Brian Armstrong, CEO of Coinbase, mentioned in an X submit on Friday that the platform has decreased the problem of pointless account freezes and restrictions by 82% to this point. Noting that pointless account freezing has been a “main situation” for Coinbase customers “for longer than is suitable,” he wrote:
“I may checklist a bunch of the underlying the explanation why it [account restrictions] obtained so unhealthy within the first place, however what’s extra vital is that we’ve made it a precedence to repair, and we’ve got been making good progress.”
Armstrong added that the trade will proceed to make enhancements, saying them as they’re rolled out.
Steps taken by Coinbase to scale back account freezes
Armstrong’s claims got here as a response to a submit by Dor Levi, founding father of smIXL, a real-time blockchain information simulation and evaluation agency acquired by Dune Analytics final yr. Levi, who’s now a part of the group working to repair Coinbase’s situation of account restrictions, detailed the steps taken by the trade to handle the problem.
Levi acknowledged that he joined Coinbase with the only real function of serving to repair the platform’s situation with account restrictions. He famous that the objective is to make sure that account freezes are “uncommon.” Restrictions on accounts must be restricted to circumstances that necessitate them, reminiscent of authorized obligations to stick to sanctions or courtroom orders, or to guard clients from scams and account compromises, he added.
Levi wrote:
“We’re dedicated to getting this proper. Current releases have enabled us to make large enhancements with out sacrificing our authorized and regulatory obligations, or our dedication to security.”
He additionally listed sure measures that Coinbase has adopted to scale back account restrictions. This consists of “important investments” in machine studying (ML) fashions, infrastructure, modeling, and groups. These investments have helped enhance the “precision and recall” of Coinbase’s fashions, leading to fewer restrictions and freezes, Levi mentioned.
The trade can also be shifting processes like source-of-funds verification and enhanced know-your-customer (KYC) validation into the Coinbase app to hurry up the method of eradicating restrictions. Levi wrote:
“This [moving processes into the app] means most restriction sorts may have self-service flows to take away restrictions, which is far more environment friendly than earlier choices.”
He added that the trade has additionally established guardrails to make sure that decreasing account freezes stays a main focus.
Coinbase customers have lengthy complained about account freezes
For years, Coinbase was the second-largest crypto trade by buying and selling quantity, second solely to Binance, till Bybit bumped it in March 2024. Regardless of the appreciable buying and selling quantity it handles every day, Coinbase customers have lengthy complained about inexplicable or pointless account freezes for extended intervals.
In December 2024, EthHub co-founder Eric Conner took to X to complain that his Coinbase account was locked whereas making an attempt to execute a transaction. Connor famous that the freeze was purportedly carried out as a result of he used a digital non-public community (VPN) to entry his account.
Following Connor’s submit, a barrage of comparable complaints flowed in, sparking a social media backlash. Some customers reported being locked out of their accounts for months and even years.
Coinbase product director Scott Shapiro defined on the time that the trade’s danger fashions mechanically flag entry by VPNs, that are all the time utilized by miscreants. Whereas some, like Blockworks co-founder Jason Yanowitz, supported Coinbase’s effort to guard customers, Connor referred to as it a “lazy implementation.”
The issue of frozen accounts persists, regardless of Coinbase’s efforts to repair it. In reality, a person replied to Levi’s submit on Friday, stating that his account has been frozen for per week, after he tried to ship $10 value of crypto to a brand new account. The person, who famous that he has been a Coinbase buyer for 10 years, mentioned that the account restrictions had been utilized to all his property, not simply those he tried to make use of.
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