Sent $10,701.03 to Coinbase. Still missing bitcoins.

Whoever was internally matched got a benefit(alleged profit) of $339.93 on their partial fill; assuming they would have sold it immediately at the high for 216.69% ROI and let not even go into the annual compounded growth rate.

Though either ways if I were the other party I would have still asked for a reversal. And here's why:

Such error's can easily happen in the reverse order (like in your case) and most often happen on a larger transaction AND if I did not complain about the beneficial trade I would lose a great amount of credibility in court or arbitration for the wrongdoing.

Also Coinbase would be well within their rights to reverse the transaction if they followed due process.

But, I have serious doubt about all CoinBase practices since yesterday (when I first saw this error), and here's why:

1. Even if I was not adept or did not have experience at reading the tape (time and sales) etc, it would be very easy for me or anyone to very if a transaction occurred on any BTC exchange at around this price level as the data is freely available, also all web based charts available for this would have developed an enormous tail. Which implies just one legitimate reason, that is Internal Matching.[0]

2. Fortunately internal matching works differently than open exchanges that have a bid/ask spread which can get quite wide on BTC due to thin volumes, but remains in a 1% range for good measure lets call this a +/- 10% spread, so on this day if volumes were thin someone could have bought BTC at $1242 * 1.1 => $1366.2 or could have sold it for $1242 * 0.9 => $1117.8.

But like I said fortunately internal matching would work differently. Much like a normal exchange it would work on a first in first out basis (FIFO) so if there is one or more buyer at X price and someone decides to sell the first order would be filled. Usually X would be the current market rate +/- an acceptable slippage which is lower than the open market let call this 5%, though it should be no more that 1%). So the worst internal match would be $1242 * 1.15 for buying or $1242 * 0.85 for selling. If this pricing condition is not met coinbase themselves could be the seller(thus become an internal market maker) or the would route the order to an open exchange.

There is a near-zero possibility of the fill happening at 68.074% lower than the market rate. The only way this could have happened is if once the order was sent to the market in the form of a market order and there was zero bidders between the ask and < $396.52(since I assume the rate includes a fees).

But if it was not internally matched and did not get executed on any exchange the only somewhat legal possibility remaining is an intentional technical/code error the only other options remaining is (hint: completely unethical and/or illegal) them not doing an exchange at all aka. market making at +/- 60%+.

3. Unfortunately if this is a technical error, it most definitely must have happened to other customers too, if it did on a partial fill the sell price would be an average, hence most users would never see it and there (CBs) books would get cleared during the end-of-day reconciliation.

I will leave the speculation as to other reasons here. No reason to allege any deliberate wrong doing beyond their lack of understanding about auditing financial transactions.

Though did you get your trade reversed?

edit: bias correction (explained below)

I am big supporter and bigger moralizer with all things relating to the business practices and moral obligations of companies when dealing with the small guys. The critic in me can draw and deduct conclusions that may skip considering situations which while possible have a very very low probability of happening. But as Murphy would say, "Anything that can go wrong, will go wrong"...

It creates a risk either ways, it's just that different parties take ownership of the risk.

> But buying only when the funds clear creates a risk when the price skyrockets. It makes it harder to ever please customers with an 'honored price' that's lower than when the BTC arrives.

Actually you're complicating it more than necessary. There is no reason for coinbase to execute a market order as soon as the funds clear. They can simply let a customer make an informed decision, and decide if they want to buy at current market rate (market order) or using a limit order which will be executed internally if a customer tries to sell lower or will be filled on the exchange if the exchange reaches fills the order first.

This practice has existed for decades, whichever order is filled first simply cancels the other order.

This is also completely fair and very acceptable. Buying first waiting and waiting for the transfer to clear is not and will never be an good choice.

> Also, any whiff of a two-step process, where the customer reconfirms the buy-intent at funds-clearing, would put Coinbase closer to holding $USD balances for customers. That's something that I suspect, as a regulatory matter, they would rather not do. A single irrevocable 'buy' with delivery some time later (at either a locked-in or a floating price) is closer to the e-commerce transactional pattern they'd prefer.

I can see why this would be viewed as the only choice. Unfortunately as I have stated in another thread, when trouble from regulator begins they will get classified as akin to a financial institution anyways. When this happens they'll have more trouble due to the misrepresentation.

> Otherwise, they look more like a money-transfer/foreign-exchange/banking/daytrading outfit.

Again, I can see where you are coming from, but this doesn't mean the law will see them as anything but a money-transfer/banking/daytrading outfit as they fit the definition most of these in totality and a few (day trading) loosely. I left out foreign-exchange as this one is the only one they are safe from, until/unless BTC gets reclassified from a security(it meets SECs definition requirements) to a currency.

> Despite the last 2 weeks, BTC has had more total upswing than downswing – going over its history from $0 to $hundreds in value. So, buying early likely will have won more often than lost, for Coinbase and its customers.

On first glance this may seem like a likely observation, but it is unfortunately misguided (no offense intended). Unfortunately people give too much credence to the notion that past behavior dictates future movement and forget to compensate for lack of sample data and =/- effects of things such as spreads, volume, volatility etc.

If there is a single profound lesson I can impart about this topic it would be "buy low sell high" only works for short-selling, albeit in reverse order ("sell low buy lower") but for most traders, investors and speculators they should learn that the true lesson to remain profitable in any trade is to "buy high and sell higher". This is simply calculated using momentum previous x day momentum. Preferably between 10 to 20 days. You could use a higher number but it would be too late to enter or exit or a lower that would enter and exit too often.

I can talk endlessly on this topic and its importance in all entrepreneurial/business/trade endeavors, but I digress.

> Calling that approach 'simply stupid' and 'simply insane', without having considered the real risk and regulatory factors affecting their business is silly.

I agree with your prognosis, I do have a bias that I failed to consider. But unfortunately, if this was the only solution to avoid the paperwork, auditing and additional responsibilities that would come from acknowledg...

That question was not directed at if the buy rate is locked in, that is well established and not in dispute. Rather the question was specifically for the cases where "there is a delay", i.e. an unreasonable one like with the OP of this post and the previous post[0].

The problem is not how they conduct their market making(or selling a product by definition the definition you presented).

An unreasonable delay adds added risk of financial loss which is akin to, while not quite as dire as; if it was possible for someone to buy a pace-maker of Amazon, to be delivered overnight (up to two days) and it was not known to the buyer could not survive past 4 days without it and for some technical reason Amazon was unable to ship it for 5 days, would the law hold Amazon responsible for not living up to their end of the commitment and unintentionally causing the buyers demise.

Though stepping away form my overly extreme and unrealistic example, as an after thought my original question may have been nonsensical. "If coinbase does buy the goods before the price is locked and BTC rises, regardless of the situation there is no risk for coinbase or the customer."

The risks on these transactions would only occur in case of BTC dropping.

> You don't have any experience with Coinbase, but you're making these declarations about what they may or may not do, and acting as if we need you to dig into this great mystery to determine what's really going on.

You're right I have no experience with an unreasonable delay that could cause financial loss. But "any experience", how did you deduct that?

> It never ceases to amaze me how many universal experts hang out on this one lil' old site.

Right back at you :)

[0] https://news.ycombinator.com/item?id=6929705