Coinbase slammed for terrible customer service after hackers drain accounts | Hacker News Reader

Coinbase slammed for terrible customer service after hackers drain accounts

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58 pointspseudolus15 comments

The excuses Coinbase uses are ludicrous. As far as I can tell, deposits on Coinbase are not directly on-chain. And transfers out aren’t blockchain-only transactions either - they are mediated by Coinbase. So the wallet you see on Coinbase is a not a blockchain wallet - it's a Coinbase wallet, effectively a bank account.

Blockchain transactions are irreversible, but that has nothing to do with why they won't reverse these thefts. They don’t reverse these transactions because it would cost money to insure people’s deposits. Not because blockchain transactions are irreversible.

I'd be curious to hear a lawyer's take on this - whether something that is effectively a bank can get away with not being called a bank in order to avoid insuring deposits.

One could argue crypto is a corruption of proper money, since transactions can't be reversed. Imagine the scenario where you wanted to metaphorically 'burn' 1M dollars. Say you hand Coinbase $1M in exchange for Bitcoin, then purposefully delete your wallet.dat and made it irrecoverable. The $1M is still there in Coinbase's account. It didn't get absorbed into the BTC blockchain. If you could think of money as a form of speech - then crypto just tramples all over that notion.

This whole comment seems a little off to me. Could you elaborate?

> crypto is a corruption of proper money, since transactions can't be reversed

Is cash also a corruption of proper money?

> The $1M is still there in Coinbase's account

How is that different from physical cash exactly?

(1) You send $1M in electronic dollars to Coinbase/Bank

(2) Coinbase/Bank sends $1M in BTC/Cash to you

(3) You burn the BTC/Cash

In all cases some institution has $1M in electronic USD from you, some institution is missing $1M in some asset, and that asset is missing from the world.

Is the conclusion that _both_ crypto and cash have some undesirable property, or is there an additional nuance or distinction those examples were supposed to illustrate?

Sorry if I confused you. In simpler terms imagine this scenario:

You burn $1M dollars, but beforehand you take note of the serial numbers on each note. Then you tell your bank those specific notes got burned, and ask the bank to re-issue you the notes, with the assumption you will not burn them again.

Cryptocurrency is different. If your wallet.dat's password is forgotten, or the wallet.dat gets irrecoverably deleted, then you have no recourse. Banknotes are simply that: Notes saying you own a certain store of value.

Coinbase still retains your money even though they issued you with the equivalent BTC. If you burned the BTC assets, that's on you. Coinbase gets to keep the banknotes you gave them, however, and there is no mechanism to burn those assets, in line with your crypto assets being burned.

I'm trying to say that Bitcoin transactions should be reversible like cash, since cash can be recovered if it was burned by accident due to serial numbers, and that cash is just a fancy IOU note.

What? What bank lets you provide a list of serial numbers and will replace them? Am I being too literal?

Cash transit vans hold cash in special boxes where if they're being stolen, they automatically taint / dye the notes a dark red color. The notes can be swapped out with fresh notes, and the tainted notes discarded. Cash is a note saying you own a store of value. They are not the intrinsic value itself.

>Cash is a note saying you own a store of value

It used to be a note redeemable for a certain amount of gold.

Hasn't been true since 1971, I believe.

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

That seems too prone to abuse (money duplication, stealing other people's cash remotely, ...). Is that really how the world works?

This kinda sucks for all parties involved.

1. Funds from an individual Coinbase account are transferred off of Coinbase onto another Bitcoin wallet.

2. The owner of the Coinbase account claims they were hacked.

Obviously I like the idea of Coinbase making account holders whole, but that creates a moral hazard and also incentivizes account holders to commit fraud themselves. What if I give my friend my credentials and he drains my account? On the other hand if I lost money on Coinbase I would be complaining all the way until I got my money back.

There are controls that can minimize damages but sacrifice usability (make withdrawals whitelist only etc). I think they have a "Vault" product that has multi-sig and time-delay options for users.

Reminder to use hardware multi-factor (like yubikey) if you own a lot of cryptocurrency on an exchange. An authenticator app is the next best option.

Dealing with fraud is a very large part of holding money on other people's behalf, and the suggestion that this wouldn't be Coinbase's problem to detect and mitigate speaks to the ridiculousness of crypto.

If Coinbase is a custodian and crypto is a commodity, why do we not see more court complaints when a financial custodian is allowing the theft of an asset with no resource for the owner (does not apply self custody of course)? Their Custody subsidiary is even regulated by New York State Dept of Financial Services [1].

Coinbase won't take the issue seriously until courts and regulators incur liability for their practices.

[1] https://custody.coinbase.com/

And all of this has happened before, and will happen again.

https://news.ycombinator.com/item?id=5427985

(Do the mods still remove "HN '12" from the titles of these posts?)

It had terrible customer service when I used it years ago. I left them during one of the hard forks when they were playing around with just keeping the money from the fork and not returning it to customers. They did in the end but I switched to a wallet that actually lets you own the Bitcoin and can handle the forks, Conomi. Mycellium is also good. Coinbase has been crap for years and and I'm surprised ANYONE still uses them. Just check out their subreddit at any given time for customer service horror stories.

> switched to a wallet that actually lets you own the Bitcoin

All my purchases on Coinbase have been transferred to my own hardware wallet. You're spreading rumors that they don't support self custody of your purchases

my experience with their customer service is abysmal.

they took months to answer a ticket with a canned non-solution reply.

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