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Sent $35,104.11 USD to CoinBase. Never received Bitcoins
658 points by mgrunin 593 days ago | 475 comments
This story dates back to December 8th when I initiated an ACH transfer with CoinBase.com for a total sum of $35,104.11. On that very same day, the system informed me that I would be credited with the bitcoins come December 13th.

December 13th came by and it was this past Friday. No coins ever came in, the only thing CoinBase did was lock in a price for me @ $868.91. Again, they locked in a price and didn't give me coins on the day they told me they would deliver the coins.Ever since the 13th, my transaction page has been showing the following:

http://i.imgur.com/R2qEn8E.png

As you can tell, the funds cleared their end on the 11th. BUT... it still says pending for crediting the coins.<p>This is how the history page looks like:

http://i.imgur.com/BQ4fUwZ.png

Just take a look at that...it actually says that the transaction has been completed here.

Let us now look at the email conversation:

http://i.imgur.com/6SQht98.png

http://i.imgur.com/eNlIS0V.png

I gave their team eight hours to get back to me and settle the issue. They have now missed that deadline so I am taking this matter a bit public. Further avoidance by them will lead me to make a few calls to news stations. I have the right contacts to easily put myself in the media.

Now the real dilemma for me here is the fact that while CoinBase.com has locked in a price for me, because they have failed to deliver I cannot sell my coins at any rate. Bitcoins could drop down to $200, and only then might they deliver the coins. The issue at that point is that I would be down a crazy percent already. If they had delivered the coins on the 13th as they had initially promised to, there would not be this issue.<p>Give me a break, the company just secured $25m in VC and this is how they are treating their clientele.<p>




Brian from Coinbase here. Sorry for the delay on that - definitely not the customer experience we are striving for.

We should have things squared away for you by end of day.

Edit: your bitcoin credit has now been processed. It looks like as we were performing server upgrades last week a handful of jobs didn't run as normal. We should have certainly caught it and responded sooner so that was our fault. My deepest apologies for the delay and trouble on that. We've credited $50 worth of bitcoin to your account for the trouble, as a small way of saying thank you for bearing with us.

Edit2: we'll push through the bitcoin credit at today's price instead of the original buy price (which should be in your favor) since the mistake was on our part. Sorry again for the trouble!

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Forget the difference in the exchange rates. Are you saying you have no system in place to monitor if transactions execute successfully? I'm not trying to be hyperbolic but that's really shocking for a company that is trying to play a role as a financial institution.

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>that's really shocking for a company that is trying to play a role as a financial institution.

That is probably the scariest part about the current Bitcoin community. Many of the big names are simply "playing a role". We have no idea of their technical expertise, the viability of their software, their USD/Bitcoin reserves, how they plan to address disputes like this, or even whether they are skimming of the top.

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I mean, MtGox stands for "Magic The Gathering Online Exchange". They were literally set up to sell trading cards. The whole "being the biggest bank in a new $6bn+ economy" is a pivot. The whole system is crazy. But even by those standards, taking 35 grand and not noticing you didn't give them what they paid for stands out.

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But even by those standards, taking 35 grand and not noticing you didn't give them what they paid for stands out.

That's really the weird part. This is a business that does money in, money out. They should be balancing the books and checking inventory every day.

It can take Amazon a while to realize a mistake because it takes time for somebody to go around the warehouse and count all the boxes to discover they're holding excess inventory. But how long does it take for Coinbase to compare the number in column A to the number in column B?

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I saw somebody today snarking about Bitcoins being Dunning Krugerrands. Coinbase appears to be making their point for them.

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But that's regulation. And HN is against that. Get with the program.

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It's not just regulation. It's basic accounting. If you're not doing it, you literally don't know how much money you have. It's always a good idea to know how much money you have, even if the government doesn't require you to know.

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You clearly haven't been dealing with businesses. 99% doesn't do daily checks. Many notice thins after a month or so, when closing books for month. And some notice those kind of things aften closing a year. But there still are many businesses which won't ever notice or care missing 100 grand. Been there and done that, and it's much more common than you think. In some of those cases I personally think that the business is partly illegal and bookkeeper is cooking the books. Therefore they don't even notice honest mistakes. I have seen same thing happening over and over again. People don't care about money. And this is business as usual.

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Reconciliation is a fundamental operational procedure of financial entities. It's how they find system failures, process failures, fraud, etc. You take feeds from various systems and correlate them. It's not super complex, but it is fundamental.

I actually work for a startup selling reconciliation software as a service to the financial industry, so it's something I'm learning about myself. Lack of it suggests Coinbase are a little bit clueless.

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Any sort of financial account should be ACID safe. You can't just receive money on one end, and then it magically doesn't enter a client's account.

Bitcoin is great, but the exchanges still suck.

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Except things like ATMs are not. They use eventual consistency.

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Very few financial systems are ACID. Why do people still think banks run on bloody MySQL?

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I love a non-sequitur as much as the next giraffe, but what does banks using MySQL have to do with banks choosing not to go ACID?

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Nothing at all other than the ever surfacing assumption by a lot of people that financial traffic is done on ACID like principles (rather than eventual consistency which it actually is). MySQL was a random example as should have been somewhat obvious.

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MySQL is a random example of financial traffic not following ACID principles? I still don't understand.

Is this a reference to MySQL, pre-InnoDB, not being ACID compliant? InnoDB's been around for a decade and has been the default database engine for years.

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If this is really is business as usual, then it might be acceptable for a widget selling company but completely unacceptable for financial services. In financial services the same actions that you describe are gross negligence that (depending on jurisdiction) can mean personal liability, possibly including criminal charges, for the relevant CxOs, and a lifetime ban from running any other financial companies in future. You can't entrust consumer's money to companies being run like that, it's pure nonsense.

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You think that Goldman Sachs, for example, had exactly 263,674,000,000.00 of cash and cash equivalents at the end of 2012? You don't think that's likely rounded to at least the million?

In fact it seems that most Fortune 500 companies, regardless of industry round things to the million. It's pretty easy to lose a few hundred thousand if you are doing that.

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Auditing standards at large banks have a materiality threshold. At a Goldman or Morgan Stanley, that threshold approaches half a billion. But that's at the top layer, on top of many other layers of accounting. At the level of individual customer accounts, even small discrepancies would be caught.

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You clearly haven't been dealing with businesses. 99% doesn't do daily checks.

No way. Not on fin-co ops.

That's like a car tire store without a pressure guage in shop.

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That makes no sense. It is self-regulation. Balancing the books is in their best interest.

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You mean without regulation, companies could effectively steal money from you and you would never be able to stop giving it to them? The free market is also regulating, by the way, and it should regulate with its full force against companies like this that fail to provide adequate customer service and satisfaction, safeguards, etc to their customers... we don't need the government to tell us these people aren't doing their jobs effectively and we should take our business elsewhere.

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I'm keen to learn more about self regulating free markets. Please provide an example.

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Aww, you guys are so cute. You think banks have this stuff under control? Auditors will "find" hundreds of millions of dollars of missing assets on the regs.

Many banks are powered by duct tape and loose Excel spreadsheets. That's why things like Basel exist.

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That's really not true. Yes, auditors do find missing assets like that, but some of these banks have trillions in assets. Moreover, these errors usually aren't things like cash in versus cash out. Accounting and tax rules are very complex. So an error might entail having incorrectly computed the value of certain tax assets or the like. More to the point, a major bank will have layers and layers of accounting controls intended to catch even very small errors. These processes are themselves audited every year, and stress tested. It's not duct tape and excel spreadsheets.

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Worked at a bank. They have better processes than this. Not gonna say they're perfect, but they can handle balancing their books and not dropping transactions. They certainly don't use a non-ACID PoS like Mongo.

Excel was over-used in many places, but was not used for day to day transactions and operations.

Yet again, bitcoin apologists inaccurately claim (lie) that banks are actually worse to excuse failings by "their" services.

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Worked at a bank as what? Working at a bank clearly doesn't make someone an expert on their IT infrastructure. The actual financial transaction infrastructure isn't ACID.

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As a software developer on corporate credit card applications, dealing with managing transactions, accounts, and restrictions. Our infrastructure was ACID. We certainly wouldn't have used experimental, flaky datastores like Mongo, and shit was not processed using Excel.

No-one is an expert on every part of a bank's infrastructure -- its too big for that. But definitely, we had software requirements, as a matter of IT policy, that kept stuff like MongoDB out of production.

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Yeah, so, you don't work on financial infrastructure. That stuff is almost exclusively eventually consistent. And I wasn't arguing that you should use MongoDB or anything else instead. Merely that claims that ACID is the holy grail of financial software is a myth propagated by people that do not know how international financial traffic works.

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> Auditors will "find"

Does Coinbase have external auditors?

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MtGox is something like 5 months behind in withdrawls with no confirmed date of when it will occur. I'm waiting on $600 since beginning of Sept...

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If this is not some sort of error, MtGox is a ponzi scheme.

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I can't remember where I read this and I don't remember all the details, however: As I understand the problem is mainly with USD withdrawals to USA, and the problem is not with MtGox but rather with the bank they use having some legacy issues and that they can only process X transactions a day in batch. Or something to that effect.

For this reason I switched to Bitstamp and the experience is night/day different. Bitstamp withdrawals/deposits have so far never taken more than 4 working days, sometimes 3, for me.

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No. The joke is that people are demanding a product so badly that theyre doing business with kiddies who dont know how to run a financial institution.

This is literally an economy of "shut up and take my money," but no one wants to play ball.

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I know this is bad, but financial institutions haven't exactly been reliable, honest, faultless or good, particularly the last few years. My own experiences have been bad, but the world still hasn't pulled out of the hole that the financial industry dug, so I'm pretty well off and lucky if I'm compare myself to the average. I'd suggest a different standard to hold this company to.

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Having spent some time in financial institutions, I can only agree with lastlogin's point. It's important to remember that there are many such mistakes in large financial institutions every day.

If I could post on yc and quickly get a response from my bank, I'd be a happy customer.

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One time I had almost 1 million extra dollars show up in my Waterhouse Brokerage account. I thought, "huh, that's interesting." It disappeared 4 days later.

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Yup, it wasn't as much, but I magically had 10k show up after I made a deposit through a bank teller that stayed there for 2 weeks before finally disappearing.

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My father withdrew cash from an ATM a while back, he got less than he asked for but had the asked for amount deducted from his account. He complained. The manager of the bank nodded knowingly when he complained. He wasn't believed. He was told that at the end of the month they would do a stocktake and see. Some months later it was credited back. This is about the best of my bad banking stories. The time our deposit for a house got lost was stressful several years of hard hard saving vanished during a transaction.

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I suppose that even with this, bitcoin banks still appear to be far more reputable establishments at the moment than say, either RBS or the Co-op, unless Rob Ford has founded one recently.

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Wait! One of the founders was a currency trader at GS?! Doesn't that make them trustworthy?

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0. This is exactly why auditing (internal and external) and settlement processes exist elsewhere. But it's impossible to have a startup deploy every single control at the very beginning. There are costs (time & money) to get things done, those control don't just magically appear. Eventually, with scale, the growing pains of business process debt (like technical debt) will come due. That's a good thing, because building every single control into an experimental venture that might not survive could be a very big waste. Just like a successful venture is a series of experiments, the business side gets built incrementally. As a company gets bigger (whether $ or buzz), it's susceptibility to being targeted increases because the bulleye on its back gets larger.

1. Let's suppose I employ an old gambit: process a large transaction through CoinBase, receive the coins and say "I never received them." I'm sure they have at least enough controls in place to avoid double-credit fraud.

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Giving coins for USD is their primary use case. Monitoring transactions should be the only control they have in place if they must cut corners.

As a coinbase customer and someone who manages a team and large complex distributed systems, this is an oversight I would not expect from an industry leader and makes me nervous to continue doing transactions with coinbase.

How can we be made comfortable that this won't happen again? $50 isn't the root cause fix and could have cost the OP $15,000 due to the delay. What if those BTC was going to be used to make a purchase? He is left holding the bag, leaving a sour taste.

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Coinbase is ultimately a double-ended marketplace. But to add more complexity to the fire, one's own systems count as yet another source of truth. So what the sellers say, what buyers say and what we say have to reconciled. It's these reconciliation processes that are the hard part...

I've had to deal with micropayment reconciliation for a minor handset mfgr (multiple currencies, payment processors, timezones, products, on and on). Sometimes the credit card processor up and changes the API without notice, and a whole slew of payments have to rerun. This is where fields in the local reconcilation db start to creep in and all sort of weird flags get made. What the heck is flag F? (IOTW, document the heck out of the db schema AND have lots^10 unit tests.)

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A customer of bitcoin shouldnt have to care if the service you provide is hard. In fact, thats why they come to you in the first place.

Complaining about the complexities does not instill faith that you have a solid grasp on your product. Tell me you dont work at coinbase, please.

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Agreed. The biggest growth area in banking and finance is compliance & legal. A startup doesn't have the financial resources to make a bulletproof compliance and customer service department.

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That is the same thing that shocked me when I run into a bunch of different entrepreneurs in the last few weeks, creating local exchanges here, bitcoin ATM, thinking about colored coins and interesting transactions enabled by bitcoin.... and when I talk with them about the technical side, they never even know how a transaction is verified, what are bitcoin scripts, how the network works in general.... I know that I know quite little about bitcoin and it confounds me that people honestly believe they can get away with not knowing how things work. Due diligence, man!

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And a majority of the (previous) big players have been compromised on more than one occasion. It's a big kindergarden.

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> We have no idea of their technical expertise

why, we do - a team who could quickly build a rails app and connect it to third party payment processor.)

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The wild west of currency, with everything that entails.

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Likewise, unlike banks, there is no legal system in place or organizations that assess companies like this and determine whether their transactions complete and such. The downside of the Bitcoin market, pretty much.

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> Likewise, unlike banks, there is no legal system in place

There may not be a well-developed specialized regulatory system in place with authority over some bitcoin firms, but in most of the places that bitcoin firms operate there is a legal system in place, and entering into a sale contract, accepting payment, and then failing to deliver the product is the kind of thing that is well within the scope of competence of most of those legal systems.

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There was a similar discussion with a very interesting comment regarding their use of mongodb: https://news.ycombinator.com/item?id=5428382

PG's reply in the thread is very telling: https://news.ycombinator.com/item?id=5428372

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Holy cow, that's amazing.

