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I bought 10 bitcoins, 4.5, and .4 on Oct 18/19 @ around $150-160. On Oct 24, within almost the hour that the coins were supposed to arrive, I receive the following email for all 3 transactions:

On Oct 18, 2013 you purchased 10.00 BTC via bank transfer for $1,556.76.

Unfortunately, we have decided to cancel this order because it appears to be high risk. We do not send out any bitcoins on high risk transactions, and you will receive a refund to your bank account in 3-4 business days.

Please understand that we do this to keep the community safe and avoid fraudulent transactions. Apologies if you are one of the good users who gets caught up in this preventitive measure - we don't get it right 100% of the time, but we need to be cautious when it comes to preventing fraud.

You may have more luck trying again in a few weeks. Best of luck and thank you for trying Coinbase.

Kind regards, The Coinbase Team

I didn't think it was a big deal after doing a little research since they have squared things away with similar situations, and I've made a 10BTC transaction in the past, but i was a bit worried because of the size of the transactions and the movement of the market. I ask this how could this be fixed?

6 days later, I finally get a response:

Sorry for the confusion on that. It looks like your recent purchases were canceled due to appearing high risk, and a refund has been sent to your bank account.

I know it must be frustrating to have this happen, but it's an unfortunate necessity that we exercise caution when selling bitcoin online in order to protect ourselves and the bitcoin community from fraudulent transactions. While bitcoin transactions from one account to another do not face this kind of cancellation, we can't guarantee the sale of bitcoin to every account due to the high risk nature of selling them online. If you try a purchase at a later time then you may have success getting it to go through. Please don't hesitate to shoot me an email if you have any further questions!

-Rees D. Sloan

Customer Support Specialist

This response really didn't tell me anything. So I ask what my other options are and here is there next response:

Hi _ ,

I am extremely sorry for the confusion on this. I've taken further steps to review your account and at this point we've been able to get you whitelisted. Any future purchases you make from this point forward will not encounter this cancellation. Unfortunately, since the refund has already been sent out on these original purchases, I'm unable to push through or re-create the original transactions.

Again, I apologize for the frustration this has caused. If you need further assistance please let me know and I'll be happy to help!

-Rees D. Sloan

Customer Support Specialist

Something really just doesn't add up here. At the date and time that the bitcoins were supposed to be added to my account, the price was at like ~199 and 200+ on bitstamp and mtgox. Thats ~$50 increase since the time i bought it, costing me nearly $7-800.

So what did coinbase do with the ~$2500 that was in limbo for so long? And what happened to the bitcoins that was purchased at much cheaper prices?

I mean coinbase could have just denied these transactions right away, and I could have went to another site to buy it right away.

The thing that really hurts about this is that none of this money was mine. I am just a student and I finally convinced family and friends that bitcoin is a worthy investment and they finally trusted me giving me this money to invest. Is there anyway that this could be reconciled?

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  • 3
    One thing to learn from this: never take others people money to invest in something you are not sure buying this from people you have no reason to trust.
    – Salvador Dali
    Nov 1, 2013 at 0:23
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    Use LocalBitcoins - There the seller has to have the Bitcoins on account and they get deducted when you ask to buy into an escrow with no return for him. THen you pay him into bank or cash wahtever and he presses a button that its all good. YOu get the coins. Coinbase is a bit dogey and I stay away from them. Never had an issue on LocalBitcoin - just make sure you deal with reputable people.e
    – Piotr Kula
    Nov 1, 2013 at 13:00
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    I have yet to receive a payout on my coins and I put in a sell order over a week ago. The money for the coins should have arrived in the bank by now but they havnt. I hope coinbase is not going out of business or something.
    – user7526
    Nov 5, 2013 at 16:43
  • 3
    Too localized, only invites discussion.
    – Stéphane Gimenez
    Nov 14, 2013 at 21:36
  • @ppumkin, what do you mean by "dogey"?
    – Pacerier
    Nov 22, 2013 at 20:20

7 Answers 7

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No, you were not defrauded because you did not lose anything real.

  • You did not lose 10 BTC.
  • You did not lose $1,556.76.
  • You lost potential, yet unrealized gain as a result of the delay in processing your order.

You may have not had access to either amount for a period of time because of the flag thrown on your transaction.

AFAIK, Coinbase does not publish its criteria for flagging transactions. Doing so would likely make it more difficult to detect transactions that would defraud them.

One way to look at it is that this is not Coinbase's fault. Coinbase has to protect itself from both financial and legal liability. It can refuse to do business with anyone it so desires if it feels the transaction may not be made with legally obtained funds by people with whom it can legally conduct business.

If you are unhappy with the delay, and that's enough of a transgression for you not to use Coinbase again, then that's your decision to make. However, this can happen with anyone as automated and needfully paranoid as Coinbase.

