Coinbase users take 100x profit due to exchange rate error

In the Caucasus country of Georgia, an error has resulted in users of cryptoexchange Coinbase their cryptocurrencies with 100 times profit. Is Coinbase entitled to that money? Or is this a simple case of users taking advantage of a great opportunity?

Coinbase (COIN) is trying to recover the money from bank accounts after discovering that large groups of users in Georgia had cashed in cryptocurrencies at 100 times the target market rate. Some of the transactions, which should have raised around $150, were executed on Coinbase for $15,000, with the proceeds transferred to personal bank accounts, users told Blockworks.

User bank accounts blocked

Shortly after withdrawing the amounts, Georgians said they received a message from their bank telling them that their bank accounts and associated Visa debit cards had been blocked.

According to this Twitter user, at least one bank has blocked all users’ accounts until further notice. “Right now, Coinbase is not communicating with their customers and at the same time, people are not able to withdraw their own money from their own bank accounts,” he tweeted.

While Coinbase reserves the right to reverse erroneous transactions in its user agreement, the fact is that all of the users’ funds have been frozen due to their mistake.

Coinbase blames everything on a “third party technical problem”

While Coinbase’s official channels did not comment on the matter in question, a company spokesperson did speak to Blockworks.

“At the end of August, the prices for cryptos denominated in the national currency of Georgia were valued at GEL 290 instead of GEL 2.90. The missed decimal point had been due to a ‘third party technical issue,’”

In the same report, the website cites a generic text message from a bank to customers, in which it appears that Coinbase had a lot to do with freezing the accounts.

“Hi, we have marked your transactions with Coinbase as suspicious and we are locking all your accounts and cards. Please note that Coinbase may request a refund of the funds. Sorry.”

At least two domestic banks are said to have been involved in the freezing of bank accounts, although not on Coinbase’s direction, a source close to the matter said. A local bank declined to comment, citing Georgian privacy laws.

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“A very small number of users (0.001% of our total users) were able to trade in error and withdraw a small, immaterial amount of funds,” a Coinbase spokesperson wrote to Blockworks in an email.

“When discovered, we have corrected the issue and are taking action to recover the funds that have been withdrawn incorrectly.”

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