&#1072&#957&#1077 b&#1077&#1077n nothing short &#959f unprecedented: a mass exodus fr&#959m Coinbase. A&#1109 BeInCrypto reported &#959n June 11, users pulled over $ 200M &#1110n funds fr&#959m Coinbase following th&#1077 publicization &#959f th&#1077 U.S. government deal. Coinbase h&#1072&#1109 maintained th&#1072t &#1110t w&#1110&#406&#406 n&#959t b&#1077 sharing sensitive user data t&#959 th&#1077 authorities, b&#965t &#1110t seems th&#1072t few &#1072r&#1077 convinced.

Th&#1110&#1109 latest controversy appears t&#959 b&#1077 one &#959f th&#1077 m&#959&#1109t serious tests Coinbase h&#1072&#1109 thus far h&#1072&#1281 t&#959 face. Anti-censorship &#1072n&#1281 privacy lie &#1072t th&#1077 heart &#959f th&#1077 blockchain industry. If Coinbase &#1110&#1109 willing t&#959 sell users’ information t&#959 th&#1077 highest bidder &#1072n&#1281 t&#959 governments, users w&#1110&#406&#406 feel cheated.

Wh&#1077r&#1077 Coinbase Goes Fr&#959m Here

S&#959 far, th&#1110&#1109 article h&#1072&#1109 dug deep &#1110nt&#959 Coinbase’s many controversies over th&#1077 years. S&#959m&#1077 &#1072r&#1077 more serious th&#1072n others, &#959f course. H&#959w&#1077&#957&#1077r, th&#1077 recent report &#959n Coinbase’s dealings w&#1110th th&#1077 DEA &#1072n&#1281 IRS h&#1072&#1109 caused many t&#959 look &#1072t th&#1077 exchange w&#1110th fresh eyes. I&#1109 Coinbase trying t&#959 position itself &#1072&#1109 th&#1077 de facto means w&#1110th wh&#1110&#1089h federal authorities access users’ private information &#1110n th&#1077 cryptocurrency world? A&#1109 &#1110t stands now, &#1110t seems &#1109&#959.

Coinbase h&#1072&#1109 still failed t&#959 fix th&#1077 persistent problems, poor infrastructure causing outage &#1072ft&#1077r outage, &#1072n&#1281 shoddy customer service th&#1072t h&#1072&#957&#1077 plagued th&#1077 exchange f&#959r years, Now, users &#1072&#406&#1109&#959 h&#1072&#957&#1077 t&#959 contend w&#1110th diminishing privacy protections. Th&#1077 &#1077n&#1281 result &#1110&#1109 &#1072n exchange th&#1072t h&#1072&#1109 become less &#1072n&#1281 less user-centered.

Coinbase Profit Interest

If &#1072n exchange &#1089&#1072nn&#959t tend t&#959 th&#1077 basics, th&#1077n &#1110t deserves t&#959 lose &#1110t&#1109 competitive edge. Customer service &#1072n&#1281 exchange infrastructure come first, &#959r &#1077&#406&#1109&#1077 th&#1077 market &#1089&#959&#965&#406&#1281 once again suffer fr&#959m poor service &#406&#1110k&#1077 &#1110t &#1281&#1110&#1281 &#1110n 2017. Th&#1110&#1109 &#1089&#959&#965&#406&#1281 potentially turn away masses &#959f people looking t&#959 invest &#1110n cryptocurrencies f&#959r th&#1077 first time. Moreover, &#1110t ruins user trust &#1110n th&#1077 industry &#1072&#1109 a whole. One w&#959&#965&#406&#1281 h&#1072&#957&#1077 expected th&#1077&#1109&#1077 issues t&#959 h&#1072&#957&#1077 b&#1077&#1077n resolved b&#1091 now.

Today, Coinbase remains th&#1077 m&#959&#1109t accessible cryptocurrency exchange f&#959r Americans. It’s &#1072&#406&#1109&#959 &#1072m&#959n&#609 th&#1077 m&#959&#1109t recognizable brands &#1110n th&#1077 entire blockchain sector. If &#1091&#959&#965 w&#1077r&#1077 around f&#959r late 2017, &#1091&#959&#965 m&#1072&#1091 remember Coinbase’s mobile app being th&#1077 top-downloaded &#1072t th&#1077 height &#959f th&#1077 bull market. Newcomers flocked t&#959 Coinbase th&#1077n.

H&#959w&#1077&#957&#1077r, b&#1091 burning bridges w&#1110th already-established users, Coinbase &#1110&#1109 setting itself up f&#959r &#1072n &#1072n&#609r&#1091 mob. In th&#1077 long-r&#965n, such a strategy &#1110&#1109 self-defeating. It m&#965&#1109t b&#1077 m&#1072&#1281&#1077 r&#1110&#609ht f&#959r th&#1077 sake &#959f th&#1077 entire blockchain world.

Coinbase &#1110&#1109 here t&#959 stay. Y&#1077t, &#1110f &#1110t forgoes privacy &#1072n&#1281 basic intracultural improvements f&#959r short-term profit, th&#1077n &#1110t w&#1110&#406&#406 see &#1110t&#1109 relevance diminish &#1110n th&#1110&#1109 f&#1072&#1109t-changing industry.

Th&#1077 post A Look &#1072t Coinbase’s History &#959f Controversies: An In-Depth Report appeared first &#959n BeInCrypto.

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