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    This is a nonsensical argument. That potential had some fair market value. Now he no longer has that value. That reflects a loss of the value of the potential. Say the fair market value of that potential was $1,000. And say he had sold that potential to someone else for $1,000, its fair value. Would you argue that the person who bought the potential for $1,000 and got nothing for it didn't lose $1,000? Or would you argue the potential had no value?
    – David Schwartz
    Nov 14, 2013 at 4:18
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    @DavidSchwartz You are conflating speculation with investment. Professional speculators have contracts that stipulate maximum transaction delay and penalty rates to eke out the most market responsivity. Most Bitcoin providers, like Coinbase, are not day trade exchanges. What Concerned experienced was an opportunity cost loss and these are not generally enforced within common law; they must be stipulated and enforced through contract law. You would have to purchase a more expensive speculative trading account, if such exist, to include a contractual liability clause.
    – LateralFractal
    Nov 15, 2013 at 1:07
  • @DavidSchwartz Or put another way: Coinbase was not selling market potential. Hence monetary assignment of loss is specious from product standpoint, unless Coinbase explicitly advertised itself as a speculative get-rich-quick scheme. If such assumptions of Bitcoin are brought to the table by new adopters - there is not much anyone can do about that; except I assume educate people as to exactly what risks they will absorb.
    – LateralFractal
    Nov 15, 2013 at 1:14
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    @DavidSchwartz If you contact a farmer to buy a pig and when you get there the farmer isn't home - the farmer didn't steal a pig from you. This is a fundamental question of perception and expectation. You should not treat a virtual loss the same as a real loss. No one should invest real money without the ability to make that distinction. A virtual loss or gain only exists in so far as it leverages future opportunities; which in the case of currency speculation is a future sale of said currency.
    – LateralFractal
    Nov 15, 2013 at 16:06
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    let us continue this discussion in chat
    – LateralFractal
    Nov 17, 2013 at 1:28
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Basically, yes. Coinbase is notorious for this type of shady practice; hit me just last week. At least you got a reply, their customer service ignored my requests for updates. A few quick searches will find you quite a few repeats of this same old story. It's best to not think of Coinbase as an exchange at all; think of them as just a store that sells bitcoins at a mark-up.

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Coinbase did not defraud you. I've done over 500 transactions with Coinbase since July 2013. They are a legitimate Venture Capital funded startup. They do however make mistakes / have bugs in their software. However they always straighten everything out after I submit support tickets.

Once they made a mistake that I submitted a support ticket about requesting they fix it. By the time they responded fixing the mistake would have cost me a few hundred and made them a few hundred, but they gave me the option to fix it or keep things the same, which I opted to do since it helped me out by a few hundred dollars.

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Surely you were screwed. Before buying something from the internet, it is a good idea to look how legitimate is the source. Just a quick search on the internet is showing that a lot of people have these problems. If it would be really something with fraud prevention, they could have cancelled the money right away and you will receive them back in one day (like if you reserve a hotel and then cancel it). I understand that right now I sound like this guy :-)

Most probably if the situation with bitcoins ended up other way around from 160 they dropped to 100 you would have received it.

What they have done can be described this way:

You are trading on some exchange. And you decide to sell bitcoins there. You sold them and one of the two things happened.

  • bitcoins lost 30% of their value. Cool you got 30% profit. You are happy.
  • bitcoins increased their value by 30%. You disappointed and undo the transaction.

They just undid the transaction. I hope you will at least receive your money.

One thing to learn from this: never take others people money to invest in something you are not sure, buying this from people you have no reason to trust.

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Coinbase says that their security cancellations are purely algorithmic cyber security measure that will flag suspicious accounts according to their own unpublished security criteria. I say that the security they are worried about is their own financial security. If they do obtain bitcoins to fulfill an order and the value has risen enough while the contract was pending why not sell them to someone else, bank the profits, cancel the transaction, and tell their clients it is all to "protect" them. It doesn't take any humans to do this it is all calculated into the algorithm, but it is the calculation by Coinbase's owners to take profits for themselves when they rightfully belong to their clients that makes this company a scam.

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Coinbase did cancel my order a while ago. However I emailed them, verified my identity and they sold me the bitcoins at the price I originally bought them at. Great company, I am continuing to buy bitcoins from them. Keep in mind Coinbase provides a service almost no one else is willing to provide due to the ease with which people can scam such a business out of bitcoins.

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It's a common practice on shady exchange.

You buy something

Price went up. They cancel "the order". The truth is your order went through. They just cancel the order so they can keep the profit.

When price went down the order will go through just fine.

Now, they deciding whether your order went through or not after they knew price go up or down is very shady.

I would avoid that like plague.

Also my buddy put $5k on coinbase and pretty much lost it.

https://bitcointalk.org/index.php?topic=1825894.new#new

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