Coinbase Inc. is one of the most popular online exchanges for digital currencies. But last year, it started seeing complaints soar on the U.S. Consumer Financial Protection Bureau’s website. Unfortunately for the San Francisco business and its customers, things have only gotten worse.
From January to August 2017, Coinbase had received at least 293 complaints on the site. So far in 2018, the total is more than 900. Some customers have also taken to Reddit to express dismay over multiple unauthorized charges to their credit cards, money disappearing and bank accounts drained to nothing.
News site the Verge helped draw attention to some of this late last week, to which Coinbase quickly pointed out that the issue was not its fault but that of Visa Inc. and Worldpay Inc. A glitch arose after some codes involved in processing the payments were changed, resulting in multiple charges for customers that had been using Visa cards. Late Friday, Visa and Worldpay issued a statement taking responsibility and saying each customer will be refunded in full.
But whoever’s fault it was, Coinbase is the one receiving the blame from customers, and the company is aware that it needs to do something to fix that perception. It’s one of the most prominent startups in the financial-technology world, with a valuation of $1.5 billion and investors like Spark Capital, Andreessen Horowitz and the New York Stock Exchange.
But it has been caught in a typical startup problem: not being prepared to handle a surge in demand that it so desperately craved before the Bitcoin boom of 2017. True, there are few who predicted the massive rise in Bitcoin’s price or the dramatic increase in people interested in cryptocurrencies. But Coinbase built its entire business around that very long-shot.
There was at least one 24-hour period late last year when more than 100,000 people signed up for Coinbase. Many web startups go dark when stuff like this happened, and Coinbase didn’t fare much better. The difference is that when Twitter Inc. got overloaded, you had to wait a few minutes before checking tweets. With Coinbase, an accidental overcharge may mean a customer not being able to pay their rent on time.
“Scaling customer support while adding 100,000 people a day is an insane task,” said Anthony Pompliano, partner at Full Tilt Capital. “The execution of fixing problems like this is what we all need to pay attention to.”
The pressure to deliver rose dramatically in January, when another startup came knocking at the door. Robinhood Financial LLC, which makes a popular free stock-trading platform, is getting into cryptocurrency trading. The firm is slowly rolling out the new tool as it gets licensed in various U.S. states and is beefing up its customer support staff to make sure that it’s able to keep up. Robinhood said it’ll charge a lot less to buy and sell cryptocurrencies.
Coinbase Inc. is one of the most popular online exchanges for digital currencies. But last year, it started seeing complaints soar on the U.S. Consumer Financial Protection Bureau’s website. Unfortunately for the San Francisco business and its customers, things have only gotten worse.
From January to August 2017, Coinbase had received at least 293 complaints on the site. So far in 2018, the total is more than 900. Some customers have also taken to Reddit to express dismay over multiple unauthorized charges to their credit cards, money disappearing and bank accounts drained to nothing.
News site the Verge helped draw attention to some of this late last week, to which Coinbase quickly pointed out that the issue was not its fault but that of Visa Inc. and Worldpay Inc. A glitch arose after some codes involved in processing the payments were changed, resulting in multiple charges for customers that had been using Visa cards. Late Friday, Visa and Worldpay issued a statement taking responsibility and saying each customer will be refunded in full.
But whoever’s fault it was, Coinbase is the one receiving the blame from customers, and the company is aware that it needs to do something to fix that perception. It’s one of the most prominent startups in the financial-technology world, with a valuation of $1.5 billion and investors like Spark Capital, Andreessen Horowitz and the New York Stock Exchange.
But it has been caught in a typical startup problem: not being prepared to handle a surge in demand that it so desperately craved before the Bitcoin boom of 2017. True, there are few who predicted the massive rise in Bitcoin’s price or the dramatic increase in people interested in cryptocurrencies. But Coinbase built its entire business around that very long-shot.
There was at least one 24-hour period late last year when more than 100,000 people signed up for Coinbase. Many web startups go dark when stuff like this happened, and Coinbase didn’t fare much better. The difference is that when Twitter Inc. got overloaded, you had to wait a few minutes before checking tweets. With Coinbase, an accidental overcharge may mean a customer not being able to pay their rent on time.
“Scaling customer support while adding 100,000 people a day is an insane task,” said Anthony Pompliano, partner at Full Tilt Capital. “The execution of fixing problems like this is what we all need to pay attention to.”
The pressure to deliver rose dramatically in January, when another startup came knocking at the door. Robinhood Financial LLC, which makes a popular free stock-trading platform, is getting into cryptocurrency trading. The firm is slowly rolling out the new tool as it gets licensed in various U.S. states and is beefing up its customer support staff to make sure that it’s able to keep up. Robinhood said it’ll charge a lot less to buy and sell cryptocurrencies.