Coinbase demands from Georgian users the return of funds received by mistake

The exchange’s clients were able to cash out their assets for 100 times the rate

02.09.2022 - 09:30

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What’s new? Cryptocurrency exchange Coinbase has demanded to return funds from users’ bank accounts after it discovered that some traders from Georgia had cashed out cryptocurrency at a rate 100 times higher than the estimated market value. The exchange’s clients were able to use an erroneous asset exchange rate in pairs with the Georgian lari (GEL) for several hours, Blockworks reports. Shortly after withdrawing funds, users who used the bug received notifications from their banks that their bank accounts and Visa cards had been frozen.

Blockworks’ material

How did events develop? One of the sources of Blockworks reported that at least two Georgian banks were involved in the blocking of funds, while not at Coinbase’s request.

“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,” one bank’s statement says.

Some trades that were supposed to bring in only $150 brought in $15 000 due to the bug. A Coinbase spokesman said a decimal point was missed with the Georgian lari settlements because of a “third-party technical issue.”

At the end of August, Georgian authorities approved an updated legal framework for the financial sector, regulating the sphere of digital business and cryptocurrency trading. The document had been sent to the parliament, with the adoption of the amendments scheduled for the fall session.

In May 2021, the Crypto.com exchange accidentally transferred $10,5 million to an Australian user instead of refunding her $100. The error was discovered during an audit seven months later. The exchange filed a lawsuit with the Supreme Court, but the woman who received the funds had already bought a mansion in Craigieburn. The judge ordered the property to be sold, and the money returned to the exchange.

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