Crypto investigator ZachXBT has sharply criticized Coinbase for recurring account locks and an undisclosed data breach. His public remarks highlight growing concerns over the exchange’s lack of transparency and poor customer service.
In a recent social media post, ZachXBT expressed frustration over being locked out of his Coinbase account twice in one month without any explanation. He also raised concerns about a customer data breach that was never transparently announced. According to ZachXBT, the incident led to thefts but went unaddressed by the platform in a way that he felt was unsatisfactory.
Reigniting concerns over Coinbase’s trustworthiness
ZachXBT’s comments are not the first to raise alarms about Coinbase’s history with customer trust and security. While the platform markets itself as a secure and regulated option for crypto trading, it has faced a series of incidents that contradict these claims. Coinbase’s initial public offering in 2021 boosted its reputation, but its customer service and security flaws have been a source of ongoing criticism.
In 2021, when market volatility became a prominent issue, Coinbase Exchange prevented thousands of users from accessing their accounts. A problem with Coinbase’s SMS recovery procedure enabled hackers to circumvent two-factor authentication, depleting user accounts. Coinbase paid back some of the stolen funds, yet its users criticized the exchange for its slow reaction to attacks and insufficient support for breach victims.
Ongoing scrutiny and regulatory challenges
Coinbase’s regulatory issues are more of a source of controversy. In 2023, the U.S. Securities and Exchange Commission (SEC) took legal action against Coinbase for running an unapproved securities trading platform. Despite fighting its legal battle with the SEC, the company declares that it supports regulatory standards. Users such as ZachXBT doubt whether Coinbase provides identical data protection and security communication to its users.
The SEC’s legal action has magnified public scrutiny against Coinbase, including strengthened requirements for the platform to demonstrate its commitment to legalization compliance and client protection.
Growing distrust in centralized platforms
According to ZachXBT, cryptocurrency users share a commonly felt perception in the crypto community. Numerous platform users have started using decentralized solutions seeking enhanced user control and transparent and secure systems. Coinbase faces ongoing adverse reactions because crypto users increasingly doubt the ability of centralized exchanges to protect their funds first and foremost.