Growth In Virtual Currency Exchange Complaints At CFPB, But ICOs Fly Under The Radar
Despite the cryptocurrency community’s overwhelming documentation of phishing scams, dubious token offerings, and calamitous hacks, it appears that zero complaints have been filed with the Consumer Financial Protection Bureau (CFPB) regarding ICOs. Instead, virtual currency exchange Coinbase remains the focus of consumer gripes.
Since the start of 2017, there have been exactly five complaints that appear for the search term “bitcoin” in the CFPB’s Consumer Complaint Database. Searches for complaints that include “Ethereum,” “ICO,” or “token offering” return zero results.
Since January 1, 2017, the CFPB has fielded 1,358 complaints classified under products that include “virtual currency.” Many of these complaints deal with traditional financial institutions (i.e., JPMorgan Chase & Co., Discover Bank), but a sizeable chunk – 284 complaints to be exact – have been about Coinbase. In many cases, customers have reported that their “money was not available when promised.” It’s not clear why, but it appears that the agency has redacted the term “bitcoin” in a number of consumer complaint narratives.
One Coinbase customer was particularly peeved:
“Every time the [redacted] market price dips the Coinbase systems shuts down buying and selling of the currency. It makes it impossible for investors remain in control of their investment and ties our hands. It happens EVERY TIME the price changes and is not available for HOURS. Investors are at the mercy of the market and can only watch the price spike or plummet and have no control of our investment.”
The uproar about Coinbase is not unexpected, as the company has become notorious for its lackluster customer service. As the virtual currency boom has gone mainstream during 2017, the rising number of complaints aligns with the growth of customers.
What’s more remarkable is the complete absence of consumer complaints about token offerings for cryptocurrency-based financial products. When one considers the range of burgeoning companies and the often ambiguous utility of tokens, it’s hard to understand why nobody has lodged a complaint.
First proposed in 2007 by then Harvard Law School professor Elizabeth Warren, the CFPB was authorized in July 2010 through the Dodd–Frank Wall Street Reform and Consumer Protection Act. The agency began operating in 2011, and was designed to improve transparency and understanding of mortgage lending. The CFPB also handles issues related to credit and debit cards as well as consumer complaints.
In light of the US Securities and Exchange Commission’s recent trading suspensions and the Internal Revenue Service’s investigation of virtual currency tax evasion, perhaps it’s only a matter of time before consumers realize what tools are at the government’s disposal. Cyberspace complaints on Twitter and reddit won’t grab regulators’ attention, but going through official channels like the CFPB will inspire additional scrutiny and encourage regulatory authorities to determine what aspects of virtual currency fall under their jurisdiction.