Is Coinbase Safe? What 8,727 Trustpilot Reviews Tell Us

Even though Coinbase is the largest US-based cryptocurrency exchange, there are a few warning signs you need to consider before giving the exchange a try:

• Coinbase has a rating of 1.5 out of 5 stars from 8727 reviews on Trustpilot 

• Coinbase was hacked in 2021 when a security flaw in account recovery protocol compromised the accounts of 6,000 users 

• Coinbase was sued in 2023 by the SEC for operating illegally as a securities exchange without registering with a regulator.

Just because it’s the biggest U.S. exchange doesn’t mean it’s the safest. Is Coinbase safe? Can you trust Coinbase with your money? 

In this article, we dive in and analyze some of the 8727 significant customer reviews on Trustpilot and major customer concerns with the exchange. Not a big reader?

Use the jump links below to move directly to the section you’re most interested in:

• 5 Safety Concerns From 8727 Trustpilot Reviews

• Top 6 Coinbase Scams to Watch Out For

• 5 Coinbase Security Tips to Implement Right Now

• Coinbase SEC Lawsuit and Wells Notice

• Coinbase Users Reporting Problems with Resetting 2FA Authentication

• Coinbase No Longer Providing Multi-Sig Protection

• Coinbase Recent Outages and Technical Issues

Initially, we were shocked to see an incredibly low Trustpilot rating for Coinbase.

• As of December 3rd, 2023, Coinbase has a rating of 1.5 out of 5 stars from 8,727 reviews on Trustpilot!

• Of 8,727 customers who reviewed Coinbase on Trustpilot, 6,894 of 8,727 reviews gave Coinbase a 1-star out of 5 rating!! 

• 79% of ALL Coinbase customers who left a Trustpilot review had a horrible experience with Coinbase.

What customers are most unhappy about:

• Safety and Security

• Poor Customer Service

• High Fees

• Account Freezes

Here is the summary from 8,727 reviews of the primary security and safety concerns customers cited about Coinbase when reviewing the platform:

1. Account Security: Customers are concerned about the safety of their accounts and the potential for unauthorized access. While customers appreciate two-factor authentication (2FA), they are still concerned because of reported compromised accounts and security breaches.

2. Data Privacy: Privacy is a big concern for many customers leaving a poor review of Coinbase because of the previous breach; customers are concerned about mishandling and unauthorized sharing of their personal information.

3. Concerns Over Private Keys: Since Coinbase is a custodial exchange, it holds customers' private keys on their behalf. Many customers are concerned about the risks associated with trusting a third party to keep their private keys and assets safe (primarily since customer support is so poor).

4. Account Freezes & Compliance Concerns: Several customers have reported their account was frozen, and restrictions were imposed due to compliance measures. While most of the time, these measures are imposed to regulatory standards to prevent fraudulent activity, the main issue is that Coinbase lacks clarity on the reasons for these actions. Customers are often unsure why their accounts are frozen, or restrictions are imposed.

5. Phishing Scams: Customers mentioned that there are a lot of phishing scams and attempts to impersonate Coinbase with fake emails designed to trick users into providing them sensitive information. It’s becoming harder and harder to detect for most customers. 

To sum up, Coinbase customers have severe safety and security concerns about the exchange based on their reviews on Trustpilot. Let’s look at actual Coinbase scams customers are concerned about.

Here are six common Coinbase scams many Coinbase customers experience and what you should watch out for:

1. Phishing Scams: fraudulent emails, websites, or messages that imitate Coinbase’s official communication to trick users into revealing their login credentials or other sensitive information. 

2. Impersonation Scams: Scammers typically create fake social media profiles or websites that closely resemble Coinbase’s official channels, such as “CoinbaseUS.” They then use these platforms to impersonate Coinbase support and trick users into providing account details or making fraudulent transactions.

3. Fake Coinbase Apps: Some scams involve the creation of fake mobile apps that mimic the Coinbase app. Users might unknowingly download these apps, providing scammers access to their account credentials and sensitive information.

4. Investment Scams: Scammers might promote fake investment opportunities or schemes, claiming to be affiliated with Coinbase. 

5. Tech Support Scams: In this scam, scammers will contact users posing as Coinbase support agents and claim an issue with the user’s account. They may request remote access to the user’s computer or ask for payment to resolve the issue.