Q: Does MongoDB support transactions?

A: MongoDB does not provide ACID transactions.

( http://docs.mongodb.org/manual/faq/fundamentals/#does-mongod... )

It is crazy to be doing financial stuff in a DB that doesn't provide transactions. It completely blows my mind that anybody would do this.

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Not really. Financial transactions are really almost never implemented with database transactions.

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A lot of people truly don't understand how financial companies do stuff. Hell, Financial companies are ones who are adopting Mongo and the like themselves. We all assume it's one way, when it's actually done another....

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They're really only doing that for hipster cred. That way they can easily write articles titled "How I made (really simple/trivial application) with (really fledgling technology)" such as "how I made a twitter client with node.js" or "how I put 2 sprites on the screen with webgl" or "how I managed 2tps with java".

We know all financial companies use databases running on tandem or tuxedo. But that's not cool sounding. How are they supposed to get fun jobs doing nothing with catered lunches? HOW, HOW I ASK!

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What financial companies are adopting Mongo for accounting/customer transaction storage?

I've heard of somewhere like ADP using it but they are using it as an analytics database, not for actual payroll processing.

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I'd love for you to expound on this point. I'm curious, what are they doing?

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What is crazy is people claiming a bank uses a transactional database for their financial transaction processing or that all parts of that system are "ACID". Both are false. Don't like MongoDB? Fair enough, it isn't great. But the tech banks use is a lot closer to MongoDB's persistence model than it is to your typical RDBMS.

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I've been keeping my mouth shut here about Coinbase after starting that thread 9 months ago.

I feel bad for someone that can't put a finger on his 30K, but I can't feel that bad if he didn't do a little research here first.

Hopefully on the next bubble people will be a little more enlightened.

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As highlighted in the thread and in PG's reply, the default response to criticism of Coinbase is to nuke the conversation.

As PG wrote:

> Strictly speaking I should have killed the post entirely

Now, it's possible that other complaints on HN were nuked by PG or some other moderator, making it difficult for someone to find it.

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As highlighted in the thread and in PG's reply, the default response to criticism of Coinbase is to nuke the conversation

As PG wrote:

> Strictly speaking I should have killed the post entirely

That's not why he said that. He explains further down thread:

HN is a news site, not a customer support forum for companies funded by YC, and in fact the site guidelines explicitly ask that it not be used that way

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This objection is pretty flimsy. HN is very frequently used as a customer support forum for large tech companies not funded by YC. A policy that it is okay to use HN as a customer support forum for Google, Amazon, and Facebook but not for Coinbase does not look very good.

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HN is run by YC. While it may feel like a public forum, it is owned by a private entity. I'm OK with a benevolent dictator taking care of matters here, and trust PG to do the right thing by all of us.

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On HN, there is an expectation of a certain degree of impartiality and free speech. Of course, YC doesn't have to provide it, but that's irrelevant: it's just something that is expected.

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Then you are an awfully silly individual.

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Why would you trust pg in the first place? I wouldn't trust him.

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Apparently, referring to a thread which is highly critical of Coinbase, while participating in another critical thread, is proof enough for you that Coinbase criticism is silenced. I hope when I frame it like this, you understand how stupid it is, what you wrote.

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What's apparent is the fact that you are incapable of analysis.

If you bothered to read the other thread, you'll see parallels to the current situation:

- transaction delays on the order of 1 week

- Coinbase is blaming technology (last time it was a database migration, this time server upgrades)

- Customer support has been silent (znowi described it as "information vacuum" https://news.ycombinator.com/item?id=5427985)

- Online account system called into question, users unaware of current positions (e.g. https://news.ycombinator.com/item?id=5428090)

If this were the first time, you can cut some slack if Coinbase responded appropriately and took steps to prevent this from happening in the future. Based on what played out recently, it's not clear if Coinbase actually learned anything from the previous issues.

And in the future, if you ever do decide to start a company and find yourself in a similar situation, I hope you would be a bit more communicative and proactive than Coinbase was in this case.

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You're changing the subject to something which is not in dispute.

You said that the standard approach on HN is to silence criticism -- a stupefying statement, given that at the time you posted it, this conversation had maybe 100+ comments and had been on the front page for a while. Also, in that same comment, you linked to another voluminous thread criticizing Coinbase. Amazingly, the existence of your comment strongly mitigates against your thesis being true.

I think you must realize this at some level, as you have chosen to employ the age-old tactic of the inescapably wrong: quietly change subjects and hope nobody notices.

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There is zero ambiguity in the PG quote

> Strictly speaking I should have killed the post entirely

And this was 9 months ago. We are left to assume that the policy was enforced (after all, if the post were killed, it wouldn't show up in a search).

And even in this thread: https://news.ycombinator.com/item?id=6931168

> I've been keeping my mouth shut here about Coinbase after starting that thread 9 months ago.

I wouldn't be surprised to hear others echo the same sentiment (concern about expressing grievances about Coinbase) especially after PG's responses in the original conversation.

Others in the original thread refuted the argument you are presenting, so I recommend you start https://news.ycombinator.com/item?id=5428757 before rehashing arguments that have already been addressed

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Sign #1 that should have given you pause: in order to disprove your assertion a person would need to prove a negative, i.e., prove that no criticism was nullified. If you don't see what the problem is here, you may need a course in critical thinking.

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(pointing to the statement that HN is not a support forum) + (commenting that PG should have killed the thread) = (PG is likely to kill all threads that may seem like support requests)

Given that many defenders of coinbase, including PG, are seeing support requests as criticisms, (threads that criticize coinbase = threads that seem like support requests) in their heads.

Therefore, (pointing to the statement that HN is not a support forum) + (commenting that PG should have killed the thread) = (PG is likely to kill all threads that may seem like support requests) = (PG is likely to kill all threads that criticize coinbase)

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If you're to believe the press they've received, Coinbase are basically the most reputable and trustworthy company in Bitcoin and the one that's going to bring it into the mainstream.

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If you've dealt with any of the bitcoin exchanges you'd realize Coinbase is the most reputable and trustworthy. It's either deal with them, trust Magic the Gathering Online Xchange or the Russian mobsters over at btc-e.com. Seriously this is a sector that is in desperate need of more legitimate players but so for this is the best we have.

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Scariest comment of the thread, surely.

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Not hyperbolic at all. This is brokerage 101. It's absolutely asinine that their system fails this hard when doing some "upgrades". A real brokerage (e.g. Fidelity, Schwab et al) would likely be subject to non-trivial fines from the FCC for this type of gross negligence.

Sounds like they need some people who have actual practical experience building financial systems.

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I'm not trying to be hyperbolic but that's really shocking for a company that is trying to play a role as a financial institution.

You're not being hyperbolic at all. You're just used to the standard Hacker News "only haters expect businesses to be competent" type of handwaving response. But this thread is about money, that makes it different.

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I'm not trying to be hyperbolic but that's really shocking for a company that is trying to play a role as a financial institution.

And which just ate $25MM in Series B.

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I work with some of the largest financials institutions and nothing surprises me any longer.

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It might not be a computer system problem.

Perhaps CoinBase (or a rogue employee) were doing some proprietary trading and screwed up badly?

Maybe they were trying to quietly recover their losses and weren't expecting a customer to cause a public outcry and force their hand?

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...how? This isn't stocks, there just isn't the same financial instruments that they can play with to recover from a drop in price :/

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Take it EASY everyone! They made a mistake, took responsibility for the error, resolved the issue, and compensated the user for his inconvenience. Good for them!

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For posterity's sake, here are the sequence of events. Coinbase:

1) stopped replying to support emails even though there was a clear issue

2) only addressed the issue when the victim decided to submit his issue to HN (and only after it sat on the front page for nearly an hour

3) blamed a server upgrade and offered $50 of BTC when the actual loss was well north of $12K

4) only made the customer whole after many HN comments pointing out that the offer was paltry compared to the loss (and that they may potentially be pocketing the difference)

I applaud them for resolving the issue in a way that the victim wanted: "deliver the coins at the exact market price that they are at the moment you are crediting the account". However, this and similar issues in the past have raised red flags that haven't be adequately addressed:

A) why did customer support go dark? I suspect the reaction would be different if they were more proactive

B) as mentioned in https://news.ycombinator.com/item?id=6930748 , why doesn't Coinbase have the infrastructure to detect these issues? This is really basic accounting, and if they can't get it right on a small scale why would anyone trust them with more money?

C) what steps were taken to prevent this from happening in the future? I imagine that there will be more server upgrades as Coinbase expands.

D) What is their future policy regarding similar issues? Based on their initial reaction, one should not expect much if any compensation.

E) Will it take an HN post in the future to get their attention?

And looking back at some of the comments in a conversation from 270 days ago (https://news.ycombinator.com/item?id=5427985) it seems that Coinbase hasn't actually learned from the previous issues.

I think joezydeco said it best: https://news.ycombinator.com/item?id=5427985

> You have a company trying to start up in a very tough space where you need to be super-reliable and super-transparent. Coinbase's actions this entire week were neither.

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How did you conclude the actual loss was > $12K? He got the bitcoins at today's price + $50. That seems like there was no loss?

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>He got the bitcoins at today's price + $50

That part only happened after many people criticized the original response: (https://news.ycombinator.com/item?id=6930109)

> Edit: your bitcoin credit has now been processed. It looks like as we were performing server upgrades last week a handful of jobs didn't run as normal. We should have certainly caught it and responded sooner so that was our fault. My deepest apologies for the delay and trouble on that. We've credited $50 worth of bitcoin to your account for the trouble, as a small way of saying thank you for bearing with us.

This was understood to mean that Coinbase would honor the original price (868.91) and not the current price. The general impression was that Coinbase made the purchase at the current price (roughly 550) and is honoring the other price (868.91), which would mean that OP lost about (868.91-550)*40 = 12756.40 (and Coinbase would be pocketing the difference).

People correctly noted that Coinbase's move was entirely inappropriate, and they were forced to change course (note the "Edit2"):

> Edit2: we'll push through the bitcoin credit at today's price instead of the original buy price (which should be in your favor) since the mistake was on our part.

The general policy with most financial firms is that firm errors should be resolved in a way that benefits the customer (so in this case, if BTC actually increased in price, Coinbase should honor the original trade price)

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Only because HN kicked up a fuss about it - someone elsewhere in the thread claims they experienced the same delay but were only credited Bitcoins at the locked-in price, causing them a big loss[1]

[1] https://news.ycombinator.com/item?id=6931976

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Only because the poster brought this to light publicly

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Lemme get this straight, Brian:

Rather than refunding the dollar value ($35,104.11) of the original, clearly botched transaction, you ended up giving him the 40 BTC at their current trading value (about $560), that is, for net a loss of $35,104 - $22,400 = $12,704?

And you think $50 plus a thank-you note(!) is enough to make him whole on this loss?

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Don't worry, based on their past behaviour I'm pretty sure they'd have managed to refund him the dollar value if the price of Bitcoin skyrocketed.

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Have you heard of that happening?

Here some cases where coinbase uses the original price even after a price increase:

http://www.reddit.com/r/Bitcoin/comments/1qlvgj/psa_rest_eas...

http://www.reddit.com/r/Bitcoin/comments/1qlvgj/psa_rest_eas...

http://www.reddit.com/r/Bitcoin/comments/1cxmuf/bought_5_btc...

And in this current case, coinbase used the new price even though the price decreased. So whether the price increases or decreases, coinbase is taking a loss and gives the money to the consumers.

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Funny dynamics for bitcoin to be used as a currency

For now its swings are like the Zimbabwe dollar

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This isn't a failure of Bitcoin. It's a failure of the market.

Bitcoin has an approximate "intrinsic value", which in economic terms is a bit above the cost of mining. Current market price has been very far from that.

Bitcoin market right now is pretty much the definition of a bubble. Beware. In a "bubble" market, your money can disappear overnight.

But again: that's not Bitcoin's fault. It's the fault of idiots vastly and irrationally driving up market prices.

This is really a textbook lesson in why Wall Street does not represent the "real" exonomy.

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> Bitcoin has an approximate "intrinsic value", which in economic terms is a bit above the cost of mining.

The current cost of mining is a rough replacement cost of bitcoin (and thus, in a sane market, ought to be a ceiling on its market value, since if the exchange cost is higher than that, you are better of mining then buying), but since mining isn't inherently reversible its not an intrinsic value.

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"and thus, in a sane market, ought to be a ceiling on its market value, since if the exchange cost is higher than that, you are better of mining then buying"

Modulo time preferences...

But yes, bitcoin's intrinsic value is that it is the only method to pay transaction fees to have work done on your behalf by the bitcoin network. I don't know how to price that, though.

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Quote: "...but since mining isn't inherently reversible its not an intrinsic value."

It IS "value", because the resources used for mining have measurable value, and can be traded for things other than Bitcoins.

It may be an indirect measure of value, but it's still a measure of value.

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> It IS "value", because the resources used for mining have measurable value, and can be traded for things other than Bitcoins.

It is value, but its not value of bitcoins. It is the value that would need to be sacrificied to replace the bitcoins by mining, but its not value that can be recovered from the bitcoins, so its not intrinsic value that supports the market value of bitcoin.

Intrinsic value, as the term is used for currency, is value that you can recover from a currency without trading it -- e.g., the use-value of gold for ornamentation or industrial uses is intrinsic value.

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But you CAN trade Bitcoins for things, not just currency.

You can trade Bitcoins directly for more hardware to mine Bitcoins. So it IS a reversible transaction, and Bitcoins are DIRECTLY (not indirectly) valued at approximately the cost of mining and distribution.

Don't confuse "indirect value" with "indirect measurement of value". They are different things.

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> But you CAN trade Bitcoins for things, not just currency.

The value for which you can trade a currency is its extrinsic value. Insofar as "intrinsic value" is meaningful, it refers to the value you can derive from a thing without exchanging it with someone else.

> You can trade Bitcoins directly for more hardware to mine Bitcoins.

Yes, you can buy things with Bitcoins. That's the definition of a currency's extrinsic value.

> So it IS a reversible transaction

No, if mining was reversible, you could recover the resources expending in mining bitcoins without trading the bitcoin to someone else in the market, the way you can make industrial or ornamental use of gold in your possession without trading that gold to someone else for industrial tools or ornamentation.

