Coinbase Bug Accidentally Drains Users’ Bank Accounts
For most users of cryptocurrency, it’s not a way of life. They have “real” money stored in bank accounts that are used for life’s little necessities like food and housing. However, a bug in Coinbase is causing small, speculative purchases of cryptocurrency to drain users’ bank accounts completely. Offering to pay your rent in Bitcoin that will be worth 20 percent more or less tomorrow might not go over well.
Coinbase groups on Reddit are rife with complaints about mysterious overcharging. Users say they purchased a small amount of crypto from Coinbase like Bitcoin, Ethereum, or Litecoin. Then several days later, the transactions were repeated multiple times. For some users who bought a couple hundred in cryptocurrency, this was enough to push their account into the red and lead to overdraft fees.
There have been scattered reports of these repeated transactions a few times over the last couple weeks, but it seems to have spiked in the last day. The Coinbase sub-Reddit is currently overrun with posts from those with missing funds, as well as those worried they’ll be next. One user says his $1,000 transaction was repeated a whopping 17 times. Another says his smaller transaction was charged 12 additional times.
It’s important to note, the users were not getting additional cryptocurrency after the repeated transactions. If that were the case, they might come out ahead after selling it all off. No, the issue was simply with the way Coinbase handles credit and debit card purchases. That’s what Coinbase reps on Reddit are saying at least.
Apparently, the issue comes from a change to merchant category codes (MCC) used by card processors. Coinbase complained publicly about these changes some weeks ago, but for a different reason. MCCs allow card issuers to identify different types of goods and services. The new MCC code for cryptocurrency purchases could allow banks to charge higher processing fees for these transactions. However, the only ill effect so far appears to be that it broke Coinbase’s platform and resulted in duplicate charges.
Coinbase says it’s working to rectify the issue and will make all affected users whole again. It’s unclear if that means covering the overdraft fees many customers were charged by their banks. For the time being, you should refrain from buying any cryptocurrency from Coinbase using a credit or debit card. In fact, it’s probably smart to hold off on buying using any method until the company confirms it has fixed everything.
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