6. Giveaway Scams: Fake giveaways or promotions that claim to be sponsored by Coinbase are common scams. Scammers may ask users to send cryptocurrency to a specified address in exchange for larger returns, which never materialize.

Now, let’s look at how to protect yourself from these scams if you’re currently using Coinbase.

Now that you know the main security risks and flaws Coinbase customers report you might want to know how to protect yourself from them, here are some top security measures you can implement:

1. Use the Coinbase Vault:  It’s important to avoid storing your Bitcoin or crypto on the exchange. If you’re actively trading store your bitcoin or crypto in the Coinbase vault. Coinbase vault is an extra secure storage option provided by Coinbase that has multi-email withdrawal approval and a 48-hour withdrawal delay.

2. Use Two-Factor Authentication: Make sure you implement 2FA which requires you to use a second verification method — like biometrics or a verification code sent via text to access your account.

3. Make Sure to Use Strong and Unique Passwords: Scammers can guess simple passwords, and repeated ones may expose you in the event of a breach. 

4. Secure Your Mobile App:  Turn on screen lock on your IPhone or Android device and add and enable a security passcode in the Coinbase app’s settings.

5. Check Your Activity on the Coinbase Activity Page: Many customers simply do not login to Coinbase for a long time. Make sure to regularly login to your account and check latest activity. Make a reminder for yourself to do so.

Coinbase is a regulated and licensed cryptocurrency exchange. While it has made efforts to comply with regulatory requirements in its operating jurisdictions, Coinbase has still faced numerous potential regulatory issues in recent months. The exchange was issued Wells’ Notice by the U.S. Securities and Exchange Commission (SEC) on March 22nd. 

While Coinbase has obtained various licenses and registrations to operate as a cryptocurrency exchange and comply with relevant regulations, the SEC recently sued the exchange for operating as an unregistered broker-dealer and allowing its customers to invest in several likely unregistered securities. 

Several, possibly thousands of Coinbase users have complained that their accounts were blocked due to 'Regulatory Compliance' — halting customer funds. They are prompted with the following message:

While some users only had to take a picture of the front and back of a government issued ID, others have complained their accounts remained locked.

** UPDATE: It was reported on July 31st that, ahead of initiating legal proceedings against the exchange, the SEC instructed Coinbase to halt trading in all cryptocurrencies except for Bitcoin. This move indicates the agency intends to exert regulatory jurisdiction over a broader market section.

According to Coinbase CEO Brian Armstrong, the SEC provided this recommendation before taking legal action against the Nasdaq-listed company, for its failure to register as a broker. As the regulatory landscape shifts, it’s wise for investors to consider safeguarding their holdings by moving them from Coinbase into secure cold storage.

Additionally, converting altcoins to Bitcoin and opening an account with a Bitcoin-only company could prove to be a strategic move in light of these changes. 

In a positive development for Coinbase, on August 16th, 2023, it received a green light to provide cryptocurrency futures to retail customers in the United States. It enables

Coinbase to directly provide Bitcoin and ether futures to eligible retail customers in the U.S. Previously, these trading products were exclusively available to institutional clients.

Coinbase is registered as a Money Services Business (MSB) with the Financial Crimes Enforcement Network (FinCEN) and holds licenses to operate as a cryptocurrency exchange in several states.

Coinbase is authorized as a regulated virtual currency exchange by the Central Bank of Ireland (CBI) and custodian by the Estonian Financial Intelligence Unit (FIU). Unlike E-Money Services, Digital Currency Services are not regulated by the CBI. Coinbase Europe is not a regulated financial services provider. Coinbase Europe is based in and provides its services from Ireland. 

Coinbase has acquired licenses from the Financial Conduct Authority (FCA) in the United Kingdom. At Swan, we believe using a Qualified Custodian and withdrawing into self-custody is the best framework to minimize custody, bankruptcy, and regulatory risk.

Coinbase has halted new user sign-ups for its exchange in India while affirming its commitment to the country. This decision follows recent emails to some Indian customers stating that exchange operations would cease after September 25, 2023, affecting only those who didn’t meet updated standards:

Please note that you will be able to access Coinbase.com or Coinbase app until September 25, 2023, and should withdraw funds held in your account by such date.

