Sent $10,701.03 to Coinbase. Still missing bitcoins.
42 comments
When it takes a public outcry on HN for a company to do their job, I no longer deal with such a company. Simple as that. I don't care if you raised $25 million - if you can't treat your users fairly, you deserve neither.
Agreed. When there is a public outcry, it means that there is inadequate processes are put into place for protect their customers. This happened twice today. This means something is fundamentally broken in Coinbase's customer service.
Many famous VCs and founders browse HN. This will hurt their reputation.
Many famous VCs and founders browse HN. This will hurt their reputation.
Yes, Coinbase is a YC company[1], yes YC hosts this site (Hacker News is, after all, https://news.ycombinator.com), yes their investors do comment on Hacker News threads[2].
Also, the CEO of Coinbase is on HN[4]. He is the top response to the other indignant thread[5], where he seems to be trying to fix this issue. Also note that you can easily find the CEO's email from his GitHub account[6]
I understand there are many people who are very angry at the whole situation (just look at the conversation on Reddit[7]). I can only imagine how many other cases he is facing. The timing on this whole thing is just awful (1 week after funding announced, BitCoin crashes), which makes the whole situation very very awful. And giving support on public forums with angry customers is super hard, particularly because you start encouraging more people to do it, which escalates the situation to impossible terms, which sucks your time, which could be used to helping all the customers, including all the ones who are not being loud on Hacker News / Twitter / Reddit (also note that it is almost 4 AM where these people live, and they are probably sleeping).
I honestly expect Coinbase to do the right thing[8], and that you'll get your money back (or your money's worth of BTC).
[1] https://news.ycombinator.com/item?id=4177605
[2] Marc Andressen is https://news.ycombinator.com/user?id=cdixon , Chris Dixon is https://news.ycombinator.com/user?id=cdixon and they both commentd on their investment announcement thread[3]. Ben Horowitz is https://news.ycombinator.com/threads?id=bhorowitz, but he has not ben very active here.
[3] https://news.ycombinator.com/item?id=6893658
[4] https://news.ycombinator.com/user?id=barmstrong
[5] https://news.ycombinator.com/item?id=6929705
[6] First response on Google for me: https://github.com/barmstrong, also the same username on HN: [email protected]
[7] http://www.reddit.com/r/Coinbase
[8] Brian Chesky told the story how Marc helped AirBnb during one of their worst crisis, on this video: http://www.youtube.com/watch?feature=player_detailpage&v=6yP...
Also, the CEO of Coinbase is on HN[4]. He is the top response to the other indignant thread[5], where he seems to be trying to fix this issue. Also note that you can easily find the CEO's email from his GitHub account[6]
I understand there are many people who are very angry at the whole situation (just look at the conversation on Reddit[7]). I can only imagine how many other cases he is facing. The timing on this whole thing is just awful (1 week after funding announced, BitCoin crashes), which makes the whole situation very very awful. And giving support on public forums with angry customers is super hard, particularly because you start encouraging more people to do it, which escalates the situation to impossible terms, which sucks your time, which could be used to helping all the customers, including all the ones who are not being loud on Hacker News / Twitter / Reddit (also note that it is almost 4 AM where these people live, and they are probably sleeping).
I honestly expect Coinbase to do the right thing[8], and that you'll get your money back (or your money's worth of BTC).
[1] https://news.ycombinator.com/item?id=4177605
[2] Marc Andressen is https://news.ycombinator.com/user?id=cdixon , Chris Dixon is https://news.ycombinator.com/user?id=cdixon and they both commentd on their investment announcement thread[3]. Ben Horowitz is https://news.ycombinator.com/threads?id=bhorowitz, but he has not ben very active here.
[3] https://news.ycombinator.com/item?id=6893658
[4] https://news.ycombinator.com/user?id=barmstrong
[5] https://news.ycombinator.com/item?id=6929705
[6] First response on Google for me: https://github.com/barmstrong, also the same username on HN: [email protected]
[7] http://www.reddit.com/r/Coinbase
[8] Brian Chesky told the story how Marc helped AirBnb during one of their worst crisis, on this video: http://www.youtube.com/watch?feature=player_detailpage&v=6yP...
Like Coinbase staff, you are making the same mistake in interpreting the situation. The outrage primarily stems from the utter lack of communication, and the recent volatility merely exposed the poor customer support. The underlying problem was there from the beginning, as noted in various forums and even in a front page post 271 days ago. (https://news.ycombinator.com/item?id=5427985)
The correct takeaway is that they should have been aware of the customer support issue months ago. They saw the issues (and another Coinbase representative "Fred" replied https://news.ycombinator.com/item?id=5428465) and failed to improve their processes. What makes you think this time is any different?
The correct takeaway is that they should have been aware of the customer support issue months ago. They saw the issues (and another Coinbase representative "Fred" replied https://news.ycombinator.com/item?id=5428465) and failed to improve their processes. What makes you think this time is any different?
Actually, Bitcoin crashing can only be an advantage to them since they lock the prices when the customer buys from them. As in, they just got an order for 20 btc at $1000 pr. btc, but, since it's crashed, they only have to pay $500 pr. btc and the customer still only gets them as if they still cost $1000. Effectively leaving them with a $500 profit pr. btc.
Perhaps, but then, if that's how they were managing, then they could go out of business on a strong move up.
I think it's more likely that they are using a combo of reserve bitcoins plus actually buying on the market at the time you place an order. This is why, on some heavy volume days, you will see the message that Coinbase itself (not just you as a user) has reached its buy limit for the day. They buy at the price they quote you, then wait for your funds to clear ACH to deposit the coin in your account.
So, another risk Coinbase has is when a customer buys (prompting Coinbase to buy), then the customer's funds don't settle via ACH. Coinbase is then stuck with the coin until they can fulfill someone else's order. This might be at a loss if BTC has moved down. In fact, if a user places an order and BTC moved sharply down, it is likely possible that the user could purposely liquidate the bank account so the ACH would fail. I am betting they have seen this.
They have been toying with Instant buys as well, but having to adjust their requirements. In the first iteration, I remembered wondering how they weren't losing their shirts, as it was designed pretty naively, as if everyone were honest. Sure enough, they changed their requirements.
In general, they take on more risk than their customers, but one thing I do fault them for is failing to communicate changes in requirements, etc. And, apparently, they do need more robust processes, automated auditing, etc. It is the most reliable place to buy that I have found, but it definitely has some of the Wild West feel of BTC itself.
I think it's more likely that they are using a combo of reserve bitcoins plus actually buying on the market at the time you place an order. This is why, on some heavy volume days, you will see the message that Coinbase itself (not just you as a user) has reached its buy limit for the day. They buy at the price they quote you, then wait for your funds to clear ACH to deposit the coin in your account.
So, another risk Coinbase has is when a customer buys (prompting Coinbase to buy), then the customer's funds don't settle via ACH. Coinbase is then stuck with the coin until they can fulfill someone else's order. This might be at a loss if BTC has moved down. In fact, if a user places an order and BTC moved sharply down, it is likely possible that the user could purposely liquidate the bank account so the ACH would fail. I am betting they have seen this.
They have been toying with Instant buys as well, but having to adjust their requirements. In the first iteration, I remembered wondering how they weren't losing their shirts, as it was designed pretty naively, as if everyone were honest. Sure enough, they changed their requirements.
In general, they take on more risk than their customers, but one thing I do fault them for is failing to communicate changes in requirements, etc. And, apparently, they do need more robust processes, automated auditing, etc. It is the most reliable place to buy that I have found, but it definitely has some of the Wild West feel of BTC itself.
> They buy at the price they quote you, then wait for your funds to clear ACH to deposit the coin in your account.
This is simply stupid, if true. There is no way any institution trading any type of instrument, asset, commodity, security etc should ever do this. And I doubt they do this.
> Coinbase has is when a customer buys (prompting Coinbase to buy), then the customer's funds don't settle via ACH. Coinbase is then stuck with the coin until they can fulfill someone else's order. This might be at a loss if BTC has moved down. In fact, if a user places an order and BTC moved sharply down, it is likely possible that the user could purposely liquidate the bank account so the ACH would fail. I am betting they have seen this.
Again this is based on the most likely false premise that they do buy the goods before the payment is cleared. This is simply insane.
If you're right about your bet that they have seen this, and if the do buy the BTC before payment clears that they get what they deserve. There can never be bonus points for anyone doing nonsensical things.
> they have been toying with Instant buys as well
What type of instant buys?
Instantly buying the BTC on an exchange once the payment is cleared using a market order by default unless the user specifies a max. buy rate (or a min sell rate)? This is the only way they should have been doing it.
Or is it instantly buying it when the customer shows intent to purchase before the ACH clear? This is just stupid.
> In general, they take on more risk than their customers
If this is true, they should get an award for the most ridiculous business practices of the year. Again I doubt this is true.
What we need to find out is, in case of a delay on large order where the price of BTC went up did they honor the original quoted rate or the current rate?
This is simply stupid, if true. There is no way any institution trading any type of instrument, asset, commodity, security etc should ever do this. And I doubt they do this.
> Coinbase has is when a customer buys (prompting Coinbase to buy), then the customer's funds don't settle via ACH. Coinbase is then stuck with the coin until they can fulfill someone else's order. This might be at a loss if BTC has moved down. In fact, if a user places an order and BTC moved sharply down, it is likely possible that the user could purposely liquidate the bank account so the ACH would fail. I am betting they have seen this.
Again this is based on the most likely false premise that they do buy the goods before the payment is cleared. This is simply insane.
If you're right about your bet that they have seen this, and if the do buy the BTC before payment clears that they get what they deserve. There can never be bonus points for anyone doing nonsensical things.
> they have been toying with Instant buys as well
What type of instant buys?
Instantly buying the BTC on an exchange once the payment is cleared using a market order by default unless the user specifies a max. buy rate (or a min sell rate)? This is the only way they should have been doing it.
Or is it instantly buying it when the customer shows intent to purchase before the ACH clear? This is just stupid.
> In general, they take on more risk than their customers
If this is true, they should get an award for the most ridiculous business practices of the year. Again I doubt this is true.
What we need to find out is, in case of a delay on large order where the price of BTC went up did they honor the original quoted rate or the current rate?
Buying when the customer orders, rather than when the ACH clears, does create a risk if the price plummets.
But buying only when the funds clear creates a risk when the price skyrockets. It makes it harder to ever please customers with an 'honored price' that's lower than when the BTC arrives.
Also, any whiff of a two-step process, where the customer reconfirms the buy-intent at funds-clearing, would put Coinbase closer to holding $USD balances for customers. That's something that I suspect, as a regulatory matter, they would rather not do. A single irrevocable 'buy' with delivery some time later (at either a locked-in or a floating price) is closer to the e-commerce transactional pattern they'd prefer. (Otherwise, they look more like a money-transfer/foreign-exchange/banking/daytrading outfit.)