> and Bitcoins are DIRECTLY (not indirectly) valued at approximately the cost of mining and distribution.

"Direct value" isn't a well-defined phrase, and isn't the one that was under discussion. Intrinsic value of currency is better defined, and is what was being discussed, and bitcoin doesn't have any of that traceable to its mining cost.

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If it's indirect that's not intrinsic. That's what intrinsic means the opposite of.

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No, it isn't. "Intrinsic" means "belonging to a thing by its very nature."

The "value" here isn't "indirect". Only the method of measurement.

This is economics, not quantum physics. The method of measurement (as long as it is rational and consistent) does not change the value being measured.

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carbon emissions from a coal plant do not have the "intrinsic value" of the coal that produced them. bitcoins from a miner's computer do not have the "intrinsic value" of the electricity and silicon that produced them.

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The exhaust from your Chevy also doesn't have the "intrinsic worth" of the oil that it ultimately came from, either. Nor does the electricity from my solar cells have the "intrinsic worth" of the silicon they were made of.

So what? That is about the farthest thing from a valid analogy I've seen in a long time.

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> The exhaust from your Chevy also doesn't have the "intrinsic worth" of the oil that it ultimately came from, either.

The difference between it and Bitcoin here is that no one is claiming that automotive exhaust has intrinsic worth due to the resources expended to produce it.

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No, you're still not getting it.

The VALUE is not indirect (i.e., extrinsic). The METHOD OF MEASUREMENT is indirect. Those are two different things. One does not imply the other.

If I measure the "worth" of your automobile in units of "old Chrysler convertibles", that doesn't mean your automobile has any more or less economic value than if I measure it in helium balloons. The method of measurement (if it's done properly) does not affect the actual value.

In the case of Bitcoin, it CAN be traded directly for goods, not dollars. There is nothing REAL distinguishing it from any other commodity, such as rice. The value is roughly equivalent to the cost of production + distribution.

I take that back. There IS one difference, but (at this time) it is minor: that is the ultimately limited supply, but that isn't even remotely close enough yet to affect a RATIONAL market.

An EXTRINSIC value, on the other hand, and to use Wikipedia's example, is like the "value" of a song played on a guitar. It has its own subjective and economic values, but that is completely separate from the cost of manufacturing the guitar. This is NOT even remotely the same situation as Bitcoin.

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It sounds like they gave him $35k worth of bitcoins at their current price, which is more bitcoins than he would have received had the transaction went through at the earlier date. Maybe I'm completely misunderstanding though.

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Coinbase updated their comment after seeing the backlash.

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Huh, I'll remember the "take it to HN" option if I ever run into big problems with a high-tech company.

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Oh, totally. You'll notice over time that Hacker News is the only way to contact google support without spending thousands of dollars on adwords.

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That's pretty much the lesson learned for everyone here today. People won't see that you have to complete 18 steps with their customer service beforehand. Instead, they'll see complain on HN = instant gratification.

Look for an increase in this kind of whinging in the very near future, and it won't be fun for anyone.

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On the one hand, that kind of thing would probably bring the community down, but on the other, given how this site is such a tech company nexus, would that even be surprising?

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Ok, that would explain that. Thanks for the clarification.

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That't why when it comes to money, you should trust Wall Street over Startups...

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If the price had gone up would you be ok with them refunding the dollars instead of honoring the original price of the "clearly botched transaction"?

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No, I would expect the resolution most favorable to the customer in either situation. If Coinbase had a public policy about what will happen in situations like this, I would expect them to follow their policy. Since they do not, it is reasonable to assume that any time they resolve a situation like this in their own favor they were using the customer's order as a free options contract.

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I had Coinbase honor a price favorable to me after initially being declined, and have heard of the same thing happening to others.

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CoinBase didn't say how they did it anywhere, did they? It would be good to get clarification though.

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Don't be ridiculous. Sure, the order was delayed, but there is no reason why they should have refunded the entire order.

Kudos to Brian and team for getting on top of this and solving the problem quickly. They executed the order as originally promised, admitted their mistake, and gave him a credit for the inconvenience.

I've executed many transactions with Coinbase and although one of my transactions was delayed briefly, I've been very pleased overall with the service.

They are go much farther than most other Bitcoin exchanges and services, which barely have any support channels and have frequently stolen user money entirely.

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Its not ridiculous at all.

With that much spread and at prices as high and fluctuating as much as they currently are you cannot expect to take 10 DAYS for a transaction of this nature.

Honestly, looking at this from the outside what is the difference between this an actual larceny? A large purchase comes in while the commodity is priced high, the commodity is not purchased but instead funds are held on to while the price drops and then the bitcoins are purchased at the lower price and the company pockets the difference...

Not even saying that foul play truly happened, but instead saying you cant run a business whos actions LOOK indistinguishable from foul play and expect to stay in business...

If you're in a business where you can tell customers i lost 30% of the value of your transaction due to a mistake on our end its eventually going to turn into a scam, even if that wasn't the initial intention... its just too much temptation

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Umm, if the Bitcoins were purchased at a lower price that would be good for the buyer. It's "Buy low, sell high", remember? The problem, it seems, is that the price was locked in at the original, higher, order price, but the transaction didn't go through and so the buyer had no liquidity as the price continued to drop. Had the transaction gone through the buyer would've lost an equal amount of money (and so the accusations of outright theft or fraud are a bit over-the-top), but the big problem is they were prevented from taking corrective action to limit their loss, which I'd consider to be pretty shitty service for a financial institution.

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What he meant was coinbase could have easily used some of the 35k to buy the 40 by cheaper, and keep the rest. They could have done this, and still said what they said and the net effect to the customer would be the same.

This is not good for coinbase, even if it was an accident.

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Is there any evidence that Coinbase actually did that? My read of the Coinbase founder's post up-thread was that they purchased the Bitcoins on the user's behalf at the time he entered the order, but a server failure prevented them from being transferred to the buyer's wallet. If they had given him the current market price they would have to purchase additional Bitcoins and eat the cost. (Which, reading the recent edit, seems to be exactly what they're doing.)

I agree this is not good for Coinbase, but I am also far less surprised or indignant than many posters here seem to be. This is what the early stages of most markets look like, with fuck-ups and manipulation galore. Read a book on the history of the NYSE (and later, Amex, which was called the "Over the curb" market because it consisted literally of people shouting orders at each other on a street corner in NYC) - this is far milder than the stuff that went on then. At least Coinbase seems to be exhibiting incompetence rather than the naked greed and malice that characterizes many other nascent markets.

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You seem to have missed this part: purchased at the lower price and the company pockets the difference

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I am not invested in bitcoin, so this may be a naive question, but is there any explicit promise that your funds will be available within n-time? There appears to be a gap in expectations. These entities do not seem to be brokerages, although many people expect them to be so.

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That's not a bitcoin question, that's a per-exchange question.

If an exchange gives users an SLA stating "orders will be fulfilled within X business hours" then that's a contract between two parties. If the exchange says "yeah, we'll get around to it someday and you agree to deal with that" which is the usual intent language in the small print then you don't have much to go on if there is a delay, other than trying to raise a public outcry in the hopes they will back down.

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Understood, but my question was specific to the current entities (exchanges/whatever) in the market that let you purchase bitcoin.

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This is definitely ridiculous. The loss of value was not on the fault of Coinbase, but the result of market swings.

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but he wasn't able to react to market swings for 5+ days after he was supposed to receive delivery

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If you delay orders due to your fault (no matter if it's liquidity, intentional, technical or whatever) then you're liable for the market swings of the delayed good.

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Sure, but the question is: if Coinbase placed the order today, that suggests they kept the ~12k loss for themselves. Is that rightful profit?

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Actually NO from an independent point of view they JAMMED him. Trades and transactions have a SETTLEMENT day and date in the financial markets. If a trade is not settled, i.e deposited and the funds available by the said settlement date the trade is called a FAILED trade. Both parties return at original transaction or go to arbitration. This alone is a reason not to touch coinbase. The system is too immature and new and I would learn from this and not play around with sums of 35K on underdeveloped platforms.

edit:grammer

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Yes. The question is why did they refuse to act until this public outcry.

My theory? Proprietary trading. The CoinBase guys were probably trading on behalf of the company and screwed up royally, taking a big hit, so they decided to try and pass that loss onto customers or until they balanced the books

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A very good guess either that or front running. This is what market makers used to do back in the day, aka "front running". Its banned in the financial markets because there is regulation and thus illegal. Either that or like you say they took a massive hit and basically held a ton of orders to mitigate the damage.

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And if Coinbase doesn't fall under those financial regulations, that is fraud.

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Considering the loss of position over the last week, it's certainly feasible.

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Here's the thing about financial institutions: when they make a mistake, they pay for it. They should really be crediting him 62.9 BTC, which is approximately what he would have gotten by selling on December 13 and buying again today.

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No, the trade should have been failed. We can't just assume he would have sold opportunistically; that's insane.

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Agreed, this is a failed trade.

They should simply wire back the money to end this matter and blame a back-end gremlin.

As a gesture of goodwill, maybe comp the guy $100 credit, cash, starbucks gift cards, whatever.

They've actually made it worse now by executing the trade but only after a public outcry.

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That's true for traditional financial institutions that consider this the costs of doing business and can easily absorb such losses. Something like the $25mn Coinbase got in venture capital is lunch money for a JP Morgan or Goldman Sachs. BTC on the other hand has insane amount of volatility and the players are comparatively small. You may simply find yourself in a situation were they are simply unable to refund your losses and instead declare bankruptcy.

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Well that's the point - if you take a short/long position in BTC, then you must afford to pay it out even in fluctuations - if you can't, pay someone to hedge/'insure' it; if you don't - declare bankruptcy and pay up whatever you have.

The whole point is that 'comparatively small' players shouldn't be allowed to take up insane amounts of volatility; if you accept consumer's money then it would be reasonable to require to put that $25mm as a bond to pay out your debts, and put a ceiling on how much deal volume you're allowed to hold if you've got only tiny amounts such as $25mm.

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Do you work for coinbase? You seem to be defending them pretty hard.

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No, I don't work for Coinbase.

I'm an avid user and big fan. I've tried a lot of alternative products, and none compares to Coinbase in terms of reliability and overall experience.

Sure, they screwed up. Brian owned up to that and fixed the issue quickly.

I just think some of the anger at the market swing is being wrongly directed at Coinbase.

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"I just think some of the anger at the market swing is being wrongly directed at Coinbase."

You keep mentioning market swing. Market swing is relevant if OP had the bitcoins in his control which clearly was not. So while the market swung, he lost money not because he was sitting on his ass but because he could not do anything about it to minimize a loss. See the difference ?

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I understand the difference, but I still think some of the anger at the change in price is being misdirected.

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They haven't fixed the core issue at all. What they have done is admitted the situation is entirely their fault (and Brian deserves credit for showing up here so quickly). Hopefully an appropriate remedy will be forthcoming.

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Fair point. And agreed, hopefully they will address it further.

Again, not saying that this is not a major screw up.

I just think Brian and crew deserve more support than they are getting.

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Agreed regarding Brian and the company. I doubt a mainstream institution would be so willing to engage directly like this.

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Reliability and overall experience would have been amazing if it was done on the 13 and he did not need to go public to get it fixed.

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Fixed issue quickly?? Let's do an experiment -- I setup a page somewhere online and you transfer $35,000 of your own dollars. Then you wait 5 days for me to transfer them back (maybe). Will see how your stomach will handle that...

You clearly have some agenda for saying things you say. Noone is that stupid.

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Wow now I'm pissed. I had the same issue but didn't make a public stink about it. Just got my coins today with no credit for the mistake and the same issue of my coins being frozen at a higher price. Looks like I should have been more rude about it.

Not only that, but I was told that my coins could not be released earlier because "they needed to be removed from cold storage". So now we have 2 different excuses for failures in the same time period. The cold storage excuse seemed completely bogus to me too because we're talking about crediting a number to my account, not getting actual Bitcoins. They don't become Bitcoins till I send them out of Coinbase.

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Make a public stint about it if the issue isn't resolved accordingly. There is no reason to pay the price for a mistake by their company.

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I support filling the HN front page with stories like this. Especially if it means that you get your money back.

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If in fact there's been no fault on the customer side, then obviously he deserves not only a (profuse) apology -- but fair restitution for any losses suffered while your people were dithering on how to follow up to his perfectly reasonable request.

BTW in equities trading I believe this kind of botched transaction would be treaated as a "Failed to Deliver" (FTD), and that's exactly how these things are handled.

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Coinbase is not an exchange like Bitstamp or Mt.Gox. This fact is not just something buried in their T&C. Their company communication has never described their product as a tool for day-trading.

They made a promise to deliver bitcoins at a certain price and on a certain date. The original poster's issue is equivalent to Amazon promising 2 day shipping but the book came a few days late.

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No, it's nothing like shipping a book 2 days late. The OP has actual, recognizable economic losses as a result of Coinbase's delay. The transfer of money via ACH is a separate transaction from the Bitcoin acquisition. After the admitted delay following the Bitcoin acquisition transaction, Coinbase should have either reaffirmed that the OP wanted to purchase the coins at the original price, canceled the transaction, or acquired the coins at the then-market price. (Note, normally when the price increases, Coinbase cancels the transaction.) Consequently, the OP has a solid legal case against Coinbase.

Unfortunately, for the amounts involved its borderline not worth pursuing. It's too large an amount for most small claims courts, and too small an amount to justify the time and cost of civil litigation (unless it settles at the very early stages). Indeed, based on Coinbase's record (refunding purchases if BC prices increase rather than executing the transaction), it's very likely that they are factoring this arbitrage into their business model.

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It is pretty much like that if you buy a book to gamble with its resale value.

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That's not the primary intention of the book - the book has intrinsic value that BTC do not.

The value of BTC lies predominantly in the market value.

So the book analogy is ridiculous and patronizing.

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OP has no economic loss as a result of Coinbase's delay. OP has a loss as a result of Bitcoin price changes independent of this error.

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Which could have been mitigated -had Coinbase fulfilled their delivery, as negotiated-. Ergo, material losses.

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Yeah, fair point that he could have sold his coin the day he received it.