Coinbase has faced challenges with local authorities since its launch in India over a year ago, citing informal pressure from the Reserve Bank of India as a reason for halting trading services. Indian authorities have maintained a cautious stance on cryptocurrencies, emphasizing the need for international cooperation in regulating digital assets.

Coinbase does NOT allow you to withdraw Bitcoin to a cold storage wallet in Singapore. Users receive the following message:

Coinbase has implemented several security protocols and practices to protect user funds and safeguard against hacking attempts and cybersecurity threats. 

Two-Factor Authentication (2FA): Coinbase encourages users to enable 2FA, which adds an extra layer of security by requiring a unique code generated on a mobile device and a password. Some Coinbase users have reported problems resetting the 2FA, including requiring multiple rounds of ID verification and the process taking a long time to complete.  

Swan also encourages our customers to use 2FA to secure their accounts using an authenticator app. Adding 2FA authentication greatly improves its security if your email account gets compromised by attackers.

Bitcoin at our custodian is secured using a geo-distributed quorum of multi-party computation (MPC) wallets. This technology does not keep a key online that can be stolen, lost, or hacked. 

Instead, in real-time, an attacker would have to compromise a large percentage of the human/device quorum across a large geographical area. The time they have to perform such an attack is limited, as the key shares are rotated frequently. 

Secure Infrastructure: Coinbase employs industry-standard security practices to protect its infrastructure and systems, including firewalls, intrusion detection and prevention systems, and regular security audits.

Employee Access Controls: The platform has strict access controls in place to limit employee access to sensitive customer information and funds. Access is granted on a need-to-know basis, and all employee actions are logged and monitored.

However, in an industry first, Ishan Wahi — a former Coinbase Product Manager, was sentenced to two years in prison for insider trading. Additionally, his brother, Nikhil Wahi, also agreed to be permanently enjoined from violating Section 10(b) of the Securities Exchange Act and Rule 10b-5 and to pay disgorgement of ill-gotten gains. 

Bug Bounty Program: Coinbase operates a bug bounty program, incentivizing security researchers and ethical hackers to report any vulnerabilities or weaknesses they discover. This helps identify and address potential security issues before they can be exploited.

Third-Party Audits: Coinbase undergoes regular security audits conducted by reputable third-party firms. Audits help identify security weaknesses and areas for improvement to ensure adherence to industry best practices. However, specific details about these audits remain largely private due to security concerns and the sensitivity of the information involved.

Offline Storage (Cold Storage): Coinbase employs multiple layers of security to store and secure user funds. The majority of customer funds held by Coinbase are stored in offline, cold storage wallets. These wallets are not connected to the internet, making them less vulnerable to hacking attempts and online threats. This offline storage strategy helps protect user funds from unauthorized access.

Multi-Signature Technology: Coinbase previously offered a multi-signature mechanism for its wallets. However, it no longer provides this service. 

Swan does utilize a multi-sig tool. In March 2022, Swan acquired Specter Solutions. This acquisition gives customers a seamless stacking experience in their Bitcoin wallets with multi-sig cold storage capabilities.

Insurance: In case of a security breach or loss of funds, Coinbase has certain options available to users. It provides insurance coverage for cryptocurrency holdings stored in its custody provider. 

Your Bitcoin and USD are stored under your name with BitGo, with you as the sole legal owner. Swan does NOT have the ability to move your funds.

Account Recovery: Coinbase has account recovery procedures in place to help users regain access to their accounts in case of unauthorized access or loss of account credentials. Users can follow the account recovery process, which typically involves identity verification and account ownership confirmation.

If Swan users lose their phone, access to 2FA, or it’s not working for whatever reason, we have a backup way to recover your 2FA (6-digit pin codes).

While Coinbase has a generally positive reputation, it has not been without controversies or customer complaints. 

Coinbase has a set of customer support protocols. However, Coinbase has a notorious reputation for its poor customer service. Many users have reported issues with frozen or suspended accounts without explanation and no ability to receive personalized responses. Customers regularly complain about this on Twitter, Trustpilot, and forums like Reddit. The platform offers no live chat feature other than a bot with limited capabilities. 