Despite the last 2 weeks, BTC has had more total upswing than downswing – going over its history from $0 to $hundreds in value. So, buying early likely will have won more often than lost, for Coinbase and its customers.
Calling that approach 'simply stupid' and 'simply insane', without having considered the real risk and regulatory factors affecting their business is silly.
But buying only when the funds clear creates a risk when the price skyrockets. It makes it harder to ever please customers with an 'honored price' that's lower than when the BTC arrives.
Also, any whiff of a two-step process, where the customer reconfirms the buy-intent at funds-clearing, would put Coinbase closer to holding $USD balances for customers. That's something that I suspect, as a regulatory matter, they would rather not do. A single irrevocable 'buy' with delivery some time later (at either a locked-in or a floating price) is closer to the e-commerce transactional pattern they'd prefer. (Otherwise, they look more like a money-transfer/foreign-exchange/banking/daytrading outfit.)
Despite the last 2 weeks, BTC has had more total upswing than downswing – going over its history from $0 to $hundreds in value. So, buying early likely will have won more often than lost, for Coinbase and its customers.
Calling that approach 'simply stupid' and 'simply insane', without having considered the real risk and regulatory factors affecting their business is silly.
> Buying when the customer orders, rather than when the ACH clears, does create a risk if the price plummets.
It creates a risk either ways, it's just that different parties take ownership of the risk.
> But buying only when the funds clear creates a risk when the price skyrockets. It makes it harder to ever please customers with an 'honored price' that's lower than when the BTC arrives.
Actually you're complicating it more than necessary. There is no reason for coinbase to execute a market order as soon as the funds clear. They can simply let a customer make an informed decision, and decide if they want to buy at current market rate (market order) or using a limit order which will be executed internally if a customer tries to sell lower or will be filled on the exchange if the exchange reaches fills the order first.
This practice has existed for decades, whichever order is filled first simply cancels the other order.
This is also completely fair and very acceptable. Buying first waiting and waiting for the transfer to clear is not and will never be an good choice.
> Also, any whiff of a two-step process, where the customer reconfirms the buy-intent at funds-clearing, would put Coinbase closer to holding $USD balances for customers. That's something that I suspect, as a regulatory matter, they would rather not do. A single irrevocable 'buy' with delivery some time later (at either a locked-in or a floating price) is closer to the e-commerce transactional pattern they'd prefer.
I can see why this would be viewed as the only choice. Unfortunately as I have stated in another thread, when trouble from regulator begins they will get classified as akin to a financial institution anyways. When this happens they'll have more trouble due to the misrepresentation.
> Otherwise, they look more like a money-transfer/foreign-exchange/banking/daytrading outfit.
Again, I can see where you are coming from, but this doesn't mean the law will see them as anything but a money-transfer/banking/daytrading outfit as they fit the definition most of these in totality and a few (day trading) loosely. I left out foreign-exchange as this one is the only one they are safe from, until/unless BTC gets reclassified from a security(it meets SECs definition requirements) to a currency.
> Despite the last 2 weeks, BTC has had more total upswing than downswing – going over its history from $0 to $hundreds in value. So, buying early likely will have won more often than lost, for Coinbase and its customers.
On first glance this may seem like a likely observation, but it is unfortunately misguided (no offense intended). Unfortunately people give too much credence to the notion that past behavior dictates future movement and forget to compensate for lack of sample data and =/- effects of things such as spreads, volume, volatility etc.
If there is a single profound lesson I can impart about this topic it would be "buy low sell high" only works for short-selling, albeit in reverse order ("sell low buy lower") but for most traders, investors and speculators they should learn that the true lesson to remain profitable in any trade is to "buy high and sell higher". This is simply calculated using momentum previous x day momentum. Preferably between 10 to 20 days. You could use a higher number but it would be too late to enter or exit or a lower that would enter and exit too often.
I can talk endlessly on this topic and its importance in all entrepreneurial/business/trade endeavors, but I digress.
> Calling that approach 'simply stupid' and 'simply insane', without having considered the real risk and regulatory factors affecting their business is silly.
I agree with your prognosis, I do have a bias that I failed to consider. But unfortunately, if this was the only solution to avoid the paperwork, auditing and additional responsibilities that would come from acknowledging that the business practices are similar to those of a financial institution, they are unfortunately doing something pretty insane and simply stupid. There is no way this will not drive them to hurt themselves and their users.
Its just the fact that has been proven time and time again, if the US regulators decided you fit the definition of a financial institution even loosely then they will deem you and prosecute you on past transgressions accordingly.
In the eyes of regulators here "If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck", no exceptions considered.
It creates a risk either ways, it's just that different parties take ownership of the risk.
> But buying only when the funds clear creates a risk when the price skyrockets. It makes it harder to ever please customers with an 'honored price' that's lower than when the BTC arrives.
Actually you're complicating it more than necessary. There is no reason for coinbase to execute a market order as soon as the funds clear. They can simply let a customer make an informed decision, and decide if they want to buy at current market rate (market order) or using a limit order which will be executed internally if a customer tries to sell lower or will be filled on the exchange if the exchange reaches fills the order first.
This practice has existed for decades, whichever order is filled first simply cancels the other order.
This is also completely fair and very acceptable. Buying first waiting and waiting for the transfer to clear is not and will never be an good choice.
> Also, any whiff of a two-step process, where the customer reconfirms the buy-intent at funds-clearing, would put Coinbase closer to holding $USD balances for customers. That's something that I suspect, as a regulatory matter, they would rather not do. A single irrevocable 'buy' with delivery some time later (at either a locked-in or a floating price) is closer to the e-commerce transactional pattern they'd prefer.
I can see why this would be viewed as the only choice. Unfortunately as I have stated in another thread, when trouble from regulator begins they will get classified as akin to a financial institution anyways. When this happens they'll have more trouble due to the misrepresentation.
> Otherwise, they look more like a money-transfer/foreign-exchange/banking/daytrading outfit.
Again, I can see where you are coming from, but this doesn't mean the law will see them as anything but a money-transfer/banking/daytrading outfit as they fit the definition most of these in totality and a few (day trading) loosely. I left out foreign-exchange as this one is the only one they are safe from, until/unless BTC gets reclassified from a security(it meets SECs definition requirements) to a currency.
> Despite the last 2 weeks, BTC has had more total upswing than downswing – going over its history from $0 to $hundreds in value. So, buying early likely will have won more often than lost, for Coinbase and its customers.
On first glance this may seem like a likely observation, but it is unfortunately misguided (no offense intended). Unfortunately people give too much credence to the notion that past behavior dictates future movement and forget to compensate for lack of sample data and =/- effects of things such as spreads, volume, volatility etc.
If there is a single profound lesson I can impart about this topic it would be "buy low sell high" only works for short-selling, albeit in reverse order ("sell low buy lower") but for most traders, investors and speculators they should learn that the true lesson to remain profitable in any trade is to "buy high and sell higher". This is simply calculated using momentum previous x day momentum. Preferably between 10 to 20 days. You could use a higher number but it would be too late to enter or exit or a lower that would enter and exit too often.
I can talk endlessly on this topic and its importance in all entrepreneurial/business/trade endeavors, but I digress.
> Calling that approach 'simply stupid' and 'simply insane', without having considered the real risk and regulatory factors affecting their business is silly.
I agree with your prognosis, I do have a bias that I failed to consider. But unfortunately, if this was the only solution to avoid the paperwork, auditing and additional responsibilities that would come from acknowledging that the business practices are similar to those of a financial institution, they are unfortunately doing something pretty insane and simply stupid. There is no way this will not drive them to hurt themselves and their users.
Its just the fact that has been proven time and time again, if the US regulators decided you fit the definition of a financial institution even loosely then they will deem you and prosecute you on past transgressions accordingly.
In the eyes of regulators here "If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck", no exceptions considered.
Again, I don't know why you think you know better than Coinbase what they should or should not consider. I suppose I am a little biased against this kind of behavior. I run an online business and we occasionally have customers/others ranting about what we should or shouldn't do, as if they have any idea what goes on behind the scenes or what went into our decision-making.
I get your point and they may well have to face regulatory matters when regulation catches up with Bitcoin in general. But, for now, they seem to have some guidance as to how they need to structure their processes to sidestep current regulations and precedent. Anyone who has experience with legal issues knows that the law is often gray. So, to wade into such waters, firms must rely on precedent and their good sense to guide them. It is a calculated risk, wherein the word reasonable becomes important. Whether they should be classified as an MSB or financial institution will be a finding based on facts. They need to line up as many facts in their favor as possible and not keeping funds on deposit or allowing limit orders works in their favor. Likewise, the timing of the trades matters. If they buy and hold the commodity, then sell it immediately upon funds clearing, then it is substantively different from taking the buyer's funds first, then selling. The former is more akin to selling a commodity they own. The latter is brokering the transaction with the buyer's funds and is dangerously close to holding deposits (if only for a brief time). If you think there is no material difference, you're wrong. In fact, part of the difference is in what you've been demomizing them for: that is, the fact that Coinbase is taking on the risk in the former scenario.
So, I don't think you can make the statements you're making so definitively, nor do I think you should assume that you have thought this through more carefully than those who are running the company.
I get your point and they may well have to face regulatory matters when regulation catches up with Bitcoin in general. But, for now, they seem to have some guidance as to how they need to structure their processes to sidestep current regulations and precedent. Anyone who has experience with legal issues knows that the law is often gray. So, to wade into such waters, firms must rely on precedent and their good sense to guide them. It is a calculated risk, wherein the word reasonable becomes important. Whether they should be classified as an MSB or financial institution will be a finding based on facts. They need to line up as many facts in their favor as possible and not keeping funds on deposit or allowing limit orders works in their favor. Likewise, the timing of the trades matters. If they buy and hold the commodity, then sell it immediately upon funds clearing, then it is substantively different from taking the buyer's funds first, then selling. The former is more akin to selling a commodity they own. The latter is brokering the transaction with the buyer's funds and is dangerously close to holding deposits (if only for a brief time). If you think there is no material difference, you're wrong. In fact, part of the difference is in what you've been demomizing them for: that is, the fact that Coinbase is taking on the risk in the former scenario.
So, I don't think you can make the statements you're making so definitively, nor do I think you should assume that you have thought this through more carefully than those who are running the company.
Some point taken and agreed with to an extent. Would have edited some of my older comments to declare the biases but was to late to edit; mentioned them in two comments a couple of hours ago.
Bias declared in [0] and mistake acknowledged in [1].
[0] https://news.ycombinator.com/item?id=6937475 (noted under "edit:")
[1] https://news.ycombinator.com/item?id=6938355
edit:
quick note:
> I don't think you can make the statements you're making so definitively, nor do I think you should assume that you have thought this through more carefully than those who are running the company.
