Coinbase Blocked Thousands Of Accounts Due To Regulatory Compliance, Halting Customer Funds

In the last few days, several customers of the crypto exchange Coinbase have complained about having their accounts restricted.

Many users have reported that their accounts have been blocked, while others complain that they are unable to send crypto outside of the platform despite not violating any of the terms of service of the platform.

Many of these customers affected are long-time customers of Coinbase with 6 figure wallets. This incident couldn't come at a worst time, with Bitcoin just surpassing the key threshold of 100,000 dollars.

Users reports having contacted the exchange's customer service asking for explanations, only to receive misleading answers.

Others have complained that the waiting time for contact with the dedicated help center turns out to exceed 5 working days.

Coinbase facing a sea of backlash

As the number of complaints against Coinbase piles up, the exchange decided to speak out on X, explaining the situation. Coinbase started by warning about the slew of misinformation on the internet about the current situation.

In another post, Coinbase also urged its customers to remain patient with a warning to users to not believe everything that they hear on the internet.

Coinbase also explained that the blocking of accounts coincides with the increase in fraudulent attempts following the presidential election. The company claimed its fraud-prevention systems have successfully mitigated significant risks, saving customers “tens of millions” in November alone.

Coinbase’s approach to VPN usage has also drawn scrutiny. In a Dec. 2 post, Coinbase product director Scott Shapiro explained that while attackers often use VPNs, the exchange’s risk models flag this as a potential red flag. He later clarified that using a VPN alone would not trigger an account review, but when combined with other factors—such as accessing accounts from unknown devices in new locations—it could prompt additional security checks.

But this way of identifying fraud has led to criticism from industry experts. For example, the head of Kraken Nick Percoco attacked Coinbase, saying

"You are making some of your users choose between financial freedom and physical safety."

Addressing the delays, Coinbase’s support team acknowledged “a minor increase in restricted accounts and elevated wait times,” urging users to remain patient. They assured customers that restricted accounts are not being ignored and that their team is “working hard to respond as soon as possible.”