As I mentioned in a few other comments, just seems to me that frustration over the Coinbase's error and frustration over the price swing are both being heaped only on Coinbase.

I've had great experiences with the product and company, I would hate for this particular screw-up to be seen as representative of their overall service.

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It's somewhere between Amazon delivering your book the day after Christmas and TicketMaster delivering your ticket the day after the concert.

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So with Amazon I'd just return the product if it arrives too late. Does this work with Coinbase too?

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The key here is the promise to deliver bitcoins at a certain price at a certain date. If they indeed promised to deliver on a certain date then clearly they are in violation... not sure if they really did make that promise though

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If I order a $30000 shipment of fish and you deliver them 2 days late, I have all legal rights to refuse the shipment and require the full amount back + my losses or lost profit (in the amount I can prove in court) for not having the fish back when you agreed to deliver them.

You don't need to be called an exchange or sell currencies in order to be financially liable for delays; and the more perishable/volatile the product is, the larger the possible liabilities.

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Off-topic, but since you guys have ignored: 3 emails from me, and a tweet...

I sent you an XSS vulnerability to whitehat@coinbase.com according to https://coinbase.com/whitehat almost 3 weeks ago and haven't received so much as a confirmation "thanks we are looking into it" email from you guys.

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Coinbase guys: if you'd like, we're happy to offer you a free 3 months of website vulnerability scanning to hopefully help you find and squash any vulnerabilities like this. Just email me at borski@tinfoilsecurity.com.

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To anyone considering or currently using coinbase: this comment (if verifiably true) should be a GIANT red flashing light warning you to tread carefully.

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It was frustrating that I didn't receive any contact from Coinbase until after posting on here HN, however I'd like to point out a couple things:

- This was a relatively minor XSS vulnerability which required a bit of social engineering to pull off, rather than being a traditional XSS that most HN readers would need to worry about.

- Their delayed response was likely due to the relative minor nature of this vulnerability.

- I still feel safe using Coinbase

- They're taking care of it and treating me well :)

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We'll take a look. Thanks for the reminder!

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This scares me.

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Enable 2 factor authentication. IIRC Coinbase doesn't use it per user action, but at least having it has the potential to save you some headaches.

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Hopefully you are selling him the BTC at today's rate, and not at $868. This post is an admission of guilt on your part, so if you don't, he likely has a great case when he sues you (which I would, if I suffered a $12k loss like he just did).

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Was the delivery date of the BTC ever set? They guaranteed a price and delivered on it (yes, they took a while, yes the value went down in the meantime). If the price went up, everyone would certainly expect them to deliver at the guaranteed price and not the current one.

What they probably should have done is just reversed the transaction entirely, but if I was deciding this, barring some agreement on delivery time, Coinbase would be mostly blameless.

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The protocol should have been to reverse the USD charge(not to the bank but the OPs coinbase account), and let the OP decide if they want to buy BTC now, wait or withdraw the funds in its entirety.

The reason for this is, they failed to deliver, that is not under debate. But they are assuming that someone who was long on BTC as a speculator, is still long on BTC.

In the latest edit Brian from coinbase mentioned that they are now honoring today's rate, which is a step in the right direction, and has subsequently save the OP substantial losses, but this does not absolve them of the original screw-up.

I doubt the OP will complain. If I were in his shoes I would personally request a complete reversal even if I wanted to buy at today's prices, and manually make a new request.

Any seasoned/experienced business would do this.

Example: If amazon fails to deliver/the shipped item is lost in transit, they reverse the credit card transaction and request you to re-order if you still want to purchase.

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What should happen is that people should notice that they do not have a reliable process for either delivering the coins or canceling the transaction (if the coins cannot be delivered within some reasonable period of time).

This sort of settlement process is a scary thing to throw very much money at.

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Oh, absolutely this should give people pause at spending $35k at coinbase (or on bitcoins period). Or, rather, maybe people should stop massive speculation on bitcoins on a platform that takes at least a few days (best case) to clear.

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Yeah, only if he can make the case that he would have sold or used the bitcoins prior to the new valuation, and only if you don't treat it as a currency.

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He only suffers a loss if he sells. I'm bearish, but it's too soon to say that it's never going back up to 800.

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... which he could have minimized if he had access to the coin when promised.

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But the point is that he provide 40 BTC worth of USD when he made the order, of $35K.

So he should get $35K worth of BTC at todays price (~60 or so BTC)

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He should just get a refund in USD for the original amount. This would be classified as a failed trade in any other market.

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These weren't the BTC he was looking for...

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Don't be silly.

He suffered a $12k loss because of price fluctuations most likely tied to People's Bank of China news, not because of Coinbase's error. There are no grounds for a lawsuit here.

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What are you talking about? He could have sold them on December 13 if he had gotten them at that time.

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Yikes! Please tell me you consulted with a lawyer before posting this publicly? Even if you gave the OP the BTC at current rates SEC/Courts can make a case against this sequence of events.

It does not even have to be reported.

I have nothing against you or Coinbase and I do sincerely hope I am wrong. This can have dire consequences on your current and future business(es).

It would have been best to refund the withdrawal in its entirety or just credited it, to be used for a future transaction as that would have saved you guys from a world of pain.

For any other service I would have given you Kudos for acting, albeit slowly, and applauded honesty(though not so much due to blaming it on the servers, which in a financial context is unacceptable).

But for a business that a court can deem/classify as a financial institution (regardless if you consider yourself one), this could be considered as a admittance of wrong doing.

edit: grammar

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Coinbase is not a bank. Or a financial institution. If it were, it'd have a charter and licenses. It's a merchant just like any other. You give them money in exchange for goods. No different than iTunes.

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It does not need to be licensed as a financial institution to be deemed as one. The courts can and will deem them that the company is subject to some of the rules and regulations governing the financial industry and up the charges against them when this enforced.

I am purposely not saying 'if'. Because there is no possibility of this not being brought to a judge on the behest of SEC themselves or a consumer complaint.

In layman terms:

(1)they buy and sell BTC on behalf of clients and charge the client for the transaction including their fees.

(2)they are an online payment processor of sorts.

They will need to follow more regulations than Paypal, as paypal is also a digital wallet of sorts, but while it provides a conversion, they technically do not trade(buy/sell currencies) on behalf of clients.

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Bitcoin is not an official currency in the eyes of the law. Therefore, there are almost zero regulations that would apply to Bitcoin transactions, other than contract law.

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You are right, botcoin is not a currency, but it is a security and it is traded on an exchange.

Here's the definition of a security [Securities Act of 1933, Section 2(a)(1)]: The term “security” means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

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I've had a terrible customer service experience with Coinbase too: http://amit.roon.io/an-open-letter-to-coinbase

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Funny how whenever a company gets enough bad publicity to actually hurt their bottom line, suddenly their customer service runs a bit smoother.

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The server upgrade bug:

1. How many other customers were affected by the server upgrade?

2. Why was this not caught at the time or after?

The customer response bug

1. What steps are you taking to correct the issue it took a front-page HN story to get traction?

2. Will you commit to writing a post-mortem blog post?

If you don't learn from your mistakes, then you are deeply doomed. I don't want you to be doomed :)

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Welcome to the wild west

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because of your delay, he lost $13226.98 at current market rate: http://www.wickedfire.com/shooting-shit/177828-where-my-bitc... I hardly think $50 is going to make him feel happy.

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And because of their delays, many others have made money on the transaction. They pay out at the market price of when the order was placed.

The OP thought it was worth it then, and bought them then.

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What you seem to be missing is that the OP tried to buy them then, Coinbase did not process the transaction in a timely manner, and subsequently bought the coins for the OP today after the OP's post at the original price, having already breached the purchase agreement.

This is a pretty close to being a classic contract law case, except with bitcoins rather than tangible goods. If this goes to trial, the outcome is not likely to be favorable to Coinbase.

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At any time between then and now, the OP could have realized his mistake and sold the bitcoins for a lesser loss had they been in possession of the bitcoins.

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Coinbase is not for trading though. He should have purchased on an exchange then.

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Do I need to quote their homepage? "Hook up your bank account to start buying and selling bitcoin in minutes. It’s that easy."

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He may not have held on to them, which he was forced to due to the delay.

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On the contrary. I don't want to fan the flames of conspiracy theories... but there is a very real possibility that if the market went _up_, Coinbase would have refunded the money as USD instead of BTC.

Only if Coinbase can prove to the public that they are consistent on matters like this would your assertion be correct. But if Coinbase were inconsistently applying their policies... they can make a very pretty penny on scamming their customers.

Transaction Delays are a serious problem.

Now, according to the edit, Coinbase did the right thing here and are eating the loss. So Coinbase is doing a good job at damage control...

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Make sure you give him the new price.

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quannabe: You have been hellbanned since your second comment.

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Did you credit his account using the rate of the day he purchased his coins in? If not that's unnacceptable. Why would anyone use your sevice?

Why does it take a public shaming for you to do your job?

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[deleted]

You seem quite the apologist:

"To not expect some errors from a startup with an emerging technology is just silly. Users should expect some errors, and expect fixes to those errors by Coinbase as properly happened in this case."

Huh?

A startup dealing in financial instruments doesn't just get to say "Startup!" "1.0!" "Beta!" or "MVP!" and wash its hands of responsibility.

If I do $10,000 worth of damage to your car due to my (in-)action, and throw $50 at you "by way of apologizing", your losses are somehow mitigated?

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I never advocated that they could wash their hands of responsibility.

My statement was that any users of a startup should understand that there are risks that come with using any new service/technology/etc. That's not to absolve a new company of their responsibility, it's just prudent business sense from a user perspective.

I just think that too much blame is being put on Coinbase. There is anger at the delay mixed with anger from the price swing, and too much is being directed at Coinbase.

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You may not have intended this, but your posts on this thread have convinced me that Coinbase should not be held responsible for their own errors that hurt their customers.

Now, care to take a guess at whether I'll ever be a customer?

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I understand that you guys have a ton of work going on, but if you are charging for a service you need to deliver and respond to your customers on time before they feel the need to go public.

I started my career as a "customer service superhero" at ZeroCater and was the only employee for a while. There was a staggering amount of work to be done at times, most of it non-customer service related. I'd never leave without making sure every customer email was addressed - and this was a much more trivial issue (lunches). This is not just human decency, but its good business practice. I wanted to speculate (yeah it's speculation :P) on bitcoin using your service, but no longer will, and will no longer refer your service to others (unless something changes, of course). It is not a question of ethics, but a question of me making a good decision - why would I trust my money with a business that doesn't feel the need to address customers on time (especially those who trust them with significant sums of money)

This issue would have cost you a maximum of 2 hours of free time/sleep to fix - now its costing you a customer (I'm sure the cost is actually far greater, judging by the exposure of this thread). Was it worth it?

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>Edit2: we'll push through the bitcoin credit at today's price instead of the original buy price (which should be in your favor) since the mistake was on our part. Sorry again for the trouble!

Is this an actual policy of Coinbase, or restricted to times when you get bad press?

Because when I saw this post I could swear that it was about me. I gave you $467 about 24 hours after the OP for 0.5 BTC, with the promise that I would have the coins 5 days later (when they were still worth $450 or so). See this screenshot from earlier today

http://imgur.com/4WrTDPy

Since I took that screenshot 8 hours ago, the coins have been credited to my account (finally) and are worth about half what I paid for them.

Now my problem was a couple orders of magnitude smaller than that of the OP here, which is why it hasn't been worth my time to send a lot of emails about it or post on HN (and the market looked OK until 24 hours ago). I had chalked it up to the risk of performing financial transactions in an unregulated marketplace.

But I feel compelled to provide another example given your assertion that this only occurred with a 'handful' of orders.

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In other words, Coinbase is going to supplement ~$13,950 loss with $50.

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In other words, Coinbase just pocketed his loss. (Assuming the transaction was made today.)

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That would be my impression, and that's really shady.

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This, including the XSS comment elsewhere in this thread has prompted me to move my coins ASAP.

Coinbase US understaffed, running fast and loose, and can't handle the spike in attention. This proves bitcoin isn't ready. Coinbase has a long road ahead of it.

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You can't possibly be serious. You pocketed his ~$12K loss and you're giving him a $50 credit? Are you high?

Sloppiness like this wouldn't fly in actual finance. It would get you fined and possibly more. Lacking any sort of internal controls, even something as simple as balancing your books and verifying all transactions... It's shocking and negligent. Even more so for a YC company. Shame on you.

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>> It looks like as we were performing server upgrades last week a handful of jobs didn't run as normal

Oh? Did that also cause some kind of downtime in your customer service operations, considering you sure took your sweet time in getting back to him? Funny how the front page of Hacker News makes things run a bit smoother, huh?

-----


I do hope that, at the very least, you will not make him pay the "locked in" price for a delay that is your fault. There are many threads on bitcointalk.org suggesting that these delays only happen when the BTC price is very volatile, and that once they are resolved, the actions taken by Coinbase (either cancellation of the order or delivery at a locked in price) always inure to the financial benefit of Coinbase.

I am certain that the Coinbase TOS allow significant discretion as to the timing and cancellation of orders. However, systematically delaying orders and then cancelling or forcing people to buy based upon which will be most profitable for Coinbase, which seems to be occurring, could certainly be construed as fraud.

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I laughed at $50!

-----


again, the best way to get support from coinbase is posting on public forums. i love coinbase, i think guys have done and will continue to do amazing things for bitcoin, and by proxy the world at large.. but your initial customer support is outrageously terrible and has been for way too long. you always seem to make it right in the end.. but you should hire about a dozen of the ten thousand kids that would love be on your support team

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Yeah, their support is pretty bad. I got this response to my first support request:

> Thank you for contacting Coinbase Support! Unfortunately, we are experiencing a tremendous volume of support requests, and have not been able to answer your ticket in a reasonable amount of time.

It goes on to tell me my issue is closed and I can reopen it.

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If only Mt. Gox were as responsive. I haven't been able to pull my bitcoins out of there for a month now, because they still haven't verified me.

Add to that the fact that their fucking site LIES TO YOU about how you can withdraw 100 bitcoins per day, and then surprises you with how you can't actually withdraw any until you get verified first.

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It's worrisome that you have to basically complain on a public forum in order to get a reaction from them.