That statement is flawed under the same premise that the author is calling me out for, maybe to a greater extent. There is no way for the author to prove or disprove that I can or cannot make these statements due to the lack of experience, thought or knowledge within this domain.
Bias declared in [0] and mistake acknowledged in [1].
[0] https://news.ycombinator.com/item?id=6937475 (noted under "edit:")
[1] https://news.ycombinator.com/item?id=6938355
edit:
quick note:
> I don't think you can make the statements you're making so definitively, nor do I think you should assume that you have thought this through more carefully than those who are running the company.
That statement is flawed under the same premise that the author is calling me out for, maybe to a greater extent. There is no way for the author to prove or disprove that I can or cannot make these statements due to the lack of experience, thought or knowledge within this domain.
>That statement is flawed under the same premise that the author is calling me out for, maybe to a greater extent. There is no way for the author to prove or disprove that I can or cannot make these statements
Not really. My statements were not definitive declarations based on my opinions, nor were they refutations of demonstrable facts (ex. how Coinbase works). Yours were. Even if you have knowledge of the domain, it does not mean that you understand Coinbase's business better than they or are solely and eminently qualified to predict the future regulatory environment, etc.
BTW, in stating that I cannot "prove or disprove that you can make these statements", you are asking me to prove a negative. The onus is on you to show why you know better than Coinbase. So far, you have not done so.
Not really. My statements were not definitive declarations based on my opinions, nor were they refutations of demonstrable facts (ex. how Coinbase works). Yours were. Even if you have knowledge of the domain, it does not mean that you understand Coinbase's business better than they or are solely and eminently qualified to predict the future regulatory environment, etc.
BTW, in stating that I cannot "prove or disprove that you can make these statements", you are asking me to prove a negative. The onus is on you to show why you know better than Coinbase. So far, you have not done so.
>There is no way any institution trading any type of instrument, asset, commodity, security etc should ever do this. And I doubt they do this.
Your doubts don't make it any less true. Most such institutions allow you to deposit funds with them first so your purchases come from your deposits. Coinbase has opted not to allow deposits, reportedly to sidestep certain regulatory requirements. So, they use ACH. Coinbase is not an exchange or trading platform, BTW.
>Again this is based on the most likely false premise that they do buy the goods before the payment is cleared. This is simply insane.
Not sure how else you think they can allow buyers to lock in a price before the funds clear.
Think about it: if Coinbase is allowing the buyer to lock in the current market price, then using ACH to capture the buyer's money, then by definition there is risk to Coinbase, no matter how they work it out behind the scenes.
What they have tried to do is minimize their risk by verifying the customer's identity and having them link a bank account. For instant buys, they require a credit card as a backup method in the event that the ACH ultimately fails.
But, there is still risk to Coinbase, obviously.
Listen, anyone who hangs out a shingle on the Net is wide open for fraud, whether it's e-commerce, bitcoin trading, payment procesing, or otherwise. That's just part of the risk. Coinbase has calculated that it's an acceptable risk for now, which is partly mitigated by their verification process and daily buy limits. But, I would bet that part of this $25M raise will go to tackling the regulatory issues that will allow them to keep deposits on account.
>What we need to find out is, in case of a delay on large order where the price of BTC went up did they honor the original quoted rate or the current rate?
This is not a great mystery. The answer is yes. I am a customer and speak from experience. Your buy price is locked in, which can work for or against you.
You don't have any experience with Coinbase, but you're making these declarations about what they may or may not do, and acting as if we need you to dig into this great mystery to determine what's really going on.
It never ceases to amaze me how many universal experts hang out on this one lil' old site.
Your doubts don't make it any less true. Most such institutions allow you to deposit funds with them first so your purchases come from your deposits. Coinbase has opted not to allow deposits, reportedly to sidestep certain regulatory requirements. So, they use ACH. Coinbase is not an exchange or trading platform, BTW.
>Again this is based on the most likely false premise that they do buy the goods before the payment is cleared. This is simply insane.
Not sure how else you think they can allow buyers to lock in a price before the funds clear.
Think about it: if Coinbase is allowing the buyer to lock in the current market price, then using ACH to capture the buyer's money, then by definition there is risk to Coinbase, no matter how they work it out behind the scenes.
What they have tried to do is minimize their risk by verifying the customer's identity and having them link a bank account. For instant buys, they require a credit card as a backup method in the event that the ACH ultimately fails.
But, there is still risk to Coinbase, obviously.
Listen, anyone who hangs out a shingle on the Net is wide open for fraud, whether it's e-commerce, bitcoin trading, payment procesing, or otherwise. That's just part of the risk. Coinbase has calculated that it's an acceptable risk for now, which is partly mitigated by their verification process and daily buy limits. But, I would bet that part of this $25M raise will go to tackling the regulatory issues that will allow them to keep deposits on account.
>What we need to find out is, in case of a delay on large order where the price of BTC went up did they honor the original quoted rate or the current rate?
This is not a great mystery. The answer is yes. I am a customer and speak from experience. Your buy price is locked in, which can work for or against you.
You don't have any experience with Coinbase, but you're making these declarations about what they may or may not do, and acting as if we need you to dig into this great mystery to determine what's really going on.
It never ceases to amaze me how many universal experts hang out on this one lil' old site.
> This is not a great mystery. The answer is yes. I am a customer and speak from experience. Your buy price is locked in, which can work for or against you.
That question was not directed at if the buy rate is locked in, that is well established and not in dispute. Rather the question was specifically for the cases where "there is a delay", i.e. an unreasonable one like with the OP of this post and the previous post[0].
The problem is not how they conduct their market making(or selling a product by definition the definition you presented).
An unreasonable delay adds added risk of financial loss which is akin to, while not quite as dire as; if it was possible for someone to buy a pace-maker of Amazon, to be delivered overnight (up to two days) and it was not known to the buyer could not survive past 4 days without it and for some technical reason Amazon was unable to ship it for 5 days, would the law hold Amazon responsible for not living up to their end of the commitment and unintentionally causing the buyers demise.
Though stepping away form my overly extreme and unrealistic example, as an after thought my original question may have been nonsensical. "If coinbase does buy the goods before the price is locked and BTC rises, regardless of the situation there is no risk for coinbase or the customer."
The risks on these transactions would only occur in case of BTC dropping.
> You don't have any experience with Coinbase, but you're making these declarations about what they may or may not do, and acting as if we need you to dig into this great mystery to determine what's really going on.
You're right I have no experience with an unreasonable delay that could cause financial loss. But "any experience", how did you deduct that?
> It never ceases to amaze me how many universal experts hang out on this one lil' old site.
Right back at you :)
[0] https://news.ycombinator.com/item?id=6929705
That question was not directed at if the buy rate is locked in, that is well established and not in dispute. Rather the question was specifically for the cases where "there is a delay", i.e. an unreasonable one like with the OP of this post and the previous post[0].
The problem is not how they conduct their market making(or selling a product by definition the definition you presented).
An unreasonable delay adds added risk of financial loss which is akin to, while not quite as dire as; if it was possible for someone to buy a pace-maker of Amazon, to be delivered overnight (up to two days) and it was not known to the buyer could not survive past 4 days without it and for some technical reason Amazon was unable to ship it for 5 days, would the law hold Amazon responsible for not living up to their end of the commitment and unintentionally causing the buyers demise.
Though stepping away form my overly extreme and unrealistic example, as an after thought my original question may have been nonsensical. "If coinbase does buy the goods before the price is locked and BTC rises, regardless of the situation there is no risk for coinbase or the customer."
The risks on these transactions would only occur in case of BTC dropping.
> You don't have any experience with Coinbase, but you're making these declarations about what they may or may not do, and acting as if we need you to dig into this great mystery to determine what's really going on.
You're right I have no experience with an unreasonable delay that could cause financial loss. But "any experience", how did you deduct that?
> It never ceases to amaze me how many universal experts hang out on this one lil' old site.
Right back at you :)
[0] https://news.ycombinator.com/item?id=6929705
>Rather the question was specifically for the cases where "there is a delay"
It appears to be the case that Coinbase honors the price and, in fact, we know of at least one case wherein it goes beyond that. That is, they gave the buyer BTC at the new, lower price when the unreasonable delay would have otherwise meant a significant loss, had they enforced the higher price quoted at buy time. I believe that was posted somewhere on this thread.
>The risks on these transactions would only occur in case of BTC dropping.
But, that's a non-statement, right? I mean, the risk is involved because no one knows whether the price will go up or down at the time of the transaction. To say there is only risk if the price drops implies the benefit of hindsight. Perhaps you meant to say there is only a loss incurred if the price drops. I'm not being pedantic. The difference is significant. The former implies that there is a scenario under which there is no risk. But, in fact, there is always risk. It just may be that all works out fine (i.e. the price does not drop before fulfillment).
>But "any experience", how did you deduct that?
Perhaps I misunderstood your original question regarding the buying process at Coinbase. Initially I thought you were asking about the simple-case, which would imply that you had no experience as a buyer. You've clarified that you were inquiring about the unreasonable delay scenario, so I retract that.
>Right back at you
I'm sure we all have our moments. :)
It appears to be the case that Coinbase honors the price and, in fact, we know of at least one case wherein it goes beyond that. That is, they gave the buyer BTC at the new, lower price when the unreasonable delay would have otherwise meant a significant loss, had they enforced the higher price quoted at buy time. I believe that was posted somewhere on this thread.
>The risks on these transactions would only occur in case of BTC dropping.
But, that's a non-statement, right? I mean, the risk is involved because no one knows whether the price will go up or down at the time of the transaction. To say there is only risk if the price drops implies the benefit of hindsight. Perhaps you meant to say there is only a loss incurred if the price drops. I'm not being pedantic. The difference is significant. The former implies that there is a scenario under which there is no risk. But, in fact, there is always risk. It just may be that all works out fine (i.e. the price does not drop before fulfillment).
>But "any experience", how did you deduct that?
Perhaps I misunderstood your original question regarding the buying process at Coinbase. Initially I thought you were asking about the simple-case, which would imply that you had no experience as a buyer. You've clarified that you were inquiring about the unreasonable delay scenario, so I retract that.
>Right back at you
I'm sure we all have our moments. :)
I can't speak to what you might call a "large" order, but in the case of a delay selling 0.4 BTC, the price went up dramatically for me, and there was no recourse. I received $156 on the day the price hit it's high of $1242.
There is a screenshot of my transaction here: http://imgur.com/iY1btbr
I feel bad for you but worse for who ever bought these if it was internally matched(some would may also call it a dark pool)(also explained further below why this was not on an exchange), here's why:
Whoever was internally matched got a benefit(alleged profit) of $339.93 on their partial fill; assuming they would have sold it immediately at the high for 216.69% ROI and let not even go into the annual compounded growth rate.
