Coinbase has been banning user accounts that send Bitcoin to gambling sites, such as Satoshi Dice or Seals With Clubs. Earlier today a reddit user made a post stating Coinbase banned his account for allegedly purchasing cannabis products with coins purchased from the service. The user provided screenshots of email correspondence with the Coinbase support team, which states the remaining coins in the user's wallet may be withdrawn, but will not be able to utilize the purchase or selling services Coinbase provides.
Coinbase cites this decision was based on its efforts to stay in compliance with anti-money laundering (AML), regulations. These actions however raise concerns that Coinbase is tracing coins purchased through their service, and users' spending habits even after coins have been withdrawn from the online wallet. These actions can set a dangerous precedent for blacklisting unspent outputs involved in transactions with "suspicious addresses."
What's happening there isn't "blacklisting unspent outputs involved in transactions with suspicious addresses". What's happening there is Coinbase breaking the US laws they claim to respect by randomly closing down user accounts without cause.
There is nothing absolutely suspicious about any Bitcoin address, nor could there ever be. Mere statements to the contrary are much akin to Citi claiming it's not lending to poor black people "because the sun is purple". The sun isn't purple, and arbitrariety in US banking is covered in federal legislation.
If Preet Bharara were in any sense an officer of the law, rather than the center of a RICO conspiracy, he'd be prosecuting Coinbase for their illegal activities.
Coinbase is the AOL of Bitcoin service providers. Once everyone understands Bitcoin and moves to controlling their own private keys, the Coinbase business model will no longer be viable.
Also, if Coinbase keeps making these sorts of inexcusable judgements it will accelerate the public education, causing an earlier than expected mass exodus to more trustworthy, less irrational and compliant services.
America, as it is run today is toxic to Bitcoin and this conflict of desired procedures and outcomes is going to come to a head eventually. The State is going to lose, just as the RIAA/MPAA has permanently lost the "war on piracy". You never hear about software piracy as a major problem; that's because the business models of developers have adapted to reality. Content providers refuse to obey the market, and suffer accordingly.
Unfortunately for the Statitst, the State thinks that it is reality, and it's a delusion they won't give up willingly. Unlike the adaptable software developers, there is no money to be made in capitulating to the market for the State (as far as they can see, which is as far as their noses).
Coinbase offers little advantage over storing your own Bitcoin . It's risky junk, run by people who are too frightened to defend rational decisions and who are on the wrong side of ethics and history.
It's a shame Coinbase never really understood their place. They worked for a while as a venue for changing the glorious hard money of Bitcoin into whatever abysmal local script you happen to need. Today I logged into my old Coinbase account I used to foolishly use for that purpose and discovered they would let me sell up to $50,000 of Bitcoin at at time, but buy far less… I think it was $1,000.
It is no secret at all in which direction the state and its agents would like Bitcoin to flow and for what purpose.
As a place to store Bitcoin, Coinbase has always been an abysmal option. As a place to buy Bitcoin it was slow and required precaution to ensure no ill imagined imaginary and malicious flags were tripped.
The entire operation though stinks of the naiveté and optimism of Silicon Valley. I has the SV stink of "This is such a simple way to play at Bitcoin while appeasing our masters, We'll never be discovered."
It's the same way nearly all Silicon Valley companies abuse their customers. The build the panopticon, but because they think themselves clever for hiding the bars. Such stewards of any transactions that might leave their aspiring walled garded yet… They would trade USD without question for a raw signed transaction sent in the mail written with fatty, yellow, Bilious turd on a background of dry, black constipated and bloody turd.