Coinbase’s Trustpilot rating is only 1.5 / 5 stars out of nearly 8,500 reviews. 79% of these reviews received a 1-star rating.

In contrast, Swan boasts a nearly opposite Trustpilot rating, with 78% of customers rating their experience as 5-star. 

Coinbase fares no better with the Better Business Bureau. The exchange has a near-worst possible score of 1.06 stars of 5-star rating.

Furthermore, the following ⚠️ CURRENT ALERTS FOR THIS BUSINESS message can be found on the company BBB page:

On October 17th, Coinbase announced that it had halted trading for 80 pairs not denominated in USD for specific supported assets on Coinbase Exchange, Advanced Trade, and Coinbase Prime. These pairs encompass a variety of cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), stablecoins such as Tether (USDT), and conventional fiat currencies like the Euro.

Some of the trading pairs in question are ACH-USDT, AGLD-USDT, ARPA-EUR, ARPA-USDT, AUCTION-EUR, AUCTION-USDT, BADGER-EUR, BADGER-USDT, BAND-BTC, BAND-EUR, BAND-GBP, BNT-BTC, BNT-EUR, BTRST-BTC, BTRST-EUR, BTRST-USDT, C98-USDT, CTSI-BTC, DESO-USDT, ELA-USDT, ERN-USDT, among others.

Coinbase has had a fair share of slow loading times, long outage periods, transaction delays, and server errors, especially during periods of high volatility, making taking advantage of market volatility a massive pain point for investors.  In 2021, hackers stole crypto assets and user information from at least 6,000 Coinbase customers. 

The 2021 Coinbase breach exposed that user accounts on the cryptocurrency exchange are not entirely immune to hacking. If sophisticated hackers obtain your personal information, such as your address, passwords, and phone number, they could potentially gain access to your account, even without compromising Coinbase’s systems.

Coinbase has frozen or suspended user accounts in certain cases due to suspected fraudulent or suspicious activity. Many users have expressed frustration over account freezes, citing difficulties in resolving such issues.

Swan customers can easily unlock frozen accounts by following these simple steps.

Coinbase provides a ‘Help Center’ on its website, which includes a comprehensive knowledge base with articles and guides addressing common questions and topics. Users can search for relevant information and troubleshoot steps to resolve their concerns. The exchange also offers customer support through email and a ticketing system.

To submit an official complaint to Coinbase, follow these steps:

If you’re dissatisfied with Coinbase Support’s response, use the complaints form. Make sure to include your case number on the form. If you don’t have a case, attempt to resolve your issue with Coinbase Support first.

When completing the complaints form, provide a detailed explanation of your complaint, your preferred resolution, and the reasons behind your choice. The online form is the quickest option.

Once you’ve submitted your complaint, you will receive an acknowledgment within 15 business days. Coinbase’s Complaints Resolution Officer will email you a written decision regarding your complaint. In some cases, they may reach out for further clarification, aiming to respond promptly.

However, as previously mentioned, many Coinbase customers complain about the abysmal service and response time they receive from the Help Center. 

In July, the DeFi platform Curve experienced a $73 million exploit, causing temporary price irregularities. A trading bot seized the opportunity, paying 570 ETH to capitalize on this unique arbitrage situation.

The Ethereum validator responsible for receiving this payment was reportedly operated by Coinbase, making the exchange an unintentional beneficiary of the incident. Alchemix, the victim of the exploit, approached Coinbase to request a refund for affected parties, but Coinbase has yet to return the funds.

Coinbase is considered a secure cryptocurrency exchange with multiple security measures, including 2FA and industry-standard protocols. It complies with many regulatory requirements and provides transparency about its security practices. 

But, is Coinbase Safe? It depends who you ask.

Many customers find it difficult to use the exchange once problems or issues arise with their accounts, and addressing these problems is challenging. If you care about customer service, education, integrity and want a committed team of experts in your corner, available to help you whenever you need it, Swan is the best option to buy and hold Bitcoin. 

So, if you are a current Coinbase customer unhappy with the platform, check out our Swan as an Alternative to Coinbase article for fees and other relevant comparison information. Once you are ready to transition away from the exchange altogether, we’ll walk you through how to complete this process, remove your digital assets from the platform, and start securing your Bitcoin future today.