Though either ways if I were the other party I would have still asked for a reversal. And here's why:
Such error's can easily happen in the reverse order (like in your case) and most often happen on a larger transaction AND if I did not complain about the beneficial trade I would lose a great amount of credibility in court or arbitration for the wrongdoing.
Also Coinbase would be well within their rights to reverse the transaction if they followed due process.
But, I have serious doubt about all CoinBase practices since yesterday (when I first saw this error), and here's why:
1. Even if I was not adept or did not have experience at reading the tape (time and sales) etc, it would be very easy for me or anyone to very if a transaction occurred on any BTC exchange at around this price level as the data is freely available, also all web based charts available for this would have developed an enormous tail. Which implies just one legitimate reason, that is Internal Matching.[0]
2. Fortunately internal matching works differently than open exchanges that have a bid/ask spread which can get quite wide on BTC due to thin volumes, but remains in a 1% range for good measure lets call this a +/- 10% spread, so on this day if volumes were thin someone could have bought BTC at $1242 * 1.1 => $1366.2 or could have sold it for $1242 * 0.9 => $1117.8.
But like I said fortunately internal matching would work differently. Much like a normal exchange it would work on a first in first out basis (FIFO) so if there is one or more buyer at X price and someone decides to sell the first order would be filled. Usually X would be the current market rate +/- an acceptable slippage which is lower than the open market let call this 5%, though it should be no more that 1%). So the worst internal match would be $1242 * 1.15 for buying or $1242 * 0.85 for selling. If this pricing condition is not met coinbase themselves could be the seller(thus become an internal market maker) or the would route the order to an open exchange.
There is a near-zero possibility of the fill happening at 68.074% lower than the market rate. The only way this could have happened is if once the order was sent to the market in the form of a market order and there was zero bidders between the ask and < $396.52(since I assume the rate includes a fees).
But if it was not internally matched and did not get executed on any exchange the only somewhat legal possibility remaining is an intentional technical/code error the only other options remaining is (hint: completely unethical and/or illegal) them not doing an exchange at all aka. market making at +/- 60%+.
3. Unfortunately if this is a technical error, it most definitely must have happened to other customers too, if it did on a partial fill the sell price would be an average, hence most users would never see it and there (CBs) books would get cleared during the end-of-day reconciliation.
I will leave the speculation as to other reasons here. No reason to allege any deliberate wrong doing beyond their lack of understanding about auditing financial transactions.
Though did you get your trade reversed?
edit: bias correction (explained below)
I am big supporter and bigger moralizer with all things relating to the business practices and moral obligations of companies when dealing with the small guys. The critic in me can draw and deduct conclusions that may skip considering situations which while possible have a very very low probability of happening. But as Murphy would say, "Anything that can go wrong, will go wrong". So acknowledging murphy's law its my moralizing responsibility to moralize myself and declare the point below [0]. [1] is further moralizing by me, old habits and all that.
[0] There is a remote(but worth mentioning) possibility that as I cannot truly check all exchanges where BTC is traded and cannot identify the exchange through where coinbase executes their trades there is a possibility, however remote that CoinBase could have used an obscure exchange for this transaction that had spreads as wide as +/- 68%. In that case it can/may nullify completely any observations and opinions I shared above, thus rendering my opinions incorrect, in which case I apologize.
[1]Though I would request if this is the case that CoinBase/Brian make it clear in their TOS that this is the case, so that users can make an informed decision with the knowledge that they can potentially lose value due to these extreme situations. Of course you would likely not need to legally disclose this so, not disclosing it is also fair.
Whoever was internally matched got a benefit(alleged profit) of $339.93 on their partial fill; assuming they would have sold it immediately at the high for 216.69% ROI and let not even go into the annual compounded growth rate.
Though either ways if I were the other party I would have still asked for a reversal. And here's why:
Such error's can easily happen in the reverse order (like in your case) and most often happen on a larger transaction AND if I did not complain about the beneficial trade I would lose a great amount of credibility in court or arbitration for the wrongdoing.
Also Coinbase would be well within their rights to reverse the transaction if they followed due process.
But, I have serious doubt about all CoinBase practices since yesterday (when I first saw this error), and here's why:
1. Even if I was not adept or did not have experience at reading the tape (time and sales) etc, it would be very easy for me or anyone to very if a transaction occurred on any BTC exchange at around this price level as the data is freely available, also all web based charts available for this would have developed an enormous tail. Which implies just one legitimate reason, that is Internal Matching.[0]
2. Fortunately internal matching works differently than open exchanges that have a bid/ask spread which can get quite wide on BTC due to thin volumes, but remains in a 1% range for good measure lets call this a +/- 10% spread, so on this day if volumes were thin someone could have bought BTC at $1242 * 1.1 => $1366.2 or could have sold it for $1242 * 0.9 => $1117.8.
But like I said fortunately internal matching would work differently. Much like a normal exchange it would work on a first in first out basis (FIFO) so if there is one or more buyer at X price and someone decides to sell the first order would be filled. Usually X would be the current market rate +/- an acceptable slippage which is lower than the open market let call this 5%, though it should be no more that 1%). So the worst internal match would be $1242 * 1.15 for buying or $1242 * 0.85 for selling. If this pricing condition is not met coinbase themselves could be the seller(thus become an internal market maker) or the would route the order to an open exchange.
There is a near-zero possibility of the fill happening at 68.074% lower than the market rate. The only way this could have happened is if once the order was sent to the market in the form of a market order and there was zero bidders between the ask and < $396.52(since I assume the rate includes a fees).
But if it was not internally matched and did not get executed on any exchange the only somewhat legal possibility remaining is an intentional technical/code error the only other options remaining is (hint: completely unethical and/or illegal) them not doing an exchange at all aka. market making at +/- 60%+.
3. Unfortunately if this is a technical error, it most definitely must have happened to other customers too, if it did on a partial fill the sell price would be an average, hence most users would never see it and there (CBs) books would get cleared during the end-of-day reconciliation.
I will leave the speculation as to other reasons here. No reason to allege any deliberate wrong doing beyond their lack of understanding about auditing financial transactions.
Though did you get your trade reversed?
edit: bias correction (explained below)
I am big supporter and bigger moralizer with all things relating to the business practices and moral obligations of companies when dealing with the small guys. The critic in me can draw and deduct conclusions that may skip considering situations which while possible have a very very low probability of happening. But as Murphy would say, "Anything that can go wrong, will go wrong". So acknowledging murphy's law its my moralizing responsibility to moralize myself and declare the point below [0]. [1] is further moralizing by me, old habits and all that.
[0] There is a remote(but worth mentioning) possibility that as I cannot truly check all exchanges where BTC is traded and cannot identify the exchange through where coinbase executes their trades there is a possibility, however remote that CoinBase could have used an obscure exchange for this transaction that had spreads as wide as +/- 68%. In that case it can/may nullify completely any observations and opinions I shared above, thus rendering my opinions incorrect, in which case I apologize.
[1]Though I would request if this is the case that CoinBase/Brian make it clear in their TOS that this is the case, so that users can make an informed decision with the knowledge that they can potentially lose value due to these extreme situations. Of course you would likely not need to legally disclose this so, not disclosing it is also fair.
No. The funds were supposed to be transferred by Nov 15. On Nov 22 I asked them to cancel the transaction because I had not been paid. On the 27th I got a form email asking me to reply if I still had a problem, and I re-iterated that I wanted the transaction reversed for non-payment.
I might add, that between the time that I tried to sell and the time that I got paid, They charged me for an automatic buy order that I forgot to cancel... at $823.09/BTC
I don't know the internal mechanisms of how they operate, but I think they have acted despicably. The more deeply I look, the more amateurish everything connected with them becomes.
I might add, that between the time that I tried to sell and the time that I got paid, They charged me for an automatic buy order that I forgot to cancel... at $823.09/BTC
I don't know the internal mechanisms of how they operate, but I think they have acted despicably. The more deeply I look, the more amateurish everything connected with them becomes.
My previous comment was wrong[0]. I will not edit it out due to my sheer oversight to understand the current situation and to take ownership. Also I checked I'm too late edit it and leave a note about my mistake. I'd also like to apologize for CoinBase for the excessive microscopic biased scrutiny.
Unfortunately it seems like I misunderstood your earlier message. A delay in simply transferring the fund doesn't open them up for the scrutiny and criticism I demonstrated in the previous post.
If the delay in sending the wire transfer was caused due to a non-regulatory delay such as human/tech error they are at fault for the delay in the wire and at worst may by their own accord make a gesture of goodwill but are not required to, a complaint against them would result a tap on the wrist at worst and of course loss of your goodwill.
Cancelling an already executed transaction would not be considered fair.
Of course if the wire transfer was not yet initiated they could have cancelled it.
> They charged me for an automatic buy order that I forgot to cancel... at $823.09/BTC
This is one of the reasons I am against their alleged model of buying BTC before a wire transfer clears. If it was an error (not saying it was not) and you informed them in a timely manner and they did not act in a timely manner (which seems to be a trend) you don't have to pay and they are stuck with the losses if BTC went down, on the flip-side if you did not notice your error and/or report it on time, you are stuck with the losses and/or liability (hello collection agencies!).
[0] https://news.ycombinator.com/item?id=6937475
Unfortunately it seems like I misunderstood your earlier message. A delay in simply transferring the fund doesn't open them up for the scrutiny and criticism I demonstrated in the previous post.
If the delay in sending the wire transfer was caused due to a non-regulatory delay such as human/tech error they are at fault for the delay in the wire and at worst may by their own accord make a gesture of goodwill but are not required to, a complaint against them would result a tap on the wrist at worst and of course loss of your goodwill.
Cancelling an already executed transaction would not be considered fair.
Of course if the wire transfer was not yet initiated they could have cancelled it.
> They charged me for an automatic buy order that I forgot to cancel... at $823.09/BTC
This is one of the reasons I am against their alleged model of buying BTC before a wire transfer clears. If it was an error (not saying it was not) and you informed them in a timely manner and they did not act in a timely manner (which seems to be a trend) you don't have to pay and they are stuck with the losses if BTC went down, on the flip-side if you did not notice your error and/or report it on time, you are stuck with the losses and/or liability (hello collection agencies!).
[0] https://news.ycombinator.com/item?id=6937475
It may be a short-term advantage, but it will leave them with lots and lots of disgruntled customers which is terrible in the long run if you try to start a business.
IMO all of this just goes to show that the BTC ecosystem is not yet mature enough and that you should only play with amounts that are not meaningful to you when lost.
IMO all of this just goes to show that the BTC ecosystem is not yet mature enough and that you should only play with amounts that are not meaningful to you when lost.
