Coinbase has a leading light in the world of Bitcoin for over the past two years. With their help several major mainstream corporations have been brought into the Bitcoin fold, with Mozilla (Firefox), Time Magazine and The United Way amongst some of the names now working with them. However, it seems they are bringing another well known feature to the consumer’s digital currency world: Spying.
Based in the United States of America and being located in the California’s Bay Area, brings both positive and negatives to a company such as Coinbase. They can take advantage of quick and easy integration with the US banking/financial systems and is a clearly a huge plus. Hhowever, potential for government over-regulation and data mining is a huge negative. One of bitcoins main selling point is it’s anonymity. Many corporations, much bigger and more powerful than Coinbase such as Google, Amazon, Yahoo and microsoft have been forced to succumb to the United States governments demand domestically. So is Coinbase becoming the next “chip off the old block?” Let’s see.
Coinbase has effectively banned all it’s Bitcoin account holders from using online gambling websites, even though online gambling is not in itself illegal. According to some Reddit users, when Coinbase customers removed their BTC from SatoshiBet.com, a popular online gambling site, they found their Coinbase account would later be closed due to breaches of the “Terms of Service” agreement violations clause.
According to another Reddit user, Coinbase has taken down the accounts of those who have allegedly bought cannabis products online with coins purchased from the service – even though the user in question themselves denies it.
“I have been a long time Coinbase customer, buying 1-3 times per month, I got an e-mail today saying they are banning me from using their services because of a ToS violation. I emailed them back to ask what the violations were and they told me that they had evidence that I used some of the BTC I bought for cannabis/cannabis seeds. They gave me a specific BTC transaction and said it was for drugs and wouldn’t listen to anything I had to say.”
ACcording to another Coinbase member if you purchased your BTC at LocalBitCoins.com that was grounds for account closure.
“Because I buy a few bitcoins a week from Coinbase (although sometimes I will go months without buying any) I was flagged as having enough volume to potentially be a Money Services Business (MSB). The Coinbase ‘compliance team’ mounted an investigation against me. They determined ‘they had reason to believe’ I am selling Bitcoins on LocalBitcoins, even though they haven’t said what that reason is, and therefore are suspending my account.”
Coinbase has explained that they’re just trying to comply with the anti-money laundering and drug laws in the USA. So by partaking in online gambling, using LocalBitCoins.com, or even buying marijuana online is not illegal everywhereyou will be banned from the service. This is the cost of doing business in the United States of America.
So if you are going to use bitcoin, is this something you should just have to expect and accept? Does this open the door to corporations overseas to offer similar services with more privacy and consumer protections and not ever increasing “Terms of Service” agreements? Will this damage Coinbase in their market in the long run? Why has Coinbase competitor BitPay not micro-managed domestic regulatory and legal issues in the same invasive way?
Coinbase used to be a trusted Bitcoin account holder, and seems to be heading towards being just a mother hen owned by government interests and unethical domestic regulations.
What do you think of Coinbase now and in the future? What should Bitcoin corporate account holders expect when it comes to regulation and oversight? Share using the links above and comment in the box below.