Coinbase Users in Georgia Exploit Price Bug

Coinbase Users in Georgia Exploit Price Bug

It seems that Coinbase's pricing error haven't gone unnoticed. 

Coinbase, a cryptocurrency exchange established in 2012, has discovered that Georgian users have exploited a price bug

According to the news report shared by Blockworks, Georgian users were able to manipulate the price bug by cashing out their digital assets for 100 times the actual exchange rate

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On August 31st, the Georgian lari (GEL), the country's national currency, due to a third-party technical issue, was rated as 290 GEL rather than 2.90 GEL.

Based on the data presented by Blockworks, the error was active for around 7 hours and was used by around 1000 people before it was fixed. According to Coinbase spokesperson: 

Upon detection, we fixed the issue and are taking action to retrieve the improperly withdrawn funds.

Although there is no information on how much money Georgian users managed to withdraw, Coinbase’s spokesperson noted that it is "a small non-material amount."

One trader told Blockworks that despite them having to receive $150 after their transactions, they received $15,000. In the majority of cases, users transferred these funds straight to their personal bank accounts, where they expected them to be safe. 

However, it was not the case. Some Georgian banks noticed the suspicious transactions and notified customers that their bank accounts and Visa debit cards were frozen. One customer shared an email from their financial institution, which states:

Hello, we have marked your transactions with Coinbase as suspicious and we’re locking all your accounts and cards. Please be aware that Coinbase may request a clawback of the funds. Sorry.

As a result, some Georgian traders cannot use any of their funds regardless of whether they are connected to the exploit or not. 

It seems that users are more than happy to exploit the mistakes of cryptocurrency exchanges. On August 31st, the news broke that accidentally sent a user $10.5 million while attempting to refund the person $100

Gile K. - Crypto Analyst

by Gile K. - Crypto Analyst, BitDegree