Actually, not really. Correct me if I'm wrong in the assumptions I make on Coinbases' process (I only gathered from comments since I'm not US based and therefore can't use it).
If a buyer buys the 8th, they then lock the price to what it is the 8th. They first deliver the bitcoins after they have received payment, which takes a couple of days (or is ACH instant?).
They will have received the payment on the 13th, given them a 5 day window (or how ever many days it takes for the transfer) for bitcoins to drop in price.
They then buy the bitcoins (which can be done almost instantly when you're on an exchange with funds) and send them to the user.
See, they first buy the bitcoins when they have the payment. If the bitcoins drop in price, they benefit from the locked price, and the customer gets his bitcoins as promised.
SO! no disgruntled customers, and, they aren't doing anything shady. They simply benefit from the time delay in paymet. This of course only works in their favor when btc drops, not when it rises.
If a buyer buys the 8th, they then lock the price to what it is the 8th. They first deliver the bitcoins after they have received payment, which takes a couple of days (or is ACH instant?).
They will have received the payment on the 13th, given them a 5 day window (or how ever many days it takes for the transfer) for bitcoins to drop in price.
They then buy the bitcoins (which can be done almost instantly when you're on an exchange with funds) and send them to the user.
See, they first buy the bitcoins when they have the payment. If the bitcoins drop in price, they benefit from the locked price, and the customer gets his bitcoins as promised.
SO! no disgruntled customers, and, they aren't doing anything shady. They simply benefit from the time delay in paymet. This of course only works in their favor when btc drops, not when it rises.
The question however, is what if they are inconsistent in their approach?
If Coinbase refunds in terms of USD whenever the market falls, and buys BTC whenever the market rises, then Coinbase is going to make a ton of money in any form of market volatility... and the customer is the one screwed in both cases.
The question we have for Coinbase is: can we trust their policies to be consistent?
If Coinbase refunds in terms of USD whenever the market falls, and buys BTC whenever the market rises, then Coinbase is going to make a ton of money in any form of market volatility... and the customer is the one screwed in both cases.
The question we have for Coinbase is: can we trust their policies to be consistent?
I am aware of everything u said.
Coinbase is dealing with real money here. Just on HN today, 30k USD have been locked up. Assuming 50 customers suffer from the same problem and same amount, they locked up 1.5 million USD. Bitcoin's has dropped its value from 1200 to 600 in 2 weeks. Assuming that trend continues, Bitcoin can potentially wipe out half of their customer's money. I know that is just a hypothetical but this is a real possibility.
You cannot excuse yourself for poor customer service just because you are a 'startup'.
Coinbase is dealing with real money here. Just on HN today, 30k USD have been locked up. Assuming 50 customers suffer from the same problem and same amount, they locked up 1.5 million USD. Bitcoin's has dropped its value from 1200 to 600 in 2 weeks. Assuming that trend continues, Bitcoin can potentially wipe out half of their customer's money. I know that is just a hypothetical but this is a real possibility.
You cannot excuse yourself for poor customer service just because you are a 'startup'.
I agree. That said, all these people using HN as a soap box is probably not ideal either.
The front page of HN is becoming YC BBB. It's where unhappy customers go to complain about poor service with hopes of bringing attention to their issue via votes. It's pretty scary to think what these bitcoin buyers would do if they didn't have HN.
Have you quit Google? Because sometimes it takes an HN thread, a post by a famous blogger, or even a blurb in the NYTimes before Google addresses festering customer service issues.
[deleted]
Apparently multiple public outcries.
The same class of problems (questions regarding account balance, money taken out but BTC missing, support went dark) happened earlier this year and there was another front page conversation: https://news.ycombinator.com/item?id=5427985
Sadly, it seems that the key takeaway (the importance of customer support) was lost upon the Coinbase staff. Based on the last response, its clear that they have not learned their lesson.
I recommend pulling all money and BTC out of Coinbase before the next crisis. And I say "next crisis" because there is no indication that steps were taken to rectify the underlying issues here. For example, as speculated in both threads, do they need to move off of MongoDB?
Sadly, it seems that the key takeaway (the importance of customer support) was lost upon the Coinbase staff. Based on the last response, its clear that they have not learned their lesson.
I recommend pulling all money and BTC out of Coinbase before the next crisis. And I say "next crisis" because there is no indication that steps were taken to rectify the underlying issues here. For example, as speculated in both threads, do they need to move off of MongoDB?
Using MongoDB to process payments is a double facepalm fail.
I'm not an expert, but it seems risky to trust MongoDB for that. Isn't it the wrong tool for that space?
MongoDB commits are asynchronous and fail silently by default. This is in opposition to ordinary SQL databases, which are synchronous and fail noisely by default.
You can enable that behavior for MongoDB, but then you're just getting ordinary SQL-style behavior, so why were you using MongoDB in the first place?
You can enable that behavior for MongoDB, but then you're just getting ordinary SQL-style behavior, so why were you using MongoDB in the first place?
You mean "ACID transactions" and not SQL databases. Some NoSQL databases, such as HyperDex, provide ACID transactions.
Well then, third post in week or so, I see HN has become the official support system for Coinbase ...
An interesting pivot, for sure.
Yeah. While it sucks that HN has been commandeered for coinbase support issues, at the same multiple people seem to have lost 10k+, and if this is what it takes for them to get their funds back I fully support their posts.
But damn, wouldn't it be nice if coinbase did some kind of simple error checking to see if transactions are being handled properly? This is a downstream simple check - does the monetary transaction correspond with a similarly sized bitcoin transaction, and do the bitcoin transactions add up to the reported balance?
I opened a coinbase account a week ago but haven't used it yet. I'm glad I didn't!
But damn, wouldn't it be nice if coinbase did some kind of simple error checking to see if transactions are being handled properly? This is a downstream simple check - does the monetary transaction correspond with a similarly sized bitcoin transaction, and do the bitcoin transactions add up to the reported balance?
I opened a coinbase account a week ago but haven't used it yet. I'm glad I didn't!
[deleted]
Does anyone else get the creepy feeling that this is mgrunin posting to stroke his own ego?
"That guy must have been one of our extremely high volume VIP users or something in order for something like that to have happened."
That just does not sound right. And it's not the first time he's tried a sockpuppet account [1].
[1] https://news.ycombinator.com/item?id=6930297
"That guy must have been one of our extremely high volume VIP users or something in order for something like that to have happened."
That just does not sound right. And it's not the first time he's tried a sockpuppet account [1].
[1] https://news.ycombinator.com/item?id=6930297
Hah - good guess, but incorrect. Coinbase reached out to me this morning from this post. They've reconciled a transaction for 10 bitcoins, but there's 2 bitcoins from an old transaction that are still "missing" despite it being marked as completed, more than a week old and the withdrawal cleared from my bank.
I don't really understand why I've been hearing the whole "sockpuppet" issue ever since my thread. What exactly do people think I am doing? Creating shill accounts? What is my purpose in doing so. I already had my matter solved in my thread successfully. This is my fist and only account YC.
[deleted]
"I'm not sure how that guy got the CEO of the company to intercede on his behalf"
Well, he did so by raising a public fuss about it, that much seems obvious. The OP of this thread seems (quite reasonably) to be attempting to achieve the same outcome by the same method.
Taking this OP’s claims at face value, it seems like the support person quoted was trying to be helpful (or at least empathetic). Unfortunately, on a basic customer-service level, the response fails spectacularly.
I fail to believe that a company such as coinbase would neglect to have some mechanism where staffers can escalate support tickets (as is apparently being claimed). Jeez, it doesn’t even have to go directly to the CEO skipping all intermediate steps: just bump it up the chain!
That CEO intervention should be necessary to achieve basic customer satisfaction is crazy to begin with. Either empower the hierarchy to solve problems, or give them access to someone who can.
OP did you try emailing [email protected] directly? (I’m not revealing any information here that a quick googling doesn’t).
Well, he did so by raising a public fuss about it, that much seems obvious. The OP of this thread seems (quite reasonably) to be attempting to achieve the same outcome by the same method.
Taking this OP’s claims at face value, it seems like the support person quoted was trying to be helpful (or at least empathetic). Unfortunately, on a basic customer-service level, the response fails spectacularly.
I fail to believe that a company such as coinbase would neglect to have some mechanism where staffers can escalate support tickets (as is apparently being claimed). Jeez, it doesn’t even have to go directly to the CEO skipping all intermediate steps: just bump it up the chain!
That CEO intervention should be necessary to achieve basic customer satisfaction is crazy to begin with. Either empower the hierarchy to solve problems, or give them access to someone who can.
OP did you try emailing [email protected] directly? (I’m not revealing any information here that a quick googling doesn’t).
Thanks for this message. I didn't email Brian directly. Rees from Coinbase reached out to me. He's fixed one of my problems and I'm waiting on the second to be resolved.
Just a fun anecdote to throw in:
I never bought through Coinbase, but I did sell some coins there recently for like $7k. They deposited the $7k in my bank account twice, and then a few days later took the extra $7k back.
So although ultimately it all worked out fine, they do seem to be ridiculously reckless in their dealings with thousands of dollars. I can't imagine my bank doing something like that. Made me very wary of dealing with Coinbase in the future.
I never bought through Coinbase, but I did sell some coins there recently for like $7k. They deposited the $7k in my bank account twice, and then a few days later took the extra $7k back.
So although ultimately it all worked out fine, they do seem to be ridiculously reckless in their dealings with thousands of dollars. I can't imagine my bank doing something like that. Made me very wary of dealing with Coinbase in the future.
Same thing happened to me. I sold $35k of coins a few weeks ago. Coinbase did 2 ACH transfers by accident to my bank, a few days apart. They reverted the 2nd one 4-5 days later.
> I never bought through Coinbase, but I did sell some coins there recently for like $7k. They deposited the $7k in my bank account twice, and then a few days later took the extra $7k back.
Me too.
Me too.
Are you sure that's the case, or could it have been ACH or reporting weirdness?
I guess it could be reporting weirdness? Never seen anything like it before, though, and I've made withdrawals and deposits to my account from many different sources.
One $7k deposit soon after I made my sale. Another distinct $7k deposit a couple days later, reflected in my account balance which was now up $14k. And then a $7k withdrawal a few days after that. Both deposits and the withdrawal still show up in my transaction history.
One $7k deposit soon after I made my sale. Another distinct $7k deposit a couple days later, reflected in my account balance which was now up $14k. And then a $7k withdrawal a few days after that. Both deposits and the withdrawal still show up in my transaction history.
It happened to me recently, but it was my paycheck. Googling around, it seems to be something that happens with ACH transactions somewhat rarely, but it does seem to happen.
"I don't have the ability to forward this to the CEO"?
Fix that even before fixing the reconciliations...
Fix that even before fixing the reconciliations...
