Chinese Crypto Community Criticizes Coinbase for Selling User’s Bitcoin Without Prior Notice

US-based crypto exchange Coinbase reportedly sold a Chinese user’s Bitcoin holdings due to inactivity. The user shared the story on Xiaohongshu, which sparked a heated debate online. Many criticized Coinbase for selling a user’s assets without prior notice. 

Also, the user voiced concerns about property rights and account security on crypto exchanges. This development underscores the risks associated with cryptocurrency investment.  

Why Coinbase Sold the User’s Holdings?

In 2017, the said Chinese investor, addressed as the original poster (OP), used ¥200,000 in savings to buy Bitcoin. Initially, OP intended only to buy Bitcoin, hold it for a long time, and sell it when the price soars or it crashes.

However, the market moved unexpectedly, and the OP frequently bought and traded various altcoins. Soon, the OP encountered significant losses, and by early 2018, their Bitcoin holdings had dwindled to 0.5 BTC from 2 BTC.

Following a period of market volatility, the investor consolidated the remnant of their assets into Bitcoin and held it until 2020. Despite the brief bull run in 2021, their holding further reduced to 0.23 BTC due to speculative trading of other tokens, USDT and Bitcoin.

Due to security concerns on platforms like Binance and Huobi, the OP moved their crypto assets to Coinbase in late 2021. However, the situation turned tense when they discovered they could no longer access their account in June 2024. 

According to the user, they contacted Coinbase’s customer support only to learn that their account had been closed, and the Bitcoin had been sold and sent to an institution in Wyoming. 

The exchange said the account remained inactive and was deemed unclaimed property. However, the OP said they logged into the account in February and March 2024. 

Meanwhile, according to state laws, Coinbase policy deems accounts inactive for three to five years as unclaimed property. So, Coinbase’s customer service dismissed the user’s login evidence, advising them to contact the Unclaimed Property Division in Wyoming.

Can the User Recover Their Asset?

The user’s story sparked reactions among crypto community members. 

According to one Reddit user, the occurrence emphasizes the importance of allowing users to maintain control over their assets.

“Again proving, Not your keys, Not your coin,” the user wrote. The OP agreed with the Reddit user, admitting that his words were “very true.”

Another Reddit user suggested taking legal action against Coinbase and filing complaints to regulators like the SEC, PCAOB, and FINRA so that it would pay fines for its actions.

On the other hand, another user proffered a different view, explaining the US legal framework. According to the user, even though the OP believes the chances of reclaiming their funds are zero, a full recovery is possible. 

The user explained that accounts that remain inactive for two years will automatically become unclaimed property. But that doesn’t mean the funds are gone; the owner can apply to recover them.

Another user echoes a similar sentiment, noting that the OP can always reclaim his assets once he proves his identity. They indicated that deeming inactive accounts as unclaimed property is a means of protecting user accounts and funds. 

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