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After the 25mil from a16z, I doubt these problems will continue for much longer.

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you shouldn't have to raise money to provide solid service

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>you shouldn't have to raise money to provide solid service

I agree... but being a market maker is one of those things that requires some reserves, and especially the early exchanges? when bitcoin was under a buck, I can totally see getting together with a couple friends and putting $20-$30K in the reserve pot and giving it a go. But with bitcoin appreciating 1000x? yeah, uh, that got serious fast. Thirty grand is no longer anywhere near a reasonable amount of operational reserves

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Skettios.

What is coinbase doing to prevent this from happening in the future? Both from a customer service perspective, and from a technical one. I want to assume good faith, but I'd also like to verify before doing business with you.

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So you've screwed him out of 13 000$, but gave him back 50$? That is ADORABLE.

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Offering restitution after a customer went to the media is not enough. If this is a systemic problem (and indications are: it is), you have to take steps to avoid these scenarios in the future.

Having a customer service that actually responds to issues meaningfully would be a first step, but that's only the beginning.

There's a technological solution to this. If you know that for whatever reason some transactions might never complete on your end, one of several obvious solutions would be to introduce a timeout after which the transaction is rolled back automatically. That means introducing a batch process to at least trigger a manual review of these cases, and possibly even an automated cancellation with repayment. Doing that within a business day of receiving the money wouldn't be out of order, maybe even make it an hour or so (this is supposed to be a fast medium, right?)

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Edit2 = Damage control.

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Brian, thank you for fixing the issue and making things right. As they typically say, a great company isn't judged by how many problems they have, but by how well they handle their problems.

You got a +1 here.

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If this is the case, why didn't you respond to the emails?

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Bravo Brian re edit#2 - there may be hope for some customer service after all! Is it too much to assume that you will be pushing through the bitcoin credit at today's price instead of the original buy price for all those affected by your "mistake" (your words). I too have had the same problem - albeit on a smaller scale.

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You need to have at least one person in charge of reconciliation. If you're not running recs with data feeds from the various parts of your system doing transactions, you're just a lawsuit waiting to happen. If you were an actual regulated financial entity, not running recs would be illegal under risk management requirements.

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+1 for owning up that this was a bad customer experience.

-1 for the cavalier, "looks like were were performing server upgrades last week..." That is a startup excuse. I'd love to hear Chase Bank use this excuse and see how that flies with banking regulators.

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Hey Brian. Appreciate your response and explanation. When you come up for air, would love to see a blog post about the issue and some thoughts on monitoring for such failures. I've run into this type of problem before in architecture.

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Quick comment on Edit2: very nice of Coinbase to do this; and I can be almost certain that it would NEVER happen with a normal bank. Brian, well played. Keep up the good work.

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brian -- i've been trying to contact coinbase as well. i sold a decent size of coins (5 figures in USD) and i waited, waited and never received the balance in my bank account although it seems to claim to have completed. i've been waiting for days and contacted your group using support same problem. waiting and waiting... what's going on? it's a large amount of money and i have no idea how to get in contact.

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some more details: coins initiated to be sold on Dec 6 -- never received in my bank account although it looks like it "completed" on Dec 12. putting me in a weird financial situation.

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Thanks for the clarification, Brian. That's very reassuring.

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As a data warehouse engineer, I feel the frustration here. d'oh.

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> Further avoidance by them will lead me to make a few calls to news stations.

Eek. The best case scenario is that you'll get a news blurb on local TV where you're portrayed as a sucker. "Weird online currency thing does weird stuff in the way you'd expect weird online currency thing to do, and look at this greedy rube who got sucked in and lost it all! Film at 11."

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That might be a probable scenario, but it's certainly not the best case.

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ActualLOL at that correction.

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Clearly you don't know who mGrunin is. I'd do a little research before making comments like the one above.

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This guy? http://instagram.com/p/h_z7OEkWEs/

I mean, I don't know who he is but I generally wouldn't fuck with someone who has $35k to drop on pretend money. Anyhow, main stream news can be foolish, regardless of who the subject is.

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Omg, go to the site he lists on his instagram.

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http://www.winningportfolio.com/ for the lazy. Incredible.

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"HACKED BY SyR!4N M43STR0"

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lol, wow, that's pretty intense

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Priceless.

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His linkedin page sends us to this awesome article too: http://sfctoday.com/news/1025-sfc-senior-already-a-financial...

Edit: Oh gawd, at the end he actually says "you only live once."

Edit2: "Money drives me completely ... I've gotten so used just being able to go anywhere without looking at any price tags ..."

Let's go ahead and [dead] this thread. Forget it ever happened. (or make a movie out of it)

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Pop culture history in the making, indeed.

ಠ_ರೃ

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I admit, that is a very poor article and I mainly blame the editor. He spoke with me for two hours with a running tape recorder and after the interview this was the best story he could come up with apparently. Obviously when you take a few lines here and there from a two hour conversation you can make anyone sound like a douchebag. Maybe that was his motive? I'll never know.

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People like this are sad. Read a book. Play an instrument. Do something.

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An account with 1 comment created ~40 minutes ago. Hmm...

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Good call spotting the sock puppet.

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I never created a shell account on here. The only thing I did earlier today was post a link of this thread at a local community forum that I am part of. Some of them came here and supported me. That is all.

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Really? I don't think it would make a huge difference. It just comes off as childish.

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Well, maybe you could post a two-sentence summary and save us all the trouble?

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He seems to be some affiliate marketer who also peddles get rich quick via trading options products.

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If you actually spent a minute watching any of my trading videos you would see that I never pitch a single product or service in them. What I offered in my videos was complete transparency on my trading.

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wow, that came out wrong. I was rooting for him, now I dislike him.

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Some guy who creates users to respond to criticism? Oh and looks like an idiot.

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I never created a shell user on here. I posted this thread on a local community forum that I am active on. Some of the members came here for the first time and supported me.

I am sorry that my appearance comes off as an "idiot".

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Martin Grunin can still be a sucker when it comes to bitcoin.

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From my google search, I really doubt local news(or anybody) is going to give a damn who mGrunin is.

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Some kid who made $ off affiliate marketing. Wow big deal.

Looks like an utter douchebag too: http://instagram.com/mgrunin

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What's your problem? I'd be pissed too. He probably worked his ass off to make all that money.

Looks like he works hard, plays hard...

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Having money is not a license to act like an entitled, materialistic douchebag. I don't know the guy, but between this post and his instagram, that's the impression I've got of him. Hopefully some outside perspective will be useful to him.

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I don't quite understand were I led anyone here to believe that I am an "entitled, materialistic douchebag". I had an issue on hand with a company, I felt I was being ignored. I was informed that the company is active on this website. I took the initiative to bring my problem to the public.

Regarding my instagram, isn't such a social networking website in existence just to fool around with? Practically all my followers are my college friends and those sort of posts interest them. I just turned 22 for god sakes, you expect for me keep every bit of my life as professional and humble as possible? I am sure many here have done much worse when they were my age.

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A social networking site is what you make of it. But if you have public material that is easily searchable, people are likely to judge the content they see. Not that this is relevant to the OP, but since you asked:

I think most people would agree that your instagram page has some extremely materialistic pictures. You tagged the rolex pic with the line "#money #suits #rolex #rkoi" (rkoi = rich kids of instagram).. I would look into making those pics private, because to many people outside your friend group, they come off as super douchey.

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Confidence is often mistaken for arrogance. Success+youth compounds the likelihood.

Props to you for attempting to address many of the detractors, but doing so will take time from your more productive pursuits.

There is some good advice below on lowering your profile a bit until your skin thickens and your manner of expression becomes a bit less brash.

You have good reason to be proud of your success in a legal area that inspires your passion. Keep it up.

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Just wanted to say that it's unfortunate how people are treating you over all of this. You should feel proud of what you've earned. I think everyone's got their pitchforks out because they think you're creating sockpuppets to fuck with CoinBase. Obviously if that's the case, you are a douchebag, but otherwise, your instagram looks fine for someone in their early 20s.

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People judge what they see, and those been had cases videos haha.

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h̶t̶t̶p̶:̶/̶/̶w̶w̶w̶.̶y̶o̶u̶t̶u̶b̶e̶.̶c̶o̶m̶/̶w̶a̶t̶c̶h̶?̶v̶=̶r̶t̶4̶g̶k̶3̶g̶6̶s̶s̶U̶

a̶n̶d̶

h̶t̶t̶p̶:̶/̶/̶w̶w̶w̶.̶y̶o̶u̶t̶u̶b̶e̶.̶c̶o̶m̶/̶w̶a̶t̶c̶h̶?̶v̶=̶U̶c̶H̶j̶X̶q̶V̶_̶5̶m̶k̶

R̶e̶a̶d̶ ̶h̶i̶s̶ ̶p̶o̶s̶t̶s̶ ̶o̶n̶ ̶w̶i̶c̶k̶e̶d̶f̶i̶r̶e̶ ̶a̶s̶ ̶w̶e̶l̶l̶.̶

W̶i̶t̶h̶ ̶m̶o̶n̶e̶y̶ ̶c̶o̶m̶e̶s̶ ̶p̶o̶w̶e̶r̶,̶ ̶a̶n̶d̶ ̶i̶f̶ ̶y̶o̶u̶ ̶w̶i̶e̶l̶d̶ ̶t̶h̶a̶t̶ ̶p̶o̶w̶e̶r̶ ̶i̶n̶c̶o̶r̶r̶e̶c̶t̶l̶y̶,̶ ̶t̶h̶i̶n̶g̶s̶ ̶g̶e̶t̶ ̶f̶u̶c̶k̶e̶d̶.̶

Nevermind, I've been reading his posts and threads on wickedfire and he seems like a pretty alright guy.

-----


To all of you who say that Bitcoin shouldn't be regulated - this is what it results in.

If it was any regulated financial deal - say, purchase of stock or Yen - then there are clear rules on how to handle that, namely, you'd be entitled to at least compensation for any decrease between the 'locked' price at the agreed settlement date and the real settlement, whenever it may happen, and the interest for the period. Repeated such situations would result in a rapid audit to verify if they really have enough assets to pay out all their debts, and if not, shut them down immediately.

Now you're quite screwed, while coinbase has taken a profit on this (and probably other) deals by delaying these settlements. And what are you going to do if you don't get all the losses covered? Your options are quite limited.

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No, wrong. The reason people have to put up with Coinbase's shenanigans^, is because of the super intense regulations in this sector. Those of us who would take customer money more seriously (and who would have refused additional customers much earlier) also take legal liabilities more seriously, particularly the legal liabilities of running an unlicensed money transmission business.

If these regulations weren't so onerous, a dozen more of us would have jumped into the arena, and the one of us who gave the best customer service would be the market leader.

Instead, buyers are stuck with Coinbase.

^ Not suggesting anything purposely illegal -- just incompetence combined with too much business. Yet another reason regulation is hurting everyone here: less regulation would have left Coinbase left overwhelmed with so much business (since there would be more competing businesses).

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Lowering standards and allowing a larger number of competitors could bring in a better alternative to Coinbase, thus benefitting users and allowing them to get better service.

However, it would also bring in a bunch of far worse companies, including purposely illegal ones. I'm fairly sure that the average 'quality' would go down even more. There could be a benefit to the more careful users, but consumers in general would simply get defrauded on scale.

If the current quality level is unacceptable, then IMHO it is appropriate to say "guarantee X or get out of the business". Even if it results in 100% everyone getting out of the business - then it simply means that the potentially profitable niche will be waiting until someone is ready to do it properly.

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There already are a bunch of far worse companies, including illegal ones. You see, the illegal ones operate anonymously and completely disregard the laws.

The only ones the laws are keeping out are honest businesses who do pay attention to the laws, and who would provide strong competition to Coinbase.

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No way. Regulation won't solve these sort of things. It will just make the barrier to entry that much higher. Now people have a voice more so than ever before. If companies don't act appropriately, people can post stories and complaints online. The companies reputation will then suffer. This is exactly what's happening here.

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We've had some recent bitcoin companies simply shutting down/running away while taking the customers' stored funds. Sure, they lost reputation - was that any help to the depositors?

And from history of 'classic' banking we know very well that the 'lost reputation' doesn't work - we've tried that all over the world in the earlier times, it resulted in people creating new 'fresh clean reputation' companies one after another and sucessfully repeating such things over and over.

Raising the barrier of entry is the whole point - if you're unable to meet your agreements, you should be kept far, far away from that business permanently.

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I say let the unregulation continue. So many libertarians see this as an opportunity for no-regulation to be tested in scale, as a proof of concept.

I personally think that no-regulation will lead to implosion, as the bad reputation of a few firms quickly turns into a bad reputation for the currency, defacto scuttling the project as consumers learn not which bitcoin companies are untrustworthy, but that the whole system is untrustworthy by design.

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Tell me how regulation stopped Enron. Tell me how regulation stopped the 2008 financial crisis with the housing bubble. These all happened in traditional markets.

You're right that some Bitcoin companies have screwed their users. Consumers need to educate themselves on who they're doing business with. A lot of these Bitcoin companies operated anonymously without impunity. Coinbase is an entirely different case. They are a US based company with VC backing. You know who you are conducting business with.

If you as a consumer want to purchase something from a company that isn't transparent, you don't know where their located, and don't know who's behind the operation, it doesn't matter whether you send bitcoins or your credit card number. It's still stupid. Common sense must prevail somewhere.

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> Tell me how regulation stopped Enron.

One of the major problems at Enron was deregulation specifically. You need to a do a little more research to bolster your regulation = bad for bitcoin argument.

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Ehhhhh....really?

Your examples are unbelievably silly, as both Enron and the financial crisis of 2008 occurred in the context of deregulation of those "traditional markets".

Wanna watch Bitcoin absolutely implode and die? You libertarians keep up your adolescent, blind fervor for nonregulation.

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And laws against theft don't prevent all theft so theft should be legal.

I will never, in my life, understand why so many Libertarians take the argument that if some criminal might engage in a crime, then everyone should be allowed to do that same thing. It's the stupidest argument possible, yet you all parrot it unquestioningly. It blows my mind.

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Wow. I encourage you to study logical fallacies. In particular: https://yourlogicalfallacyis.com/strawman

I never held the position that you stated.

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Wow. I encourage you to study written English communication.

