Coinbase’s IPO is good for shareholders, but what about its customers?
Unless you’ve been sitting in your room for the past four months, then you all know about the Coinbase IPO. Ah, sorry, after four days of ‘easedown’, I’ve forgotten we’ve all been sitting in our rooms for the past four months.
Opinion is divided as to why Coinbase went to IPO because it seems to have so much money in its reserves, but there’s no argument about why it used Nasdaq to do so. Every IPO happens in New York nowadays because that’s where the dough and certainty is… and London is really suffering because of it.
At time of writing, all was well in the Coinbase world. Offered at $250 per share, the share price currently sits around $322, a nice profit for early shareholders and valuing the company at whatever-billions.
At one stage this week that number was $100 billion, a price based on the ATH of Bitcoin, Ethereum and its acolytes; it was widely heralded as the day that cryptocurrencies went mainstream and were vindicated as viable currencies with Bitcoin perhaps replacing the dollar as the global reserve currency for the next 100 years.
Well, so the narrative goes. This columnist isn’t so sure and wonders deeply how many holders of crypto decided to also become Coinbase shareholders.
Perhaps they’re the quiet and smart ones, going for Nasdaq-caution instead of terrifying themselves with QR codes when occasionally trading between crypto and fiat. People who don’t have gambling apps on their mobile phones.
Coinbase’s share price may even come to shadow that of the cryptocurrencies themselves with that concomitant volatility, which would have dire consequences for Coinbase’s market cap.
With so much money awash in the industry, Coinbase has had further problems before its IPO with the ever-present scammers offering free cryptocurrencies and preferential share price offers to its customers.
They’re very slick. A mate of mine lost £40K this week after being beguiled and distracted by the offer of free money. Over the course of a phone call, after previous polite calls and viable emails, he gave away his authenticator without mentioning his private key.
Moreover, the scammer was still on the phone when the funds were removed. “What’s happened to my funds?”, he asked in innocence. “Oh, that was me, I’ve taken them, bye”.
Salt. In. The. Wound. Indeed.
Of course, Coinbase is not responsible for this, but there has been nothing from the company warning about this scams. Not on its website, not through its messaging (and I use its exchange regularly) and, as far as I know, not through its social channels either.
Now that it’s a ‘traditional’ grown-up company with shareholders, it’s going to have to raise its game. Imagine if a UK bank was aware of scams and didn’t mention it to their customers, there would be understandable uproar.
There are other problems as well when it comes to customer service. Alex Wheatley has been a Chartered Accountant for two decades and wanted to understand crypto. After Coinbase was recommended to him, he did his own due diligence and thought that an exchange going to IPO would be his best option.
Far from satisfactory
He said: “I thought I had enough experience to learn something new, but the experience has been far from satisfactory. I opened my account in January this year and all was fine until I received an email at the end of February stating my account was ‘under review’ and this was after KYC.
“That meant it was locked without any ability to add, withdraw or trade crypto. I was then advised that it had been resolved and the case closed. However, my account was still locked and because the case was closed I had to restart the whole process. Again, I was told the case was resolved and closed. It wasn’t.”
As somebody who abhors being put on hold for more than two minutes when actually making a telephone call, Wheatley’s frustration is palpable, he’s been on hold for months… and he’s not the only one.
I hear similar stories from others in my WhatsApp groups and my experience with Coinbase has been similarly frustrating.
Three years ago, it took six weeks for money to be accredited to my account after I had withdrawn it. Even today it seems that I have fiat available in my portfolio, but if I wanted to take it out, apparently I have no funds.
Don’t get me wrong, this isn’t Coinbase-bashing, don’t even get me started with Binance and the theft of my 163 ETH two years ago, but exchanges need to do better for their customers, not just smiling and flirting at their shareholders.
Presently it’s Kafkaesque if anything goes wrong and the closing of ‘tickets’ when nothing is resolved is something that needs to change.
Nobody likes going down bad rabbit holes, so hopefully Coinbase’s IPO and shareholder scrutiny will improve these somewhat large teething problems.
The last word goes to the exasperated Wheatley talking earlier today.
“My account is still under review and is still locked as it has been since the end of February. The real problem is that you cannot speak to anyone, it seems to be all driven by bots. Very, very frustrating,” he said.
You don’t say.