The error was simple, Coinbase priced the Georgian Lari at $290 instead of $2.90 for seven hours on Wednesday. According to the exchange, only about 1000 users took advantage of the opportunity and the company only lost a nominal amount. Coinbase wants it back, though. And they’re taking action on the matter.
Some coinbase users saw this amazing opportunity of arbitrage, sold their assets and withdrew money on their bank accounts.
— Levan Ilashvili (@LevanIlashvili) August 31, 2022
In few hours, one of the worst Georgian banks - TBC - blocked ALL of their accounts and ALL their money.
According to Twitter user Levan Ilashvili, at least one bank blocked all of the users’ accounts until further notice. “At the moment, Coinbase is not communicating with their customers and at the same time, people can’t withdraw their own money from their own bank accounts,” he tweeted. And while Coinbase does reserve the right to reverse erroneous transactions in its user agreement, the fact of the matter is that ALL of the users’ funds have been frozen on account of their mistake.
While Coinbase’s official channels didn’t comment on the matter at hand, a company spokesperson did speak to Blockworks. Of course, the company blamed it all on a “third-party technical issue” and called it a day.
“In late August, prices for cryptos denominated in Georgia’s national currency had been rated at GEL 290 instead of GEL 2.90. The missed decimal point had been due to a ‘third-party technical issue. A very small number of users (0.001% of our total users) were able to erroneously trade and withdraw a small non-material amount of funds. Upon detection, we fixed the issue and are taking action to retrieve the improperly withdrawn funds.”
In the same report, the website quotes “one bank’s blanket text message to customers.” And it certainly seems like Coinbase had a lot to do with the freezing of the accounts.
“Hello, we have marked your transactions with Coinbase as suspicious and we’re locking all your accounts and cards. Please be aware that Coinbase may request clawback of the funds. Sorry.”
Last but not least, Blockworks quotes one of the lucky/affected Georgian crypto users.
“[There were] multiple levels of failure from Coinbase. They had no checks. Even worse, when they detected unusual activity, which they should have detected, they failed to act on it for over seven hours.”
