Our partner, XM, lets you access to a free demo account to apply your knowledge.
No hidden costs, no tricks.
What would you do if one day you looked at your Coinbase wallet and saw that your $20 crypto investment is now priced at $1000? Well, this is what happened to those Coinbase traders who instead of USD had their account balances in GEL.
Coinbase is one of the biggest crypto exchanges in the world. It is certainly the biggest one in the US and plays second fiddle to Binance in other parts of the world. With a daily transaction volume of around $2 billion, it is not surprising that they are so big, but with such a huge operation, it is destined to have some technical errors every now and then.
This is exactly what happened during the early hours of August 30. Traders who resided in the republic of Georgia and had access to trading cryptos using GEL saw huge spikes in prices. For example, traders were able to sell 1 USDT for 288 GEL, which at that time was worth around $100. At that time, the exchange rate was 1 USD for 2.88 GEL. So taking a closer look, we can see that the mistake that was made by Coinbase was that their system ignored the comma and set the exchange rate at 1 USD for 288 GEL. This gave traders the opportunity to sell any cryptocurrency on Coinbase for 100 times the price if they had access to GEL on their accounts. At the time of writing, the problem is still not fixed, as it still shows inflated prices. But Coinbase has put restrictions on selling cryptos for GEL.
This is not the first time Coinbase has run into problems. Just recently a lawsuit was filed against Coinbase by residents of Georgia, but this time it was in the state of Georgia. More than 100 users complained about Coinbase and that the company arbitrarily locked them out of their accounts and prevented them from selling their underperforming assets. The lawsuit also includes the fact that Coinbase was not able to protect the security of some users and their security systems had flaws in them, causing hackers to get hold of some users' wallets.
Coming back to the most recent bug in the system, it is still unknown how much money traders were able to withdraw before Coinbase shut down the withdrawal options. As some sources suggest, most banks have locked the bank accounts of customers who withdrew money from Coinbase in that time frame. Coinbase has yet to make any public announcements regarding this latest bug, and we don’t know if they will be able to get their money back and if people who made tens of thousands of dollars from a few hundred dollars, will be able to keep their profits.
At investfox we are always happy to tap into someone's brain to produce great content.
Wanna help us out?
We will be glad to host an interview or collaborate on an exciting piece!