On Thursday, many users of Coinbase, one of the world’s most popular cryptocurrency marketplaces, reported their bank accounts were either emptied or hit with large overdraft fees.
Those users found out that the exchange had charged them multiple times for the same transactions. Coinbase also acts as a digital wallet which enables people to store their digital coins before they trade them.
Coinbase is especially popular because its interface is one of the most user-friendly on the market, a feature that has lured in new cryptocurrency traders. The company acknowledged that there have been some issues but promised to work “as quickly as possible to help anyone affected by this.”
Initially, the digital exchange did not say if the problems were caused by a glitch or hack. While some users were doubled charged for a single operation, other complained on Reddit that they had as many as 50 phony charges.
We can confirm that the unexpected charges are originating outside of our control, and are related to charges from previous purchases,
a Coinbase spokesperson said.
Coinbase Blames Visa
Coinbase ultimately put the blame on Visa, which processes the credit and debit cards that users use across the platform. In short, Visa reclassified the operations on the exchange as “ash advances,” and the system automatically recharged old transactions.
The move was a spurred by a collective decision of most card issuers last week to alter the Merchant Category Code (MCC) for the digital exchange. As a result, the transactions on Coinbase were tagged as “cash advances,” which usually trigger larger fees.
None of the extra fees went to the exchange and they do not benefit the startup either since users will be discouraged from using their credit cards on the platform from now on. The company said the changes would not be permanent and promised to refund affected users.
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