The value of digital currencies like bitcoin has fallen back to earth after peaking in December 2017, but interest remains high. Prominent advisers like Ric Edelman remain bullish on crypto while institutions like Fidelity are developing infrastructure to support cryptocurrency trading.
Accompanying cryptocurrencies’ rise in popularity has been an increase in consumer complaints. According to an analysis by LendEDU of the Consumer Financial Protection Bureau’s database of consumer complaints, consumers submitted 1,186 complaints about cryptocurrencies in 2018. Only seven complaints were filed in 2016, so that’s a 16,843% increase in just two years.
However, 817 complaints were filed in 2017, so the increase from 2017 to 2018 was only 45%. LendEDU research analyst Mike Brown suggested that could be correlated with the drastic drop in the prices of bitcoin and other digital currencies.
“Perhaps as these sharp price declines became national news, consumers became hesitant to jump into the world of cryptocurrency,” Mr. Brown said on LendEDU’s blog. “This would have led to a decline in new investors, which conceivably would stunt the rate of grievances being submitted to the CFPB.”
The most common complaint by consumers, 35% of claims, was that money wasn’t available when it was promised. Complaints about frauds or scams were 15% of claims.
When it comes to companies named in complaints, Coinbase leads the way. It appeared in 78% of claims filed in 2018. This is likely because Coinbase is by far the most popular exchange, wallet and tool set for cryptocurrencies, Mr. Brown said.
“In 2017 and 2018, its volume of complaints remained about the same even after virtual currencies exploded onto the mainstream,” Mr. Brown said. “In other words, they are always going to receive a heavy percentage of complaints relative to other crypto companies because of their high number of users and because they help people buy, sell and hold virtual currencies. If they can prevent that volume from increasing drastically, Coinbase is likely doing a great job.”
But there are also a growing number of companies being named in complaints following the increased interest in cryptocurrencies among traditional financial institutions: TD Bank, JPMorgan and Bank of America were each named in at least 20 complaints, while Wells Fargo was named in 13.