Coinbase Users Just Withdraw 100x Their Holdings, Here’s How
Coinbase is looking to recover losses incurred from a bug that enabled Georgia-based customers to withdraw up to 100x their assets. The American exchange has come under some heat from U.S. regulators, and the recent bug is one of it’s recent woes.
Magic bug gives Georgian $LARI a rating of 290 instead of 2.90
Several Georgian users exploited a bug associated with the eastern European country’s currency on the exchange. It appears the bug rendered the Georgian Lari at a value 100x its original price. The Lari, on Wednesday, had a rating of 290 instead of 2.90 on Coinbase. The exchange did not discover and fix the bug until 7 hours later.
The mistake was an obvious case of an omitted decimal point. Coinbase noted that the error came from a technical third-party issue. The fact that such a minute error can result in significant damage that could result in massive losses underscores the need for meticulousness in handling financial data.
Customers who discovered the bug before Coinbase fixed it were able to withdraw 100x the values of their Lari. Coinbase mentioned that only about 0.001% of its customers took advantage of the bug. This rate translates to about 1,000 customers. Some users withdrew the funds to their bank accounts, while some used their bank cards.
Coinbase under fire from the SEC
Some of the customers’ banks have frozen the accounts and cards of the individuals involved. Reports identify at least two banks that have done this. Notwithstanding, Coinbase has noted that it did not give this order. A Coinbase spokesperson mentioned, however, that they were employing measures to retrieve the funds.
The Coinbase bug surfaced barely a day after the reports of Singapore-based exchange Crypto.com mistakenly transferring $10.5M instead of a $100 refund to two Australian women. The platform discovered the issue 7 months later in a December audit last year. Crypto.com has charged the women to court, seeking a refund of the erroneous transfer.
Besides this recent bug, Coinbase has been at the receiving end of the U.S. SEC’s aggressive litigations of late. Early last month, the SEC launched a probe into Coinbase due to its staking program. Additionally, in July, following DOJ charges brought on an ex-Coinbase employee for insider trading, the SEC asserted that some of Coinbase’s listings are unregistered securities.
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