A crypto investor named Mike Dudas, recently posted on his X (formerly known as twitter) account (@mdudas) regarding Coinbase’s restrictive measure of crypto transactions. The investors claims himself to be a loyal Coinbase customer for 11 years but was frustrated after finding out that he could not make transactions as the account’s ability to send crypto on-chain had been suspended for a month.
been a @coinbase customer for 11 years
professional crypto vc with daily onchain activity
for my own “protection”, i can’t send money onchain for a month
coinbase’s marketing schtick: “we’re driving the global onchain economy”
simply incredible pic.twitter.com/oRpI4g599f
— Mike Dudas (@mdudas) January 9, 2025
The notification highlighted the action as “precautionary measures to protect against potential loss” which has spread criticism within the industry.
Concerns Over On-Chain Economy
The user in his tweet had pointed out the contradiction in the exchange’s marketing, which promotes itself as a driver of the “global on-chain economy.” This restriction now has led to question about the platform’s reliability, specially for investors who rely on frequent on-chain activities.
Fred Rispoli, a prominent attorney in the crypto space, weighed in on the situation. He commented with cautionary warning: “Now imagine what is going to happen to you ‘ability’ to cash out/send crypto in your Coinbase account when the bull market is really raging. Do. Not. Trust. Coinbase.”
Rispoli’s tweet here implies that the exchange’s restriction on sending crypto could become a more sever problem during bull market which would potentially limit the user’s ability to cash out or transfer their assets.
He is warning users not to trust the exchange, suggesting that the exchange’s restriction could become a problem when the market is surging.
Has This Happened Before?
This is not the first time Coinbase has faced criticism for its account restrictions. Users have raised complaints about temporary holds, withdrawal limits, and account freezes, often during period of bull market.
Such measures are usually due to compliance efforts and risk management but these are considered as barriers to accessing funds by the users especially during the critical trading opportunities.
Coinbase’s Stance on the Issue
Coinbase implements these restrictions as protective measure. Its communication around such action lacks clarity and hence it is being criticized by the community. The exchange has many a times addressed these concerns, emphasizing that these measures are for user protection, regulatory compliance, and fraud prevention as the primary motives of these actions.
Despite these reassurance from the exchange, whenever such situation arises again, it leads to a growing tension amongst the exchange and the user. The exchange must come up with a solution that helps balance both risk management and preserve user trust.
Also Read: US Senate to Introduce First Cryptocurrency Subcommittee