Your writing clearly implied that regulation is useless because sometimes criminals evade regulation. If you were capable of understanding how communication works, you'd admit this.

Further, I encourage you to learn how not to be a jerk. because you are one, and it undermines any value that you might have, by ensuring that no sane person (who disagrees with you on you on any point) will ever want to have a discussion with you. That said, I can see where an ignorant jerk like yourself might consider it a feature that only people who agree with you completely are capable of having a conversation with you.

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I'm sorry. Please accept my apology as that wasn't my intent. As a student of both writing and communication, I subscribe to the belief of that a person should write not to be understood, but to not be misunderstood. Clearly I've failed at that.

My point was that I don't think that regulation is the answer. I honed in on the idea that regulation has failed in the past (I have more research to do here) and thus, maybe alternatives should be considered. I wasn't trying to imply that because laws don't prevent criminals, that we should not have laws. Obviously, that's ludicrous. It's ludicrous because regulation != laws, or the principle of having laws. I think we can safely say that regulation may be an implementation of a law, or a specific law. Much like pizza is food, but not all food is pizza. Follow me so far? So, philosophically, if we have a bad set of laws, I wasn't suggesting that we throw out all laws, I was suggesting that we look for alternatives to the bad set of laws. To bring it home a bit more to other areas in modern society, it'd be like if I said that I think the war on drugs is failure, "tell me how the war on drugs has helped stopped drug abusers and criminals" and then you were to respond with your same response of "And laws against theft don't prevent all theft so theft should be legal." when that clearly wasn't my position.

Does this clear up my position a bit? Anyways, sorry I came off as a jerk.

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So over time people figure out how to verify these things. Coinbase was easy: they are backed by Union Square Ventures. I generally trust anything that is funded by them.

Don't act like the only way this can be "fixed" is by inserting government control over the situation.

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If companies don't act appropriately, people can post stories and complaints online. The companies reputation will then suffer.

Ah, Libertopia! It's almost upon us, Comrades!

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Yes, and are you 100%, no strings attached, free to not participate if you are not comfortable with the rules.

The stupid libertarians get their stupid pie-in-the-sky currency and you get to sit back with a bowl of popcorn (purchased with a government-secured currency of your choice) and enjoy the show.

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Great, now if you could please convince the government to adopt your attitude. Ridicule and childish insults I don't mind, just men with guns coming to lock me up if I don't run my business in the way you think it should be run.

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You know, this whole "men with guns" thing is a pretty tired, and basically vapid analogy.

The whole point that libertarians fail to realize -- and one of the most basic and obvious lessons of thousands of years of recorded human history is that one way or another, we're all stuck on this same, leaking boat together. And we're just going to have to find a way to cooperate on some basic level.

Else things start to get really inefficient and wasteful -- or potentially really, really ugly and violent -- really, really fast.

See also:

https://en.wikipedia.org/wiki/Prisoner's_dilemma

https://en.wikipedia.org/wiki/Tragedy_of_the_commons

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"Mens with guns" isn't an analogy, it's literally what happens if you don't play by what a small majority says are the rules.

It's what happens if you smoke weed and it what happened if you were gay until very few years ago. It's what happens if you're really annoying on Twitter in the UK.

But the golden irony is that you follow up with an analogy about the greatness of coercive government. Leaking boat? Cooperation? Sounds great, clearly that's why we need to throw Aaron Swartz in jail for 35 years.

I'm not convinced that no government is the right size, but the current scope of government across the western world has an immense moral authority problem. We may well be on a leaking boat, but it seems clear to me that the life raft isn't going to save us.

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If companies don't act appropriately, people can post stories and complaints online. The companies reputation will then suffer. This is what's exactly happening here.

That's great for all the people who watch and learn that Company A will steal your money, but not so great for the people who provided that evidence for everyone else.

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Lost reputation is limited to the life of the corporation, going literal here, but once a corporation cease to exist, rarely does the reputational consequences affect the lives and businesses running them, which is usually thanks to regulation and laws.

In this paradigm, where anonymity is rampant, reputation is just a word. As an anonymous entity/non-entity has no consequences to their actions.

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For every person who gets attention to their case on the internet, there's a thousand suffering with no attention. You think this is the only guy who didn't get his coins?

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>If companies don't act appropriately, people can post stories and complaints online. The companies reputation will then suffer. This is exactly what's happening here.

Except for the missing piece of the puzzle: worthy competitors. Very few people who would otherwise run great businesses to compete with Coinbase don't want to operate in this sector because of the ridiculously onerous criminal laws that now surround money transmitters and exchanges.

As just one example of these laws, to operate in this sector, you have to agree to be a government informant against your own customers, even if you think they're not doing anything wrong.

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Ah, the libertarian fantasy of the completely informed and rational public, always willing and able to promote the good guys and eradicate the bad guys...

-----


as opposed to the reality of completely informed rational and benevolent government elected by the same people?

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> To all of you who say that Bitcoin shouldn't be regulated - this is what it results in.

My interpretation is precisely the opposite of yours. Every other method to exchange bitcoins and USD has been shut down (or at least had its US presence shut down). Coinbase nearly has a monopoly in the United States (I say nearly, because there are certainly still ways to get on other exchanges based in other countries, they're just much more difficult). Coinbase, from what I can tell, must have some political advantage that allows them to stay in service.

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[deleted]

I'm skeptical of that. Coinbase is easily as well-known as Bitfloor (though granted, I don't have data on transaction volume), and certainly more popular and active than the guy who has creating physical bitcoin coins: http://www.wired.com/wiredenterprise/2013/12/casascius/

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From what I recall from when I worked in FX trading, settlement dates were set by contract and not by regulations.

As an aside calculating settlement dates for currencies is actually pretty hard because different currencies have different rules, observe different holidays and roll-over differently. When calculating for a cross-pair you basically need to find the first settlement date which is a valid trading date for both currencies (except some currency pairs which have special rules).

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There's no problem with setting settlement dates - the original poster had a clearly agreed settlement date with Coinbase.

The problem is with risks and consequences of the counterparty failing to deliver on the settlement date.

-----


Now you're quite screwed, while coinbase has taken a profit on this (and probably other) deals by delaying these settlements. And what are you going to do if you don't get all the losses covered? Your options are quite limited.

Do we know that this was case of Coinbase taking a free option, versus incompetence? My thought... If they lock in a price, they are taking a risk. There's no risk-free arbitrage. They could wait and hope for the price to go down, and make some money, but they'd also owe money if the price went up.

This does harm the customer, but if it's not a daytrading platform, you can't fault them if they honor the original price no matter what direction it turns.

The real concern is if this happens to a lot of trades at once, the firm could go out of business honoring the original price.

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Their lock in isn't worth the paper it's printed on, though - they reserve the right to cancel transactions up to the point bitcoins are actually delivered, and frequently do if the price goes enough (or just refuse to offer locked-in prices if it's obvious the price is rising).

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If they can cancel pre-delivery, it's a very different story, because then it can be interpreted as a free option.

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The fact that coinbase has bad customer service is not new. You and anyone else upset about it can simply not use their service. Adding regulation only makes the barrier to entry worse for new companies. You can be sure that Coinbase would be (one of) the only companies who'd be able to exchange bitcoins so easily.

-----


From their terms of service:

> Coinbase does not guarantee the value of bitcoin. You acknowledge that the price or value of bitcoin can change rapidly, decrease, and potentially even fall to zero. You acknowledge that holding bitcoin is high risk. You agree to deliver the agreed upon payment for bitcoin upon confirmation of an order, regardless of changes in bitcoin value.

> Coinbase will make reasonable efforts to ensure that requests for electronic debits and credits involving bank accounts, credit cards, and check issuances are processed in a timely manner but Coinbase makes no representations or warranties regarding the amount of time needed to complete processing because Coinbase services are dependent upon many factors outside of our control, such as delays in the banking system or the U.S. or international mail service.

It's possible that Coinbase is experiencing delays, and their terms of service give them a clear escape path. It sucks that they are holding onto your money, but consider this a learning experience: always start small, make sure everything smells right, and then scale up. If they were holding onto 35.10 rather than 35.10K, I suspect you would react differently

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His complaint meets neither of those terms of service.

Coinbase confirmed the banking side of things, and then failed to deliver the coins. As a result, the investor is taking a material loss solely due to Bitcoin's failure to deliver. You can't TOS a failure to deliver out of the equation.

At the least, he should be entitled either to cash or Bitcoin credit for the difference in value between the delivery date and the actual delivery date.

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> As a result, the investor is taking a material loss solely due to Bitcoin's failure to deliver.

They are very careful not to use the word "invest" or "investment" or even remotely suggest that BTC is an investment. They merely discuss buying and selling BTC. This is akin to a marketplace for buying and selling Magic the Gathering cards. An MtG exchange doesn't treat the Wrath of God cards as an investment; in the same way, Coinbase doesn't treat BTC as an investment.

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Certainly, to be exact, his decision to 'invest' is entirely separate from the functionality offered by Coinbase, et al. Duly noted, but if you can demonstrate a material loss due to the failure to deliver of another party, it would be hard to argue you don't have a civil case for losses / damages.

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He's taking a material loss regardless of whether he bought them as an investment or just to buy stuff with Bitcoins.

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Good analogy; you're also referencing how the MtGox domain started out as a Magic the Gathering exchange, right?

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In a court case, the breach of contract will be evaluated and the losses incurred will be relevant whether or not the assets are an "investment". What kind of law will apply is up for debate.

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> breach of contract

What breach of contract? Coinbase didn't agree to deliver by a specified date. I will emphasize the key phrase:

> Coinbase makes no representations or warranties regarding the amount of time needed to complete processing

There's a reason these CYA clauses exist. And the time frame (8 business days) isn't entirely unreasonable (in the sense that banks generally give themselves 3 days for ACH, with an additional 7 business day holding period if necessary).

Downvoter: if there is some other contract that I am unaware of, please reply with a quote or link

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No, that doesn't work. There's a difference between fine print qualifying statements, and fine print explicitly contradicting statements.

Your system can't say "Bitcoin deposit, 13 December", whilst your TOC says "eh, can be whenever we want".

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So this counts as a dispute with Coinbase, and the terms for that are pretty clear:

> 5.3 Disputes with Coinbase. If you think we have made an error, write to us at 14525 SW Millikan Way #26680 Beaverton OR, 97005, or email us at support at coinbase.com. In your correspondence, you must give us information sufficient to identify you, your account, and the transaction on which you believe an error occurred. You must contact us within 30 days after the transaction occurred. Within 90 days of receiving your request, we must either correct the error or explain to you why we believe the transaction was correct.

The key phrase here is "Within 90 days of receiving your request, we must either correct the error or explain to you why we believe the transaction was correct." Notification must have happened after December 8, but let's say December 8. That means, at the very least, they have until March 8 to give an explanation.

BTW: I agree that making the customer whole is the right thing to do, but strictly speaking they have time to respond.

More generally, on the issue of online displays, I checked my bank's terms of use (http://www.tdbank.com/exc/pdf/internet_banking_agreement.pdf) and it clearly says:

> We agree to make reasonable efforts to ensure the full performance of the Bank’s Online Banking Service.

> We are not responsible for any indirect, special, incidental or consequential damages arising in any way out of your use of the Bank’s Online Banking Service.

They indemnify themselves against issues with the online display.

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The original poster does seem to have started small(er) before scaling up: https://news.ycombinator.com/item?id=6929954 .

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[deleted]

So if I buy $1 in BTC and then come back to buy $10 in BTC I must be some sort of billionaire gambler. There's nothing out of the ordinary with making large transactions with a company once you trust them.

That being said, now that I've cashed out of BTC for a sizable profit I wont be touching it with a 10foot pole.

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[deleted]

This isn't a credit card transcation, it was an ACH which almost every bank already confirms at send time (usually OTP SMS). In anycase, they're user not vendor initiated.

Does AmEx call you if you buy a Ps4 or TV at Best Buy after only every buying a few $30-40 games? If so, you're in their high fraud risk group.

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It's a TOS. Feel free to write whatever you want in there, because much of it will go straight to the trash if its ever tested in front of a court.

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Fuck their shitty TOS, call the SEC and have them investigate, they need to comply with the law.

They are acting as financial services provider and must be in compliance with those laws.

The law gives the OP a clear resolution.

There's a pretty clear resolution here, give the customer back their money because your business doesn't actually work, or give the customer the coins at the most favorable price.

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BTC exchanges aren't regulated in the same way as stock exchanges. Coinbase isn't a BD AFAICT, so they don't have the same type of fiduciary responsibilities. They also aren't registered as a bank or as a NY private bank, so they aren't subject to FDIC or other banking regulations.

They are much closer to ebay than to IB

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In the recent senate hearing around Bitcoin everyone agreed that the current laws can and do apply to Bitcoin. Some modification is needed, but not much.

At the end of the day, it's up to the judge.

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If you get it in front of a judge miraculous things can happen, if a judge finds as a matter of fact that they are an exchange than suddenly their more like IB than eBay. By guaranteeing a price they are acting as a counterparty to the transaction.

That's the whole point of this, CoinBase doesn't want to be like IB so they should refund the customer his money rather than acting like a fraudulent IB.

There are plenty of more serious operations like http://bitcoincapitalpartners.com that take client money seriously.

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Which law? I can see something under non delivery of goods paid for but that would just be a civil court matter. If you order a car at your local dealership and then they don't give it to you, that's not something the SEC cares about.

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FinCEN, one of the US agencies charged with regulating financial institutions, considers Bitcoin to be a "virtual currency" and thus institutions dealing in Bitcoin are subject to some, but not all, of the regulations applying to normal currencies.

So you're right, it's not a matter for the SEC, but it definitely is a matter of concern for several other federal agencies, all of which have more teeth than the SEC.

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http://www.bankersonline.com/regs/210/210.html http://www.law.cornell.edu/ucc/4A

Please explain to a judge how something called 'bitcoin' is more like a car than cash. If it was called bitcar and people were could redeem their bitcars for a ride then you might have a point.

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How is it more like cash than a commodity? I can't directly take bitcoins or gold or copper and purchase anything at my local wal-mart. Since the car analogy didn't work for you, lets say I contract someone to buy 1 oz of gold/platinum/etc at a specific price. They don't deliver, are they falling afoul of funds transfer laws or is it a contract dispute?

