Coinbase, the biggest US-based crypto exchange, was criticized from the community of cryptocurrency after it emerged that its users were not allowed to log in through Virtual Private Networks.
Scott Shapiro is a Coinbase product designer who warned customers on December 2 to not use VPNs while accessing accounts. He explained that Coinbase’s risk model treats VPN usage as a red flag, typically associated with malicious activity, even if the user is legitimate.
“He said:
“Attackers always use VPNs, so our risk models take that as a negative sign even if you’re legitimately using your own account.”
Online VPNs encrypt data and mask IP addresses for privacy and safety. VPNs encrypt data and create a secure link between the device you are using and a server located remotely.
Reports show that Americans’ VPN use has surged in popularity, with 95% of adults familiar with the technology and 46% actively using VPNs. It is estimated that 105 million Americans use VPNs.
Community Reaction
The crypto community has strongly criticized Coinbase’s stance, with many comparing it to recent efforts to debank individuals in the US. Users argue that VPNs are a right to privacy, and that any restrictions on them could push users to abandon the exchange.
Kraken’s Chief Security Officer Nick Percoco argued that Coinbase’s action forced users to choose between financial freedom and personal safety. In certain areas, VPNs can be a crucial tool for ensuring the safety of crypto users.
Then he added:
“Crypto users are some of the most privacy and security minded users on the planet. There are also places on the planet where is it physically dangerous to access a crypto exchange without a VPN masking their destination from the local ISP.”
Security expert Sudo also criticized Coinbase’s position, calling the decision “misguided.”He stated that VPNs can be a shield of protection, in particular when using Wi-Fi public or to prevent government and ISP surveillance.
He also pointed out the hypocrisy in Coinbase’s action, noting that the firm recently celebrated a legal victory overturning sanctions on privacy tool Tornado Cash yet now deems VPN usage a problem.
However, crypto expert Evan Van Ness defended Coinbase’s approach, describing it as standard anti-fraud measures.
He said that the main users of VPNs were fraudsters. Even those who use VPNs legitimately understand when they need to disable it for certain actions.
Van Ness Additional:
“Could Coinbase do better? Probably and perhaps the backlash will spur them to [address] their customer service could be better by all accounts But fundamentally this is a tradeoff that everyone makes and a very reasonable one.”
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