Consumer Complaints Against Digital Currencies Increase Amidst Phenomenal Price Increases
The number of complaints against digital currencies that were filed with the US Consumer Financial Protection Bureau (CFPB) has increased by Up 5,971%, according to report by LendEDU.
Amidst the increasing market capitalization for cryptocurrencies, the number of complaints against digital currency companies filed with the US Consumer Financial Protection Bureau (CFPB) has increased by nearly 6,000% according to report by LendEDU.
Based on CFPB data, there have been 277 complaints tagged “virtual currency” since January. In all of 2016, there were only seven. An additional 288 complaints have been filed against Coinbase in 2017. Nonetheless, this represents just a fraction of the 145,948 total complaints lodged with the CFPB in 2017.
The complaints filed by consumers do not necessarily mean that the parties in question are engaging in any wrongdoing. However, regulators and researchers are using the database of the CFPB to identify possible criminal activities.
CFPB warning on digital currencies
Meanwhile, the CFPB has issued a warning to consumers on the possible issues with cryptocurrencies. Among the potential issues cited are the virtual currencies’ volatile exchange rates and the threat of hacking and scams. The agency also claimed that companies involved in digital currency trading may not provide assistance or refunds for lost or stolen funds to the consumers.
Opinion on the possible reasons behind the increase in complaints
Bitcoin tax law and anti-money laundering (AML) compliance specialist Tyson Cross has offered his opinion about the rise in cryptocurrency complaints. He thinks the increase in complaints is due to the stricter verification processes that have been implemented by exchanges.
“As a whole, the industry is growing and more consumers are creating accounts. At Coinbase, the userbase is growing very rapidly. However, as the industry has grown so to have the restrictions placed on companies like Coinbase by regulators. Regulators have forced exchanges, like Coinbase, to place tight restrictions and limits on users due to anti-money laundering concerns. Coinbase, and other exchanges, now require an in-depth verification process to withdrawal money.”