Seems safe to say that the customer support person could have surely emailed the CEO if they really wanted to, according to [1] they have a total of 8 employees as of thier recent funding last week. Also, a 2-second google search shows that it is [email protected]
[1] http://www.vcpost.com/articles/19649/20131212/bitcoin-focuse...
[1] http://www.vcpost.com/articles/19649/20131212/bitcoin-focuse...
It just lends more credibility to the "this is just a mgrunin sockpuppet" hypothesis elsewhere in this thread. No way in an 8 person company, you "don't have the ability" to talk to one of them.
I'm guessing it's someone just spreading FUD, for whatever reason. I don't know that it's mgrunin, but they probably just imagined the company being some monolith that is actually quite small.
That's also an incredibly unprofessional response that completely throws their company under the bus, which I have a hard time believing anyone who isn't a complete moron would do. Seems quite convenient that it fits the poster's narrative perfectly.
--
Edit: after doing a bit more digging, mcgrunin has been very respectful toward the CEO of coinbase after his mishap. So let's not go libeling people needlessly.
https://news.ycombinator.com/item?id=6933058
The rest of his comment history is the same.
That's also an incredibly unprofessional response that completely throws their company under the bus, which I have a hard time believing anyone who isn't a complete moron would do. Seems quite convenient that it fits the poster's narrative perfectly.
--
Edit: after doing a bit more digging, mcgrunin has been very respectful toward the CEO of coinbase after his mishap. So let's not go libeling people needlessly.
https://news.ycombinator.com/item?id=6933058
The rest of his comment history is the same.
Surprisingly this is word for word the response I got from customer support. Rees from Coinbase reached out to me after this post and they've resolved 1 of the 2 transaction problems. I'm still missing bitcoins.
They will get you the bitcoins (I got mine yesterday afternoon after a promised Friday delivery) the question will be at what price they give them to you.
What are you guys talking about. This is my first and only YC account that I created yesterday. What is my reasoning behind creating a shill account? If you read my responses in my own thread, you'll see that I thanked Brian for resolving the issues the proper way.
Mgrunin, don't take some of these comments too seriously. I know it's really frustrating to read comments that jump to absurd conclusions about yourself without having done any research. Especially when they're firing at someone they don't know. Not all of us on HN are like this though.
I think the comment by `seobeaver` on the other thread is what threw off a lot of people because it seemed like a needless hero-worship (of sorts). And you explained in the other thread that possibly that user came from one of the forums that you frequent that you posted a link to this discussion on.
I think the comment by `seobeaver` on the other thread is what threw off a lot of people because it seemed like a needless hero-worship (of sorts). And you explained in the other thread that possibly that user came from one of the forums that you frequent that you posted a link to this discussion on.
I appreciate your comment. I just wanted to clear the air and put an end to that assumption. I know there are a few members here that are annoyed that I utilized HN as a means to my end, but it was my last option before contacting lawyers.
I am happy that Brian was able to resolve my case, but it is frustrating to see others dealing with similar issues here.
I am happy that Brian was able to resolve my case, but it is frustrating to see others dealing with similar issues here.
This is precisely why I was shocked at this response. Half of my transactional issues have now been resolved with Coinbase, now waiting on the second transaction.
Why are people even posting on HN? The easy answer is do an ACH chargeback and be done with it. Do it quickly as well since the price has plummeted. Don't even bother with contacting customer support.
It serves the useful function of alerting the community of early adopters that coinbase is (probably) not (yet) ready to be trusted to competently handle one's cash. Also, YC is a backer of coinbase so there's a high likelihood that someone from coinbase will see the post here if it's on the front page long enough.
Don't do a chargeback because the price plummeted, you chose to invest in a volatile asset class, and that's all on you, under different circumstances it could be construed as fraud.
But DO the charge back in this case as it is CoinBase's fault, they failed to deliver. This delay clears the path to one simple understanding, these guys don't know what they are doing and have no understanding of the laws they are governed by.
I had written a few posts explaining this on the other thread, that could be referred to:
[0] https://news.ycombinator.com/item?id=6931647
[1] https://news.ycombinator.com/item?id=6930863
[2] https://news.ycombinator.com/item?id=6930591
[3] https://news.ycombinator.com/item?id=6930100
[4] https://news.ycombinator.com/item?id=6930065
edit: grammar
But DO the charge back in this case as it is CoinBase's fault, they failed to deliver. This delay clears the path to one simple understanding, these guys don't know what they are doing and have no understanding of the laws they are governed by.
I had written a few posts explaining this on the other thread, that could be referred to:
[0] https://news.ycombinator.com/item?id=6931647
[1] https://news.ycombinator.com/item?id=6930863
[2] https://news.ycombinator.com/item?id=6930591
[3] https://news.ycombinator.com/item?id=6930100
[4] https://news.ycombinator.com/item?id=6930065
edit: grammar
Could Coinbase be arbitraged this way? Just running ACH chargebacks every time the Bitcoin price falls before fulfillment?
Surely there are repercussions for issuing chargebacks for non-legitimate reasons?
I imagine Coinbase would just cancel your account pretty quickly.
I imagine Coinbase would just cancel your account pretty quickly.
That would be fraud. I'm sure there are plenty of ways to make money if you're willing to commit fraud.
I'm not sure if it is fraud or not. Maybe an attorney can comment, but here is how I look at it:
Fraud:
(1) a false statement of a material fact,
(2) knowledge on the part of the defendant that the statement is untrue,
(3) intent on the part of the defendant to deceive the alleged victim,
(4) justifiable reliance by the alleged victim on the statement, and
(5) injury to the alleged victim as a result.
The attempt at buying coins on coinbase while selling coins outside of coinbase, then if the coin price falls… If Coinbase doesn’t deliver the coins according to their TOS and you say to the bank that you want to do an ACH chargeback due to them not delivering, it doesn’t fit the definition of fraud in multiple ways:
The statement you would make to the bank would be: “Coinbase did not deliver the coins based on their TOS so I request my money to be sent back to me via ACH chargeback and if they do send the coins, I will send them back to Coinbase”
1) it isn’t a false statement
2) doesn’t apply since it isn’t a false statement
3) not deceiving anyone
4) they are relying on it, but it isn’t false
5) no one is injured since Coinbase waited to fulfill the transaction, they can just resell the coins at the current market price, assuming they are able to actually sell coins.
Fraud:
(1) a false statement of a material fact,
(2) knowledge on the part of the defendant that the statement is untrue,
(3) intent on the part of the defendant to deceive the alleged victim,
(4) justifiable reliance by the alleged victim on the statement, and
(5) injury to the alleged victim as a result.
The attempt at buying coins on coinbase while selling coins outside of coinbase, then if the coin price falls… If Coinbase doesn’t deliver the coins according to their TOS and you say to the bank that you want to do an ACH chargeback due to them not delivering, it doesn’t fit the definition of fraud in multiple ways:
The statement you would make to the bank would be: “Coinbase did not deliver the coins based on their TOS so I request my money to be sent back to me via ACH chargeback and if they do send the coins, I will send them back to Coinbase”
1) it isn’t a false statement
2) doesn’t apply since it isn’t a false statement
3) not deceiving anyone
4) they are relying on it, but it isn’t false
5) no one is injured since Coinbase waited to fulfill the transaction, they can just resell the coins at the current market price, assuming they are able to actually sell coins.
You and eterm are talking past each other. Eterm is talking about the situation where Coinbase fulfills their end of the bargain and gets you the coins you bought, but you chargeback anyway.
If you only consider the chargeback in the case that they honestly failed to live up to the terms of service, then I will agree that it doesn't sound like fraud. It's still kind of slimy, though.
If you only consider the chargeback in the case that they honestly failed to live up to the terms of service, then I will agree that it doesn't sound like fraud. It's still kind of slimy, though.
It's both fraud, and unethical.
It may be unethical, I don't make that judgement, but it definitely doesn't match the legal definition of fraud.
It makes you wonder if this is why these customers didn't get their bitcoins, someone else charged back their transaction; concommitant risk?
I don't think chargebacks can go to a different account.
Hi, <name> from Coinbase here. Sorry for the delay on that - definitely not the customer experience we are striving for.
<some phone shit right here>
Edit: <we actually did our job and made it work. we also gave you 0.01% on top!>
<some phone shit right here>
Edit: <we actually did our job and made it work. we also gave you 0.01% on top!>
The problem what I have is 'fairness' (not just Coinbase, mostly all companies with customer service).
OP tried to solve it without making a fuss, without causing trouble for CoinBase but they couldn't help him and they didn't want to help him. Now he is creating negative press (exactly what you don't want) and see the response from last night. CEO probably comes in and saves the day.
The problem is that the people who 'behave' will get shafted, and those who seek 'social media' will get a prompt resolution.
That is a disappointing trend that with Twitter/Facebook only became worse (before those it was mostly threatening with consumer advocate programs on TV). Try it yourself, send an e-mail and a tweet to a company. E-mail gets a reply within 48h, twitter within 1h. Companies are creating their own monster this way....
OP tried to solve it without making a fuss, without causing trouble for CoinBase but they couldn't help him and they didn't want to help him. Now he is creating negative press (exactly what you don't want) and see the response from last night. CEO probably comes in and saves the day.
The problem is that the people who 'behave' will get shafted, and those who seek 'social media' will get a prompt resolution.
That is a disappointing trend that with Twitter/Facebook only became worse (before those it was mostly threatening with consumer advocate programs on TV). Try it yourself, send an e-mail and a tweet to a company. E-mail gets a reply within 48h, twitter within 1h. Companies are creating their own monster this way....
Assuming this post is legitimate, what kind of organization of that size (an article published today indicates that there are 8 employees!) has a hierarchy and culture where if an individual working in a customer support role sees something wrong they have no way of communicating with the CEO?
Scary, if true.
Scary, if true.
I don't know how else to prove this is legitimate. Not that I feel I have to.
Rees from Coinbase reached out to me this morning and we've resolved one of the two issues. I'm still missing bitcoins from my account and will update this when it's resolved.
Rees from Coinbase reached out to me this morning and we've resolved one of the two issues. I'm still missing bitcoins from my account and will update this when it's resolved.
Just to clarify what the problem is now. Coinbase reconciled my purchase of 10 bitcoins by giving them to be at todays market price. I'm still missing 2 bitcoins from an old purchase that says it's been cleared.
This is exactly why I'm not buying bitcoins in the current dip. Counterparty risk on the exchanges.
http://fc13.ifca.ai/proc/1-2.pdf
http://fc13.ifca.ai/proc/1-2.pdf
UPDATE: I've been in touch with Coinbase support and they've corrected the larger of the two transactions in question. I'm still waiting on the second transaction to be fixed. I'm still missing some bitcoins from transactions that are well beyond complete (more than a week old, ACH withdrawal completed and marked as complete in coinbase).