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> I can't directly take bitcoins or gold or copper and purchase anything at my local wal-mart.

You can't do that with Euros, either (assuming you're in the US, otherwise s/Euros/USD/). But that's obviously closer to cash than commodity.

There are merchants that accept bitcoins in return for goods. You're just purposefully avoiding them in your argument.

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There are merchants that accept gold in return for goods too, but we don't consider all gold transactions to be money transfers do we?

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My point was not that bitcoin is a currency. I happen to believe that, but I didn't argue that. My argument was that the definition you were using in order to show that bitcoin isn't a currency was flawed.

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http://en.wikipedia.org/wiki/Bitcoin

It seems that the overwhelming popular opinion is that it's a digital currency.

According to Coinbase: Bitcoin, safe and easy. Coinbase is an international digital wallet that allows you to securely buy, use, and accept bitcoin currency

So pretty much everyone agrees that bitcoin is a digital currency.

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If they were holding onto 35.10 rather than 35.10K, I suspect you would react differently

The courts tend to as well.

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Actually you'd be wrong in this case as it is an illegal practice ("bucketing") whether due to a technical error, human error or malicious intent.

The settlement amount may defer for the plaintiff, but the as it would be considered as/or similar to securities fraud the repercussions for the company could be dire.

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What is "bucketing"? Isn't this a simple case of goods paid for but not received? This is the same as if I buy 100 gallons of fuel oil for $5 and they don't deliver it.

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No it isn't, because holding the assets is causing a depreciation in value for him.

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So if I buy 100 gallons of fuel oil at $5/gallon, someone fails to deliver it to me on time and the price drops to $2/gallon, that's "bucketing"?

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No...Bucketing would be you buying 100gal of fuel through a broker for $5/gal and your broker in turn not buying your fuel until the price drops to, say, $4/gal. Thus they get to keep the $100 difference + their normal fees.

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Not saying this applies here, but assuming goods sold are delivered on time, does it matter what price and when they were purchased for sale?

I can understand it not being legal in the case of brokerages that submit orders to an exchange but if I buy fuel (or sell a futures contract to buy fuel) the other end of that doesn't have to have the fuel at the time of agreeing to the contract, just when its delivered right? It transfers the price risk to the counter party which seems to be legal and how (to continue the example) most home heating oil companies work.

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I see where you are coming from here, and I will try and answer to the best of my abilities. There are multiple scenarios that you have opened to discussion each deals with different regulatory frameworks and the laws and scope change accordingly. Frankly any industry that comes under the purview of self-regulatory organizations and special regulatory bodies have a easier time contesting wrong doing.

As this can get very lengthy I will just point you to the right resources where good information is available.

In terms of futures it is correct that the other party does not need to possess the underlying commodity. In the US commodity futures and options trading comes under Commodity Futures Trading Commission[0]. With futures contracts institutions that you would initiate the trade through are required to maintain strict margins this is usually the case for speculators and small hedging operations. Most if not all trading platforms I have come across automatically close/roll-over the futures contract, thus delivery does not usually become a problem. If delivery does arise, the definition of delivery is not the traditional definition, you can read more about it at [1],[2] and [3].

In terms of a small purchase of physical crude oil from a middle man with upfront cash it comes down to the paperwork and the terms that were agreed to. For example if you were given a delivery date of 5th December with a guaranteed latest by 10th, and they failed to deliver you'll be able to take them to court if you feel the losses and hardship suffered due to the delay justifies the lawyer and court fees you would incur.

In terms of a large shipment of crude (may also apply to a small purchase, but would be more trouble than necessary), the money is rarely given upfront but is usually on the basis of Letter of Credit(LC) issued by a financial institution that works similar to an Escrow, with the performance terms built-in. So in case of failure to deliver, damage etc. the monies released conform to the terms of the agreement. There is a ton of information available about how LCs work, start of with the wikipedia page [4], it would also help to learn how delivery works in international trade(Incoterms) [5].

[0] http://www.cftc.gov/index.htm

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Futures

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[1] http://futures.tradingcharts.com/tafm/tafm10.html

[2] http://investdaily.custhelp.com/app/answers/detail/a_id/450

[3] http://www.investopedia.com/terms/f/failuretodeliver.asp

----------

International Trade

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[4] http://en.wikipedia.org/wiki/Letter_of_credit

[5] http://en.wikipedia.org/wiki/Incoterms

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I guess the value fell to zero. :)

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For anyone considering using Coinbase or similar services where you have to pay via bank transfer -- think twice and take this as a serious warning that you have almost no protection if they screw you/up somehow.

I have a problem with Coinbase for a much smaller sum (luckily): ordered at what I was convinced was a fixed price and just received less BTC at a much higher rate. Their customer support refuses to help (or even to cancel the transaction) and banks just don't get involved in direct transfers on your side, the way they would do on a credit card transaction.

Short of going to the police and lamenting on forums (hello!), there is nothing you can do.

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Sounds like Coinbase is using arbitrage to capitalize on market swings.

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Why can't you file a small claims lawsuit? It should cost you about $50 and a few hours of your time.

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"a few hours" lol. Also, where? Summon whom to court? If I were coinbase I'd simply ignore such a suit.

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If its not enough money to spend a few hours on, then I'm not sure its enough money to complain about either.

Where? Wherever you are, assuming in the US? I'm sure they could motion for dismissal under their TOS but at that point they will have probably taken note and fixed your issue.

Summon whom? You file suit against the corporate entity, this is how most lawsuits against corporations work. They get a notice and its up to them to either show up or not.

So if they ignore it and you get a default judgement, you can then use the judgement to collect from their bank since I doubt they are structured to hide money across international lines. Or you can just sell the judgement to a collections agency and let them deal with collecting it. Either way, if they ignore it you will likely get your money back. (Again this all assumes both you and Coinbase are in the US, if either of those isn't true then its possible for them to ignore it and have no issues)

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Care to elaborate more? Specifics?

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There isn't any more to it. I disagreed with what I received, they said "we're so really deeply truly sorry but don't care, kthx for the money". Bank said "lol direct transfer". End of story.

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File a lawsuit. Small claims if its under the threshold.

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Here is the problem with coinbases tactics.

Consider buying $1,000 worth of bitcoins...

Coinbase can tell you your price.

Coinbase can then just wait, and wait and wait, weeks on end for the price to dip down. They can then buy the coins at the lower price and deliver them to you voila, they profit from you. This is very dubious.

If the price goes up they then buy at your price + some percent of their commission so they don't lose money, either way.

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Yeah but what if you decide to withdraw while they are waiting for the price to dip?

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You can't because your coins aren't "available." I've only used coinbase once and haven't done more than buy btc, but it did take several days for the coins to become available (presumably for bank transfer to clear), during which time the price dropped by about $100/btc. I'm not mad about this- it was clear at time of purchase that I'd have to wait for transaction to clear, but >3 days would have upset me.

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They've had some problems recently. I'm now at day 12 waiting for an "instant buy" to clear. The ACH transfer cleared over a week ago but I still don't have my coins. (Support #67989 for anybody at coinbase)

It's weird, I performed several small buys in a row just in case this exact thing happened. I got 5/6 purchases but this one is stuck in some weird state. I really like coinbase; they're just having some trouble handling the huge increase in volume recently.

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And all it took was a single comment on HN to get it resolved. Thanks!

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You are really thanking them for that?

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The situation has been appropriately resolved by CoinBase. I would like to thank Brian for making this right. It is unfortunate that this situation had to be dealt with in the public light, but this was my last resource before contacting lawyers.

I will answer other comments later tonight.

Thank you HackerNews.

- Martin

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I hate to be that guy, but Coinbase is pretty clear that you'll get your coins _eventually_.

If I were doing thousands in transfers, I'd absolutely be using an exchange. They're also a small start up, funding or not.

Their support team has always come through and usually eats the cost difference if it was a bump on their end. I'd just wait it out.

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Getting your funds 'eventually' is not reasonable nor acceptable for financial deals.

A stock/foreign currency/whatever to-be-settled on 16th december is one item, the same stock to-be-settled on 17th december is a completely different item - it certainly has a different price, and there are a bunch of valid finance situations when you don't need the purchase at all if it's delayed; you just need the money back + compensation for the breach of agreement.

There's a term for when a financial institution is unable to settle deals on the agreed day and needs to postpone - it's called insolvency. Such repeated situations are quite valid reasons to require them to cease operating and liquidate all assets in order to pay out their debts.

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Can you explain the difference between Coinbase and an exchange? I'm afraid now that an order I put in could be futzed up.

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Sure. Coinbase, as far as I know, sources its coins from the exchanges (Mt Gox, Bitstamp, btc-e, etc). I could be wrong about this.

Coinbase acts as a nice middleman where you can securely link your bank account, and for this convenience Coinbase charges you a higher fee than the exchanges. They procure your coins, handle the financial leg work, and suddenly you have access to bitcoins.

I wouldn't worry about it. I've used both quite a bit. It was a huge pain in the ass to gain access to Mt Gox. Coinbase is just better imo. The support team always comes through for any problems.

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Not to shamelessly self promote, but the best way to buy/sell large amounts of BTC is directly, without going through an exchange/retail site. It is faster, cheaper and definitely a better customer experience. I've worked at two bitcoin exchanges so I know from experience. Now I am arranging private deals between a buyer and a seller. Here is the plug now though www.BitcoinCapitalPartners.com

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How can I be sure that the other person won't run away with my money?

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I use a btc escrow for non trusted sellers

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> Now the real dilemma for me here is the fact that while CoinBase.com has locked in a price for me, because they have failed to deliver I cannot sell my coins at any rate. Bitcoins could drop down to $200, and only then might they deliver the coins.

It's scary that they can literally guarantee constant wins for themselves by choosing how long to delay the delivery of Bitcoins to customers.

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I don't think they're maliciously delaying the delivery of bitcoins. I just think they need to hire more customer support reps to deal with problems like these in a timely manner when they arise.

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Well malicious intent could easily be proven, even if unintentional, depending on a few questions.

1. Was there really a delay because price could have slipped below what they quoted and they were hoping for a better rate before executing? If so, they committed an act of bucketing.

2. Next, if they tried executing a trade was it a limit order or a market order? It should always be a market order unless the client requests otherwise by specifying maximum entry price etc. Its still under the purview of bucketing.

3. Did they execute the transaction (or transactions in case of a fills on a market order) and fail to deliver due to a technical or human error? If yes, this could be classified under kiting and bucketing. Also they should have never quoted a rate unless the transaction took place, as this in itself means that the trade has been executed.

4. Did they segregate the funds until the transaction was complete or did they pool it with other funds that may have been used for other transactions (trades and withdrawals)? If they were not left untouched and were not segregated this would construe as kiting if only used for trades. Worst case it would be classified as a Ponzi-like operation.

Its quite easy to ensure that these illegal situations do not arise, it usually happens to good people with good intentions who have a lapse of judgement or loose control of their emotions and subsequently have a loss of common sense.

edit: formatting

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It's highly suspicious that Coinbase has the capacity to selectively delay or cancel transactions when the prices rise, but no ability to do so when prices drop. If their system isn't capable of that, it's definitely a deliberate design choice since the necessary code is essentially identical.

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Do you really believe these systems are so non-automated? Of course the price swings must have something to do with their delays!

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Actually if there was a delay alone this would not really be illegal and could be forgiven.

If you look at: http://i.imgur.com/R2qEn8E.png

They clearly quoted a transaction price for the BTC conversion. This price should be calculated as:

=> (rate at which the bitcoin have Already been purchased) + (costs incurred by coinbase) + (fees owed from client)

The rate Can Not under any circumstance be quoted unless the transaction has already been executed.

If the trade(s) were not executed, Coinbase broke laws that they are governed by regardless if bitcoin is regulated or not.

If the trade(s) were executed, Coinbase still broke laws(albeit different ones) that they are governed by regardless if bitcoin is regulated or not.

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I also have some very strange behavior going on in my account: https://twitter.com/agibralter/status/411685377015947264

Basically they're showing a transaction of selling BTC that I never made or authorized. Also, it's showing up in my transaction list but not in my history...

They said they're looking into it, but I haven't heard back in days.

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Update: I just logged in and saw the coins returned to me as a new, separate transaction. Very strange. Still no word from customer service.

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Same thing happened to me except for the bitcoin magically reappearing. Since this is now Coinbase's unofficial support forum - issue 52050 - 4 weeks and counting....

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check if you got an API key and disable it - there were a few posts on reddit about this

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I'll say this again about coinbase, I'm convinced they are playing the market on peoples investment. I bought when bitcoin was starting to rocket, they tied my money up for weeks, bitcoin doubles in that time. Then after that I get a sorry letter and my money back. What was my money doing in that time? Probably making them money.

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Something tells me if the price went the other way (in coinbase's favor), the situation would have not ended with refunded money.

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I feel bad for you, honestly. But serious question as well: Would you have went public with this if the price hadn't fallen dramatically? Perhaps if it went back up to $1500 a coin would things be different? Either way I hope things get resolved for you.

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Actually he probably still should have (and perhaps would have) taken this public, as they have failed to deliver the instrument in a timely manner and the OP could have bought and sold bitcoin taking advantage of price movements.

This is a clear case of "bucketing"[0] whether done intentionally or not. Its illegal regardless if it seemingly "worked out".

[0] http://www.investopedia.com/terms/b/bucketing.asp

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If the price went back up to $1500 a coin, Coinbase would cancel his transaction whether he wanted them to or not despite the supposed price lockin (and return his dollars in their own sweet time). Their usual justification is "excessive risk".

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They also have an history of halting Bitcoin sales when it's value drops too much.

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Course not.

But all I am asking for them is that they had delivered the coins on the day they said they would.

If BTC went up, I would have had no advantage of them crediting me the coins on the day it was actually due or today.

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Understandable, thanks for your response.

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HN is really getting overloaded with bitcoin noise the past couple weeks. Honestly this just doesn't feel like the right venue for advice and support about this stuff.

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This is the same situation as Facebook's IPO with NASDAQ. Orders were placed $40, then cancelled, then filled at $40 six hours after the market closed (at which point Facebook was already trading below its IPO price).

Unless you are a massive financial institution with some serious clout/legal department, I recommend you cut your losses and move on.

