Coinbase made a mistake valuing Lari Georgia at 100 times that lasted for 7 hours causing more than 1000 users in Georgia to take advantage of the opportunity to make a profit. However, after discovering the error, the exchange locked the bank account as well as the linked Visa debit card for recovery.
According to anonymous information from Blockwork, on August 31, Coinbase mispriced Lari Georgia at $290 instead of $2.90 in seven hours. According to the exchange, only about 1000 users took advantage of the opportunity, and the company only lost a nominal amount.
However, as soon as it was discovered Coinbase locked the bank account as well as the associated Visa debit card to recover the amount.
“In late August, prices for cryptos denominated in Georgia’s national currency had been rated at GEL 290 instead of GEL 2.90. The missed decimal point had been due to a ‘third-party technical issue,”
A Coinbase spokesperson told Blockworks
According to Twitter user Levan Ilashvili, at least one bank blocked all of the users’ accounts until further notice. And while Coinbase does reserve the right to reverse erroneous transactions in its user agreement, the fact of the matter is that all of the users’ funds have been frozen on account of their mistake.
“At the moment, Coinbase is not communicating with their customers and at the same time, people can’t withdraw their own money from their own bank accounts,”
He tweeted
“Hello, we have marked your transactions with Coinbase as suspicious and we’re locking all your accounts and cards,(…). Please be aware that Coinbase may request clawback of the funds. Sorry.”
One bank’s blanket text message to customers reads
Users told Blockworks that certain trades on Coinbase that should have brought in $150 or so instead brought in $15,000, with the money being moved to personal bank accounts.
Georgians make about $4,200 a year on average, thus some customers made more than three times the national average. Losses for Coinbase are estimated by a Georgian trading community that Blockworks contacted to range from $14 million to $140 million, while this exchange disputes those figures.
If this is a “third party technical issue”, who is responsible? Did the user do anything wrong in this situation? Are all the errors caused by the user being too greedy? But why could Coinbase be involved in freezing user accounts of banks in a country other than the US?
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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