Coinbase is crumbling under pressure due to “a large volume of outgoing bitcoin transactions,” which has led to withdrawal delays of 12 hours or more.
“We’re seeing a high backlog in bitcoin withdrawals due to significant congestion on the bitcoin network. This means it is taking us longer than normal to process bitcoin withdrawals.”
So says Coinbase in a factually incorrect statement because the bitcoin network currently has no backlog and is operating as normal.
The bitcoin network used to be congested, but when fees reached a high of $7, it appears much demand shifted elsewhere with the bitcoin mempool – the transaction “queue” – being of an insignificant size now.
However, Coinbase’s own system is clearly very congested due to a probable race to withdraw ahead of the August 1st deadline.
That’s because Coinbase has made an astonishing statement, saying in very definitive terms that their “customers will not have access to, or be able to withdraw, bitcoin cash (BCC).”
Even with somewhat restrictive ViaBTC futures, which require freezing of BTC until after August first in order to have your BCC now, Bitcoin Cash is still trading at around $300, reaching a high of $900.
Once BCC is created on August 1st, with the asset to be listed on Kraken, South Korea’s Bithumb, and other exchanges, its price may settle higher due to a lack of any constrains on demand.
As such, everyone wants their hands on Bitcoin Cash, regardless of their views on scalability, because money is money. So they are seemingly racing to get out of Coinbase.
But Coinbase appears to be doing their best to keep them locked in. People are complaining about their webcam based verification system which often doesn’t work. Some are complaining about their withdrawal limits which lock them in beyond August 1st.
While now, even those that can get out have to wait for hours, with some saying their withdrawal from Coinbase took 24 hours or more.
All this has led to questions about their solvency. Not least because the BCC statement makes no sense from either a political or practical view.
Politically, Coinbase’s CEO has been a strong and very vocal supporter of bigger blocks. Practically, it is very unlikely their position would hold up in any court of law since they are with-holding property belonging to others.
And even if by some miracle a court of law does uphold it, their reputation in the court of public opinion is now seemingly down the drain because many see the BCC statement and its handling as unforgivable.
As such, Coinbase is showing once more the veracity of that old saying. It took them years to build a crisp and professional reputation. It took them three days to throw it all away.