Your time is much more valuable spent doing something else rather than the time you will spend trying to recover $X,XXX

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Not sure if this is sarcasm, but $35,000+ is a HUGE sum of money for even the decamillionaires I know.

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$35,000 is a huge sum of money. I'm suggesting he sell the 40 or so bitcoin he purchased immediately at market price (~$550), cut his loses and move on. By doing so he would limit the damage and would only lose ~$12,700. Bitcoin will continue to fall and he will continue to lose money.

He won't get his money back from CoinBase and he is losing money every second he holds his bitcoin.

Losing money sucks. It happens to everyone who invests, gambles or takes a risk. Take your medicine, learn for your mistakes and be better tomorrow.

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Everything ended up resulting in my favor. Brian from CoinBase issued the BTC earlier today at today's market price. Considering I have been holding about $18k in BTC from prior transactions as well, as of this moment I am down 1.83% on my total investment.

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Ah, I get it now.

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$549...

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Bitcoin's been extremely bouncy, there is a chance that it could re-test resistance at around 700-800, or it could retest support at $300 short term.

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Not really, I can easily come up with 35k at the drop of a hat...

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Wanna buy some bitcoin? ;-)

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I'd rather buy a car.

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ACH transactions are reversible FWIW.

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Yes, I am aware of that. I told them in my last email that I will be reversing my ACH if they continue to ignore me.

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you should just get it reversed as soon as possible. Combined with the fall of BTC you are lucky to have a "out".

Also once you threaten the reversal there isn't much reason for them to work with you. What if they give you BTC tomorrow and you reversed the ACH already.

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Second this. Get your money back, live to fight another day. Why ask for delivery and suffer a loss?

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Reverse now. You have plenty of proof. There's no need to take a bath on this.

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Actually having this option is really good and you should use it, as there could be a likelihood of "legitimate" BTC services facing bank runs in the current panic.

Of course, you could be contributing in a bank run, though that's not your concern.

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Could you talk about why you don't want to reverse it?

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You are aware that the BTC value just dropped dramatically right? Why dont you reverse if thats possible?

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Hang on. So one could buy and receive BTC, dispose of them, and then reverse the ACH transfer? Brings a whole new meaning to the term "double spending"!

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That's pretty much why Dwolla pulled out of funding Bitcoin exchanges.

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No, they are not - only if you prove fraud. I tried to get an ACH back with BofA and I couldn't. The other party can reverse it, you can't yourself.

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I bought 1 a few weeks ago. I got a notice last week that they rejected it and would be returning my money. They have still not returned my money, and their customer service emails just return an automated "we are looking into it", with no follow-up.

It seems like they take orders as long as they make money (a friend ordering the day before took a loss and they accepted his payment no problem). Looking around their forums, the arbitrary rejections seem very common and make the company seem quite scammy.

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FWIW, I made a small transaction with Coinbase not long ago and while they "guaranteed" the coins would be in my account by a certain date, they didn't actually deposit them until 2-3 days after that. Struck me as pretty odd.

Hope your situation gets settled quickly.

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If you search for 'coinbase' on https://bitcointalk.org/ you get a sea of people complaining about the same or similar issues - stay well clear.

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HN is now a coinbase support forum?

Why would you put that much money into a service that isn't a true bitcoin exchange? Do you realize they're an extra middleman that is likely to add more delays to any transaction?

If you look at reddit.com/r/coinbase you'd know this sort of thing is a common occurrence with coinbase- Why are you surprised this is happening? Seems like they have a history of this sort of thing that should have warned you of the risks you were taking. Why give them your business if they're known to do this type of thing?

If people keep supporting businesses that act in a manner they're not happy with then what is the incentive for anyone to create a better alternative?

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All HN posts are now about bitcoin, so yeah I guess its a support forum now. Its quite hilarious that people are prepared to throw that much money away, but hey.

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Tbh... I would still reverse it. I refuse to do business anymore with companies that do not respond.

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I got some Tulips you can buy to make up your loss on.

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Coinbase customer service sucks - I rarely get a response, given I've never been this screwed over

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Do an ACH chargeback as quickly as possible, don't be an idiot and wait for a response, otherwise you may miss your opportunity to walk away without losing $10k.

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So Coinbase put me in a similar situation but they haven't bothered to respond to any of my emails thus far. Is this where I contact Coinbase customer support?

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founders@coinbase.com :)

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I am really confused and frustrated. I sent my first ever BUY through Coinbase. I got my checking all set up. Made my purchase on 12-16-2013(an earth shattering .12 coins $100 bucks) No biggie. On 12-17-2013 the US funds left my bank account and off to coinbase. Alas... All I need to do is wait now until the 20th to spend my now 30 dollar loss due to market. Well here it is. The 20th of December somewhere in the world so I go to look at my account and there are no coins. Further inspection of this I find my transaction was canceled. No explanation. Just a big red canceled. Wheres my money now? I really want to be an advocate and intend to move WAY more than $100.00 into the bitcoin market place but seriously? Just a hundred dollar transaction that made one of their customers slightly irritated? Im glad I DIDN'T trust them with serious cash like the originator of this post! Come on... GUYS! Don't take the fun out of all this! Figure it out! (Because if its not fun... It certainly wont be VIABLE!)

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Welcome to counterparty risk, Bitcoin style.

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shouldn't it be more like Market Risk ?

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Market risk would be the risk of the value of the asset changing (which is also present here). Counterparty risk is the risk of Coinbase not living up to its contractual obligation of delivering the bitcoins in the first place.

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In this case, the counterparty to the transaction appears unable to meet its obligations, at least according to the OP. That's counterparty risk.

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But the ACH is completely reversible. So not really a risk specially considering that price has fallen :).

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ACH is not completely reversible - it's reversible in certain cases depending on the legal reasons for the reversal. IANAL, but I believe that simply having a dispute with the other party is not valid grounds - you authorised the payment, it went to the intended beneficiary, so if they don't / can't pay you back, it's your loss.

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There are rules that govern ACH reversals. My understanding is that reversals are permitted in cases where the amount transferred was incorrect or the transfer was not authorized.

As another poster on this thread noted, Coinbase's terms of service appears to give them great flexibility in processing transactions. The OP, on the other hand, seems to have the understanding that Coinbase was obligated to complete his transaction within a very specific period of time.

This is a dispute between two parties to a transaction. One is arguing that his counterparty failed to meet its obligations; it appears the other has the ability to argue that under its terms of service those supposed obligations never existed. Given the amount of money involved, either party might be motivated to resolve this matter through legal action.

Again, this is all an inherent part of the wonderful world of counterparty risk.

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This was posted to imgur a few hours ago. I have no idea of its authenticity, but hopefully they're just really busy, and will do the right things. Good luck.

"Coinbase being a bro - saved me $400" http://imgur.com/r/Bitcoin/E52ILfD

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I've had poor experiences with Coinbase as well, hit major bugs, which cost me hundreds. The only reason people use them is that they are the only choice at the moment. Can't wait for more alternatives such as Circle to launch! In cases like this , regulation and compliance don't sound like something negative!

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> The only reason people use them is that they are the only choice at the moment

Has anyone tried Kraken.com ?

Registered there, but no transactions yet. Serious question.

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Yes, I personally like them. I don't have much money with them but it works.

The only minor problems are the verification time and the API rate-limits. They don't publish the rate-limits. :/

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Kraken is just an exchange. You can deposit/withdraw USD if you live in the States. The only two other options are CampBX and LocalBitcoins.com, but neither has the ease of Coinbase.

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I'd go straight to anyone and anyone who will listen. Companies don't escalate until they need to. HackerNews is big for us technies but you need to blow up their twitter,facebook, retweets daily as every day your going to lose value as bitcoin continues to drop with the news about china.

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Did you have prior experience with CoinBase and buying bitcoins from them?

If not, why didn't you start with 1k to make sure the transaction went smoothly before sending over 35k?

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I have purchased from them before, to a tune of $18k over several different transactions.

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I'm in the same exact situation, except for the amount of BTC (I purchased 10BTC). The ACH was cleared on Friday Dec 11th and the message read "Your bitcoin will arrive by the end of day on Friday Dec 13, 2013.". The actual coins didn't show up until mid-day Dec 18th, 5 days later and $400 below the Friday's levels. Can I have my purchase price adjusted as well? Or Coinbase have some sort of a preferential treatment program? My Case # is 73898.

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Apparently mgrunin's website was also hacked. Not his week.

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If you have serious money to transfer into BTC, this is not the way to go. Coinbase essentially is an intermediary, not a wallet. The whole point of Bitcoin is to get of intermediaries as are inefficient and make profits along the way. Bitcoin will solve this, it will just a take a couple of years. Btw, online-wallets neglect the working of the algorithm at some point. The system depends at the moment depends that people know what they are doing.

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His website is hacked by some terrorists: http://www.winningportfolio.com/

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I get you're angry about the bad customer service but dude, you need to get off your high horse and realise you're not that special. I don't know who you are and don't care and googling you name doesn't come up with anything special. Get over your self, unless you're a real celebrity no one will care, even if your story made it on to tv (which I highly doubt).

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Why do you have to be special to get customer service?

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I wouldn't say you need to be special to receive it, but resorting to threatening to expose them to the media seems desperate and childish.

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This is why I can't take Bitcoin seriously. It's a liquidity depth issue. Much like HFT, there is a _perception_ that the order book has depth. But there's no guarantee that you'll get execution at the price displayed. At least market makers in the past were forced to execute up to a certain amount by regulation. No such regulation exists here.

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Hey, do you know your website has been hacked?

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Now take my sincere advise, take a trip to Hawaii for couple of weeks. don't sell them fast. Once you are back, you will either have another trip, or just cash out successfully. end.

As for coinbase, Well played Sir, this comes from a broker but in a different field. every fucking pun intended.

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mgrunin isn't alone.

I have been having severe issues with Coinbase recently. Attempted to sell a small amount (less than 1) Bitcoin, and it has been nearly a month now -- no money in my bank. According to their own customer support representative, the transaction should take 2-7 business days. It has been more than double that. I've inquired again as to what the heck is going on, but I'm still waiting for a response. Unless they can get their act together and complete the transaction soon, I don't know if I'd trust Coinbase with my money.

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My first purchase with Coinbase took 7 full business days (not far off from what you waited). Other than that my experience with Coinbase has been 100% positive...extremely fast and reliable service.

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> Further avoidance by them will lead me to make a few calls to news stations. I have the right contacts to easily put myself in the media.

Cringe.

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How could you get that amount of money back to dollars, if lets say the price doubled and you wanted to sell?

Like back in my bank account dollars.

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Since it has taken this long, I guess you would rather have the lock price removed. It's around ~551.57 vs your original 868.91

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Yes, and that is only because they didn't deliver the coins on the day they locked in the price even though they said they would deliver then.

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I too had a sour experience with them, took more than 7 days to transfer coins after transfer took place.

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Coinbase will close their doors forever before honoring price lock removal. You took a risk, one that is a lot harder to read than the Fed-drunk stock market.

From what I can gather coinbase makes their money by throwing away or backing out transactions they would take a loss on. You sir, gave them $35k for digital beanie babies. You get what you pay for. And you did.

Why aren't you buying btc at an exchange? Were you planning on moving them?

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Question for mgrunin. In your opinion did CoinBase make things right? If not, why? If so then can well just drop this!

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Wow, what a disgraceful way to treat people. Certainly a company to steer clear of then.

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What're your non-Coinbase platforms for purchasing coins?

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Crap. I was looking at Coinbase. Has this happened to others?

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Yikes! I really hope this gets resolved for you!

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Well now I know not to use coinbase :)

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Speculation is a risky endeavor.

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Yes, but the usual significant expected risk is in the market value of the speculative commodity, not whether or not the broker ever bothers to execute your order.

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Its one thing to speculate on price of BTC, its another to worry about whether your exchange will hold up.

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The problem isn't speculation, but rather that he paid money and was informed he would receive the coins on a certain date, but did not receive them then.

The "price lock in" is perfectly valid so long as they inform the buyer the length of the processing period. If they give false information about that, though, it's the vendor's fault, not the buyer's.

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Bitcoin amateur hour continues.

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Can we say coinbase is basically shorting bitcoin with its customer's money ? (it's a question.)

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Leaking the last four digit of your bank account can be dangerous. http://www.nbcnews.com/id/44231957/#.UrKovi95F7M

Though old news god wonders what other services still do this.

We know your name is Martian and if we spend enough time we might be able to identity your true identity and possible to start trying things.

If you want to hide your identity, you probably should just use something more distinct.

Just saying.

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The official way to file a complaint is with the California Department of Business Oversight, and the form is here:

http://www.dbo.ca.gov/forms/tma/Form2120_English-Spanish.pdf

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So wonderful to watch this little drama (complete with breathless appeals to get the news media involved) play out today on HN, which appears to have become "Bitcoin News".

A match made in heaven, between this genius financial entrepreneur and this competent, reliable trading platform, seems to at least sum up Bitcoin nicely, if not the brainless economic philosophies underlying this horseshit.

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> HN, which appears to have become "Bitcoin News".

Seriously, what's up with this? There are at least two Bitcoin articles on the front page every day.

I had no idea Coinbase was funded by YC, though. I wonder if there's any correlation.

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I was thinking the exact same thing. Plot twist? "There is no such thing as bad publicity"

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For a split second your comment began to irritate me, until I finished the whole comment. At that point, your comment came off so eloquent written that I couldn't remain mad. Bravo.

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ouch

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Those guys in finance don't make or sell anything. They're just greedy. Too many of the smartest people go into it just to make money... Me on the other hand, I'm gonna make a difference.

Where can I get me some of those Bitcoins!?

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The guy who bought these coins is a douche. The fact is bitcoins are highly unstable and he bought them when the price was high(for this week). It is doubtful he would have had the sense to sell them before todays drop. If he really believes that bitcoins are a good investment, which I do, then he should have faith that they will rise in value over time(months, years). It's speculators like this that buy in when the price is high then immediately complain about the volatility that give bitcoins a bad name.

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> It is doubtful he would have had the sense to sell them before todays drop.

Based on... what?

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My spidey sense. Plus he bought in at $950 for $25k. Either he's rich or a gambler.

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Or at least, temporarily one or the other.

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