Bitcoin cryptocurrency News

Coinbase Lets Customers Buy $9,500 Of Bitcoin, But Does Not Let Them Withdraw A Dollar Without Intrusive Verification

Coinbase is the biggest Bitcoin exchange headquartered in the United States, and they use to be fairly down to Earth and easy to use back when I was a customer in 2014. However, Coinbase has had somewhat of a monopoly on the United States crypto market for years, and they are abusing that power to intrude on their customer’s identities in an invasive way. The way they force customers into handing over personal information is particularly dishonest. They let customers buy up to USD 9,500 of Bitcoin, and then once the Bitcoin is stuck in the account they demand a massive amount of identity information to unlock the Bitcoins. This flies in the face of Satoshi Nakamoto’s vision of decentralized and anonymous money.

Customer’s discover that they need to verify their identity at the point they hit the send button in their Bitcoin wallet. Coinbase now requires level 3 verification, the maximum possible verification, just to send a single satoshi of Bitcoin to an external address. Date of birth, social security number, employer information, what you will be using the Bitcoin for, and photo ID is required. This makes it clear that you do not own your Bitcoins when using Coinbase.

Further, if one were to receive Bitcoin into a Coinbase address, it would get stuck in limbo until this full verification is completed, since both Bitcoin deposits and withdrawals are disabled prior to verification.

One of the greatest strengths of Bitcoin is its anonymity, and the freedom to use Bitcoin however you want, but there is zero anonymity or freedom when using Coinbase. It can be further speculated, but has not been confirmed, that Coinbase has blockchain forensics experts, and will track your Bitcoins after you send them to an external wallet, since this has practically become a requirement for anti-money laundering (AML) protocols. This means if you send Bitcoins somewhere, and those Bitcoins end up going to the darkweb at some point even if you did not do it, you can get in trouble.

Additionally, Coinbase takes the liberty of filing taxes for customers, which really screwed over people who made money on the Bitcoin rally in 2017. One person invested USD 5,000, which grew to USD 880,000, but lost most of that and was left with USD 125,000. Then Coinbase filed their tax return, and the IRS sent them a USD 400,000 tax bill.

GenesisBlockNews believes that when using Bitcoin on Coinbase, it is no better than using fiat payment networks like PayPal, in the sense that transactions are tightly controlled by a central organization. There is no point in using Bitcoin if people are going to use Bitcoin via Coinbase. There are much better solutions, like using the Bitcoin Core or Blockchain.com wallets, and buying Bitcoin via a peer to peer dealer.

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