Ever wonder why there are not 100 different exchanges out there providing services to the equities/options/bond markets??? Simple, it's fairly costly and complicated to 1) meet regulatory requirements, 2) achieve a level of liquidity/transaction volume to make the exchange viable, and 3) take business away from the incumbents...
moreover, as soon as you attach the word 'exchange' to your service you immediately set an expectation in the consumers mind that you will provide a similar level of service/liquidity as that which they would receive if they were working with a real exchange operator.
coinbase currently lists a team which has zero experience in the exchange operations world. the closest they come is a guy who did some foreign exchange trading at GS.
net-net they have a looooooong way to go to get to being a viable exchange in the traditional sense of the word. and that's before you get to the whole topic of whether or not bitcoin is really something that will be a viable exchange model asset. that has yet to be tested outside of a very, very small base (relatively) of ecosystem participants..
moreover, as soon as you attach the word 'exchange' to your service you immediately set an expectation in the consumers mind that you will provide a similar level of service/liquidity as that which they would receive if they were working with a real exchange operator.
coinbase currently lists a team which has zero experience in the exchange operations world. the closest they come is a guy who did some foreign exchange trading at GS.
net-net they have a looooooong way to go to get to being a viable exchange in the traditional sense of the word. and that's before you get to the whole topic of whether or not bitcoin is really something that will be a viable exchange model asset. that has yet to be tested outside of a very, very small base (relatively) of ecosystem participants..
Wow, that is pretty surprising.
First thing in support is, YOU are the face of the company as far as the person you are in contact with, can see.
Second thing is, if you don't know, don't guess; tell them you will check into X and get back to them about it.
Third, empathize with the person - wouldn't you be worried over the disposition of $10K if you took it out of your bank account and then had problems getting what you ordered?
First thing in support is, YOU are the face of the company as far as the person you are in contact with, can see.
Second thing is, if you don't know, don't guess; tell them you will check into X and get back to them about it.
Third, empathize with the person - wouldn't you be worried over the disposition of $10K if you took it out of your bank account and then had problems getting what you ordered?
While I'm inclined to believe the OP, the text posted does set of my spidey sense.
Word for word the response I received from customer support. Another customer support person, Rees, reached out to me this morning and we've resolved 1 of 2 issues.
Unfortunately this is a trend for Coinbase: http://www.reddit.com/r/CoinBase/comments/1t6326/customer_su...
Just don't use them and protect your hard earned money.
Just don't use them and protect your hard earned money.
Coinbase founder here. We'll reach out via email to discuss the details of this case with you.
can you perhaps tell us if everyone - even those with smaller amounts - will be receiving the same consideration? ie should we also be stomping our feet or is it just a matter of patience before you address smaller mistakes?
Sent you an email, Brian.
I have a question that is related to how Coinbase deals with situations like the one on this thread:
I have a Coinbase account, and I am verified with a Credit Card. This means that I can instantly buy bitcoins. What happens if they fail to get the money from my bank account 2-3 days later? Would they charge my credit card instead?
[deleted]
Seems like Coinbase wasn't able to create a viable and sustainable process. To me, they will just fail as long as their processes become scalable. Surely i won't deal with them anytime soon :)
UPDATE 2: Still waiting to receive two missing bitcoins that were purchased on December 11 and promised delivery for December 17. I mentioned the issue to them days ago and it's still hasn't even been acknowledged. Sent them a message this morning and again right now.
Coinbase has been kind enough to resolve the issue with 10 bitcoins being delivered nearly a week late. But I'm not sure why 2 bitcoins disappeared from my account and they have yet to acknowledge the issue.
Coinbase has been kind enough to resolve the issue with 10 bitcoins being delivered nearly a week late. But I'm not sure why 2 bitcoins disappeared from my account and they have yet to acknowledge the issue.
To the OP: if Coinbase provides terrible customer service but you still publicly declare you're a "huge fan", what incentive is there for them to change?
Isn't the incentive to show them that you're still willing to work with them in the future so long as they get their crap together? I'm honestly not impressed with this stuff happening to people, even as a mistake, but at the same time I don't see people writing off entire companies that have otherwise acted in good faith.
Of course, if it happens to many more people, you can only do so much with so little.
Of course, if it happens to many more people, you can only do so much with so little.
LOL it seems that Coinbase has a lot of junior developers that are too superior for unit tests . Try the magic the gathering site?
1. Chargeback.
2. Better Business Bureau.
3. Federal Trade Commission.
4. Lawyer/lawsuit.
All of these are better options than whining on some Internet forum.
2. Better Business Bureau.
3. Federal Trade Commission.
4. Lawyer/lawsuit.
All of these are better options than whining on some Internet forum.
1. You can't chargeback a completed ACH withdrawal. (It is possible to revert an ACH transaction, but that generally happens only if the original transaction was unauthorized, which is not the case here. ACH/debit transactions do not have the same level of consumer protections as credit card transactions. That's why Coinbase doesn't accept credit cards.)
2. The BBB is a corporate shill.
3. Rotsa ruck.
4. Will cost more than the amount lost, and legal fees are rarely recoverable.
2. The BBB is a corporate shill.
3. Rotsa ruck.
4. Will cost more than the amount lost, and legal fees are rarely recoverable.
2. Shill or not, I've gotten results via them on multiple occasions.
4. I don't believe this. You're basically telling me if I pay for a car from a dealership, and they fail to deliver, that I or a lawyer can't sic law enforcement on them.
4. I don't believe this. You're basically telling me if I pay for a car from a dealership, and they fail to deliver, that I or a lawyer can't sic law enforcement on them.
> You're basically telling me if I pay for a car from a dealership, and they fail to deliver, that I or a lawyer can't sic law enforcement on them.
No, you are over-extrapolating what I said. Cars and BTC are not comparable.
Buying a car is a business model that everyone understands. There are governmental regulations in place to track every vehicle, so claims about cars being delivered or not are easy to verify or refute. So if a dealership fails to deliver a car that you paid for you most likely won't even have to sue them, they'll just give you a refund, because if you did sue them there are well-established processes for determining the facts of the case, and clear rules about a dealership's obligations to deliver.
BTC is a completely different situation. There are no government regulations, no rules, no precedents. To prevail, you will have to prove in court that coinbase failed to deliver. You will have to prove this to a jury of people who barely understand how to use an iPad. How do you do this? Consider the possibility that the OP is not telling the truth, but wants to generate bad PR for coinbase in support of some ulterior motive. How could the OP prove that he's telling the truth? It's not so easy, even when you're addressing an audience that actually understands how BTC works.
Also, have you actually read the coinbase TOS? (I haven't.) Do they say that BTC purchased will be available by a certain deadline? I'd be really surprised. If no deadline is specified, none is implied. So all coinbase has to do to get the lawsuit dismissed is cough up 10BTC. If push came to shove, that is the best outcome you could hope for, and you'd still be out your legal fees.
No, you are over-extrapolating what I said. Cars and BTC are not comparable.
Buying a car is a business model that everyone understands. There are governmental regulations in place to track every vehicle, so claims about cars being delivered or not are easy to verify or refute. So if a dealership fails to deliver a car that you paid for you most likely won't even have to sue them, they'll just give you a refund, because if you did sue them there are well-established processes for determining the facts of the case, and clear rules about a dealership's obligations to deliver.
BTC is a completely different situation. There are no government regulations, no rules, no precedents. To prevail, you will have to prove in court that coinbase failed to deliver. You will have to prove this to a jury of people who barely understand how to use an iPad. How do you do this? Consider the possibility that the OP is not telling the truth, but wants to generate bad PR for coinbase in support of some ulterior motive. How could the OP prove that he's telling the truth? It's not so easy, even when you're addressing an audience that actually understands how BTC works.
Also, have you actually read the coinbase TOS? (I haven't.) Do they say that BTC purchased will be available by a certain deadline? I'd be really surprised. If no deadline is specified, none is implied. So all coinbase has to do to get the lawsuit dismissed is cough up 10BTC. If push came to shove, that is the best outcome you could hope for, and you'd still be out your legal fees.
the blockchain is public evidence, and should be admissible in court.
Sure, but exactly how are you going to use the blockchain to prove to a non-technical jury that your BTC were not delivered?
If it's ever used in court, it'll be construed as a hacker or terrorist tool by some barely literate computer forensic "expert".
Unfortunately you give the system too little credit. In Aug 2013 a Federal judge recognized bitcoin as akin to a currency (stores value, can be used for exchange of goods). It also opened the doors to allow SEC to pursue these cases[0].
Granted it was for a ponzi scheme.
[0] http://rt.com/usa/bitcoin-sec-shavers-texas-231/
Granted it was for a ponzi scheme.
[0] http://rt.com/usa/bitcoin-sec-shavers-texas-231/
In all fairness, Coinbase doesn't accept credit cards because that same consumer protection can be abused into defrauding them. Which, seems reasonable :)
CB could accept credit cards without too much risk if they chose to by e.g. putting a 60-day hold on all BTC bought with credit cards. My guess is they don't take credit cards because they have their hands full dealing with their business as it stands, and adding the extra business logic to accept credit cards would just be too big of a PITA.
Another possibility is that the credit card companies won't allow them to do it.
Another possibility is that the credit card companies won't allow them to do it.
I'm not disputing that these options are probably more effective the OP in terms of getting his situation made right (although I'm not sure what the BBB / FTC could do), but the point of "whining" on an internet forum is to give others a heads up about things like this happening. It's remarkable how quickly companies tend to move when their customer issues are aired out in public, and others are talking about them.
I'm closing my Coinbase account today and advising others I know to do the same or stay away.
I'm closing my Coinbase account today and advising others I know to do the same or stay away.
I don't disagree that one should warn others of shady businesses… but it shouldn't be the first thing you do to try to get your money back!
The BBB has been shown to be a pay-for-grade scam. See http://abcnews.go.com/Blotter/business-bureau-best-ratings-m...
Coinbase may have a track record of terrible support, but they also have a track record of doing the right thing (eventually), so I would think "whining on some Internet forum" (which happens to be one their CEO and employees browse, that's run by one of their investors) would in fact be a very efficient way of resolving the problem. Somebody else did the same thing yesterday and got a prompt response from Coinbase about rectifying the situation, so there's even precedent for this being a useful tool with them.
Coinbase was fair and resolved my transaction for 10 bitcoins this morning, by giving them to be at the current market price; however there are 2 bitcoins still completely missing from my account.
Before the $25m round that was just announced, CoinBase had raised $6.71m.
What have they spent that money on?
What have they spent that money on?
It's a tiny amount of money for a financial services company - because they need money not for expenses & salaries (as a software company), but as a pure instrument in their everyday transactions. I can easily imagine Coinbase needing ten times more working capital than that simply to function properly (i.e., not as they seem to function now).
