Some cryptocurrency traders found themselves unable to access their money and cash in on the recent bitcoin boom as the most popular cryptocurrency exchange in Britain froze their funds for over a month without explanation.
Dozens of customers of San Francisco-based Coinbase, which lets users buy, sell and store cryptocurrencies like bitcoin and ripple, complained of being left ‘totally in the dark’ after accounts began being frozen as long ago as late October.
They were told they needed to re-upload a driving licence or passport documents to verify their identity, even if they had already done so, but were subsequently told their account ‘was under review’.
Some customers of Coinbase were locked out of their accounts without explanation from the end of October onwards
This left them completely frozen out without explanation, unable to buy or sell cryptocurrencies on the exchange or withdraw their funds, while many reported being unable to get a response from customer services despite multiple emails and social media messages.
It came at a time when bitcoin, the world’s best-known cryptocurrency, hit a high of more than $19,700 a coin and investors tried to get in on the action.
Coinbase has 35million users worldwide and was the exchange of choice for three-fifths of UK consumers surveyed by the Financial Conduct Authority in research published earlier this year, said the issue affected ‘a small number of our UK customers.’
One post on a section of the social media platform Reddit dedicated to Coinbase said there had been ’50 to 100 new posts a week because users can’t login or have no access to their funds.’
Users have now reported their accounts are being unlocked but beyond ‘technical issues’ the company has not specified why customers were unable to access their money.
There have been 10 connectivity or outage problems between March and December 2020 involving Coinbase which have impacted customers trying to trade, including three last month, but none of these appeared to involve customers being locked out of their accounts.
Coinbase was the most popular place to buy cryptocurrency customers among UK adults, according to research by the Financial Conduct Authority earlier this year
The exchange is popular among casual UK traders because it lets them buy bitcoin with smaller sums of money.
It charges a fee of around 1.49 per cent on card payments along with a spread of around 0.5 per cent, meaning someone purchasing £500 would be billed around £10 in total for the privilege.
Lee Wilson, a Coinbase customer from Berkshire who works in IT, was one of those whose accounts were frozen.
He told This is Money: ‘I have only had an account with Coinbase for about 2-3 months, my intention was to find an exchange to purchase crypto and to transfer off the network to a hardware wallet’ and “stick it in the drawer” for a couple of years.
‘This was all going fine and as I got verified pretty early on, it was an easy process and I was buying and transferring money away in small amounts.’
Lee Wilson, from Berkshire, had his Coinbase account frozen at the end of November
He logged in around a fortnight ago at the end of November to transfer around $700 of bitcoin to his wallet, and was asked to once again verify his ID, to comply with money laundering and security rules.
After he did so and the identity check was confirmed, however, ‘from that moment on my account has been in “review”‘, he said, leaving his money frozen with no explanation as to why.
The only recent post on the company’s website was on 4 December and was a warning to its users about falling victim to bitcoin scams.
Despite multiple emails and filling out complaint forms on Coinbase’s website and messaging them on Reddit and Twitter, he received only one reply on Friday 4 December, telling him his case was ‘on the right track’ and the team was ‘working through the queue’.
Mr Wilson told This is Money: ‘There are thousands of people who are in a worse situation than me, as my case is one of the newest’.
He said he had seen instances of some customers who had been locked out since late October, while one recent post on the Reddit forum devoted to Coinbase said they had been unable to touch their money for three weeks.
Lee sent multiple emails and messages to Coinbase customer support but received only one response telling him he was in a queue and his case was ‘on the right track’
Another UK-based trader who spoke to This is Money said their account had been locked after they had been verified at Coinbase’s highest level for ‘around three years’.
He said he was not a frequent trader and had only around £1,000 in his account at the time it was frozen three weeks ago. After converting around $400 into ripple, another cryptocurrency, he was asked to verify his identity.
‘I thought this was odd as I was already verified’, he told This is Money, ‘but did the required steps anyway.
‘Since then my account has been blocked from accessing my assets completely. I cannot trade, convert or withdraw my coins. I have money which is gaining no value that I wanted to convert to bitcoin.’
Bitcoin surged to an all-time high at the end of November
Like Lee Wilson, he said he had received only one message in the three weeks his money was frozen, telling him his case ‘was on the right track.’
After This is Money contacted Coinbase with Lee Wilson’s details, he could once again access his account, while other users reported they could once again access their money.
However, there was still no indication as to why he lost access to the account in the first place, receiving only an email last Wednesday telling him ‘You’re ready to invest. We’ve verified your account. You’re all ready to invest in crypto.’
When we asked the company for an explanation, a Coinbase spokesperson said: ‘We are aware that a small number of our UK customers have experienced technical issues using our platform and deeply apologise for any inconvenience.
‘We can confirm that we have restored functionality and that most customers whose accounts were impacted are now able to make purchases and withdraw funds from the platform.
‘We have contacted all those affected by this issue and encourage any users who have questions to visit our Help Center.
‘At Coinbase we work hard to ensure a seamless experience for our customers and are disappointed when we fall short of this standard.
‘We are constantly investing in improving our systems, whilst maintaining high compliance standards, in line with evolving regulation.’