I would love it if you could elaborate on this. Since most exchanges don't do anything before they received money from buyer, what would they need the money for?
1) The BTC market isn't that liquid (compared to, say, USD-EUR forex). If you want to buy/sell X BTC on behalf of your customers right now, you may be unable to do it quickly in that amount. So, you can't really wait until the final confirmation of 'money from buyer' and only after that start to do things - you may finalize the deal at that point, but you'll do some buying and selling before that simply in anticipation of the deal coming on. You can and should manage the open positions so that they aren't too big in any one direction, but generally you'll have to be part market-maker and have reasonable non-tiny reserves in both USD and BTC just to do your daily trades; otherwise at times you'll be unable to make deals and have to cancel/fail/postpone them which hurts your service.
2) 'When you receive money from buyer' is a tricky issue. In general, you won't get the money from the buyer when you want it and in the full amount. No matter if you accept credit cards, ACH or whatever - some of them can be reversed, some of them will be reversed, and again, noone will simply trust that you'll return the money when needed, so they'll freeze or hold some of that money for some time. Well, unless you can prove that you have so big reserves that you don't need the money anyway.
3) As you don't have any reasonable reserves/trust/credit rating, in any relations with other financial institutions (such as paying out funds) you'll be required to either cover everything upfront, generally a day before (which is expensive to you), or hold deposits/bonds/whatever as collateral (which requires the collateral); so right there you'll have to hold reserves comparable to your daily turnover. In order to get a dollar to customer on Dec 15, you'll have to give away the money some time before that.
4) The same holds if you want to integrate in any of the payment systems worldwide to receive and send money - if you want to get direct access (instead of extra price+delay by going through an intermediary), expect to put up multimillion deposits simply to ensure that noone else loses a dime in any case. The general principle is that counterparties occasionally tend to go bankrupt or act fraudulently, so everyone extends only very limited $ amount of trust. This, coincidentally, causes almost all of the payment processing time in the 'classic' banking - you can send the payment cheaply in seconds, but it takes a few days to do this in a manner that ensures that one bank doesn't lose money if another doesn't pay, either intentionally or because it's unable to.
5) The financial partnership deals you get depend on your size - the bigger you are, the safer you are perceived; the smaller you are, the more you pay for the same things. And I'm not talking about $25m-capital-small - small means a tiny local bank or 'pocket bank' of some person or company with $250m+ in assets; 25m capital means you don't even get to talk about non-standard terms for servicing your account, much less get them.
And there are other issues. It all adds up - each such item holds up some funds, so in general, you need a sizeable capital that's proportional to your total turnover; and the full turnover of USD->BTC->USD, not just your revenue.
2) 'When you receive money from buyer' is a tricky issue. In general, you won't get the money from the buyer when you want it and in the full amount. No matter if you accept credit cards, ACH or whatever - some of them can be reversed, some of them will be reversed, and again, noone will simply trust that you'll return the money when needed, so they'll freeze or hold some of that money for some time. Well, unless you can prove that you have so big reserves that you don't need the money anyway.
3) As you don't have any reasonable reserves/trust/credit rating, in any relations with other financial institutions (such as paying out funds) you'll be required to either cover everything upfront, generally a day before (which is expensive to you), or hold deposits/bonds/whatever as collateral (which requires the collateral); so right there you'll have to hold reserves comparable to your daily turnover. In order to get a dollar to customer on Dec 15, you'll have to give away the money some time before that.
4) The same holds if you want to integrate in any of the payment systems worldwide to receive and send money - if you want to get direct access (instead of extra price+delay by going through an intermediary), expect to put up multimillion deposits simply to ensure that noone else loses a dime in any case. The general principle is that counterparties occasionally tend to go bankrupt or act fraudulently, so everyone extends only very limited $ amount of trust. This, coincidentally, causes almost all of the payment processing time in the 'classic' banking - you can send the payment cheaply in seconds, but it takes a few days to do this in a manner that ensures that one bank doesn't lose money if another doesn't pay, either intentionally or because it's unable to.
5) The financial partnership deals you get depend on your size - the bigger you are, the safer you are perceived; the smaller you are, the more you pay for the same things. And I'm not talking about $25m-capital-small - small means a tiny local bank or 'pocket bank' of some person or company with $250m+ in assets; 25m capital means you don't even get to talk about non-standard terms for servicing your account, much less get them.
And there are other issues. It all adds up - each such item holds up some funds, so in general, you need a sizeable capital that's proportional to your total turnover; and the full turnover of USD->BTC->USD, not just your revenue.
The huge fluctuations in the price of BitCoin probably cause problems. Taking an order, locking the price in, and waiting a few days for the transfer gives BitCoin time to drastically change in value.
Presumably you had the opportunity to buy the coin at the price you offered when you offered it. I am a small potato with no customers. I bid on an auction a few days ago for more BTC than I had. Why?
Well, at the time, I hadn't planned to make up the difference at Coinbase, but that was my first plan. The due date of the payment would have been after the closing date of Coinbase transactions on that date. I could probably still buy more coins before they were due, if I was still winning the auction for 6BTC.
But the real plan? SatoshiDice. I'm not talking double, I had most of the BTC needed for my bid, and the difference between what I had bid and the next bidder (split the difference) was even smaller.
So, if I just need to win 0.9BTC, it's pretty easy to do that at SatoshiDice with 4.5BTC bankroll. In fact I won 0.7BTC yesterday, after someone outbid me. I could have made it up in cash at Coinbase, but then there would be no Christmas.
This however is a small auction for another speculative asset between friends. I am not a financial services company! I can't imagine the size of the spreadsheet required to predict whether Coinbase will be able to meet all of its obligations to every customer at each point in time given the possibility of price fluctuations. Certainly a harder problem than "can I maybe win 0.9 at SatoshiDice."
But certainly also, within striking distance of solvable.
Well, at the time, I hadn't planned to make up the difference at Coinbase, but that was my first plan. The due date of the payment would have been after the closing date of Coinbase transactions on that date. I could probably still buy more coins before they were due, if I was still winning the auction for 6BTC.
But the real plan? SatoshiDice. I'm not talking double, I had most of the BTC needed for my bid, and the difference between what I had bid and the next bidder (split the difference) was even smaller.
So, if I just need to win 0.9BTC, it's pretty easy to do that at SatoshiDice with 4.5BTC bankroll. In fact I won 0.7BTC yesterday, after someone outbid me. I could have made it up in cash at Coinbase, but then there would be no Christmas.
This however is a small auction for another speculative asset between friends. I am not a financial services company! I can't imagine the size of the spreadsheet required to predict whether Coinbase will be able to meet all of its obligations to every customer at each point in time given the possibility of price fluctuations. Certainly a harder problem than "can I maybe win 0.9 at SatoshiDice."
But certainly also, within striking distance of solvable.
Liquidity
It takes more than a million just to be a certified for financial transactions I believe.
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I think Coinbase ought to be aware we know their customer service needs work & when stuff comes on HN and it looks bad for them its just damage control to give a false impression of competence when they respond.
Did anyone say Ponzi Scheme ?
Plenty of people say "Ponzi Scheme". Many of them don't know anything about Bitcoin (or Ponzi Schemes).
"There's a sucker born every minute" - P.T. Barnum
You posted here at pretty much the exact wrong time (11:30pm PT) but I would still be surprised if you don't eventually get taken care of (assuming a legit situation).
Can we make a new rule? HN is not an end run around companies' bad customer support (even YC ones). We could probably fill this site with these pretty easily.
Matt, I think these posts are valuable. The readers of HN seem to be exactly the type of people who might be early adopters of Coinbase. It's helpful for those people to know how the service works from a customer's perspective.
Then you also have the benefit from the entrepreneurial side. These posts can serve as a cautionary tale to other would be founders as how not to do customer service.
I think where this crosses the line from inane bitching to useful discourse is the gravity of these issues. It's not like these people are posting with complaints about the page layout of the company or <insert minor nitpick here>. The issue is with the core function of the company, and that's work discussion.
Just my $0.02.
Then you also have the benefit from the entrepreneurial side. These posts can serve as a cautionary tale to other would be founders as how not to do customer service.
I think where this crosses the line from inane bitching to useful discourse is the gravity of these issues. It's not like these people are posting with complaints about the page layout of the company or <insert minor nitpick here>. The issue is with the core function of the company, and that's work discussion.
Just my $0.02.
We already have that rule. The site guidelines explicitly ask that people not use HN as a support forum for companies we've funded.
http://ycombinator.com/newsguidelines.html
We let this and the last one go lest people think we were censoring bad news, but we're going to kill these in future.
http://ycombinator.com/newsguidelines.html
We let this and the last one go lest people think we were censoring bad news, but we're going to kill these in future.
UPDATE 3: Still missing bitcoins purchased on December 11. No acknowledgment of missing bitcoins yet from customer support or Brian.
They are 8 people. He can surely push through.
Final Update: I've finally got my missing bitcoins from Coinbase. I'm squared up. Thanks for responding Counbase.
Sounds like it's time to start the process of reversing a fraudulent ACH transaction.
That is one of the worst responses from a customer service agent I've ever seen.
Glad I don't use online bitcoin wallets.
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Bitcoin news...
I have no interest in Bitcoins. Is someone gaming HN ?
I have no interest in Bitcoins. Is someone gaming HN ?
In this case, Coinbase is a YCombinator company. Even if you aren't interested in BTC, Coinbase and its business dealings are very much a good topic of conversation on these forums.
Check your URL. Perhaps you're looking for news.learningram.com?
Now, I'm still missing bitcoins in my account for transactions that have already been cleared and I've received a portion of the $10,701.03 in bitcoin at the price that I was was locked in at if I was to receive them on Friday, December 13th. I received them 5 days late and at the price locked in on December 8.
Coinbase is at fault and they've violated their own terms of service. I've asked for a similar resolution that the other gentleman on HN got from Brian, and this is the response I received from their customer support:
"I'm not sure how that guy got the CEO of the company to intercede on his behalf, but that's definitely not a normal handling of that case.
I simply do not have the ability to do that, I'm sorry. None of the admins do. That guy must have been one of our extremely high volume VIP users or something in order for something like that to have happened.
I...don't really know how to respond further. That does seem somewhat unfair. Very sorry, but I just don't have the ability to push through such a request. Nor is it possible to forward a ticket to our CEO. My apologies, but I'm just not able to be of further help here..."
What's wrong with Coinbase right now? I'm a huge fan of them, but this is terrible customer service. I can't get a fair resolution because your ticketing system doesn't allow you to send a ticket to Brian or any of your other superiors? What kind of customer service is this?
I would even love an acknowledgment that Coinbase violated its TOS and is in the wrong here. I'm just looking for a fair resolution.