Worldpay and Visa are reversing duplicate transactions for Coinbase users

The Coinbase cryptocurrency exchange application seen on the screen of an iPhone.

Payments processors Worldpay and Visa said Friday they are reversing duplicate transactions that recently caused unauthorized withdrawals for some users of cryptocurrency exchange Coinbase.

“Worldpay and Coinbase have been working with Visa and Visa issuing banks to ensure that duplicate transactions have been reversed and appropriate credits have been posted to cardholder accounts,” the two payments processors said in a joint statement published Friday evening New York time on Coinbase’s Medium blog.”This issue was not caused by Coinbase.”

The statement added that all reversal transactions should appear on customers’ accounts in the next few days, and that the majority should already have posted.

Visa and Worldpay confirmed the statement to CNBC. Worldpay works with Coinbase to use Visa’s network. Not all card issuers were affected by the issue of unauthorized transactions.

San Francisco-based company Coinbase is the leading U.S. marketplace for buying and selling major cryptocurrencies.

In the last few days, an increasing number of Coinbase users took to Reddit and other social media to complain about duplicate transaction charges that sometimes drained the bank account to zero, with overdraft fees.

The U.S. Commodity Futures Trading Commission said in a statement to CNBC Friday that “the CFTC is aware of customer complaints and is looking into this issue.”

The Consumer Financial Protection Bureau also said in a statement that, “We are aware of the reports, and expect companies to comply with all applicable laws regarding the treatment of consumers’ funds. Consumers who find unauthorized charges in their bank account or credit card should contact their financial institution immediately.”

J.P. Morgan Chase did not respond to a CNBC request for comment. But the bank’s support Twitter account said earlier this month, in a reply to a customer who complained about a “$5 non chase atm fee,” that:

“The recent change to the way Coinbase transactions are processed is due to a reclassification between the merchant and Visa. Any cash-like transaction, such as this, will be assessed the cash advance fee. This is typically $5 or 5% of the charge.”

Wells Fargo declined to comment for this story.

Bitcoin marketplace Coinmama, which also supports Visa, told CNBC Friday they have had no issues so far with payments on their platform.

The impact of the issue Coinbase users were seeing appeared limited. CNBC reached out to more than 30 states where Coinbase is licensed to operate. Of the eight that responded, none of them reported an uptick in complaints against Coinbase.

A spokesperson for the Alabama Securities Commission did point out that typically, complaints can take weeks to arrive at their office. Customers generally first contact merchants, before regulators become involved.

Venezuela about to pre-sell ‘petro’ cryptocurrency, and other countries could follow

Venezuela will launch a pre-sale of its commodity-backed “petro” cryptocurrency on Tuesday.

President Nicolas Maduro hopes the country’s own digital currency will help it to make financial transactions and get around Western sanctions.

Both the United States and the European Union have imposed economic sanctions on Venezuela over their opposition to its autocratic government. Last year, the Economist Intelligence Unit’s Democracy Index downgraded Venezuela from a “hybrid regime” to an “authoritarian regime” due to its “continued slide towards dictatorship.”

Venezuela’s petro token will be backed by its oil, gas, gold and diamond reserves, according to the government. The country’s cryptocurrency regulator said Friday that it would draw investment from Qatar, Turkey and other Middle Eastern countries, as well as from European nations and the U.S.

The petro will not be available in the Venezuelan bolivar initially. Venezuela’s own hard currency collapsed as the South American state grappled with crippling hyperinflation.

‘This is chavismo drinking their own Kool-Aid’

Caracas has attracted a number of skeptics as it gears up to launch its cryptocurrency pre-sale.

Many doubt its digital currency venture will bring much benefit to either Venezuela’s economy or its people, who are suffering shortages in food and medicine due to price controls.

Francisco Toro, a Venezuelan journalist, political scientist and blogger, said that Venezuela was turning to cryptocurrency out of “desperation” because of its economic isolation from the United States.

“They have been trying to figure out ways to get around anti-money laundering sanctions provisions, and crypto is maybe one way they can do that,” Toro, who is editor of the blog Caracas Chronicles, told CNBC in a phone interview Saturday.

“I do think that part of this is about getting investors from non-traditional lenders, from Russia and China, to put in some more money, to lend fresh cash. The financial sanctions — the U.S. sanctions, the European sanctions — are not the main reason Venezuela can’t raise financing. The main reason Venezuela can’t raise financing is that macroeconomic finance is a s— show.”

As well as quadruple digit inflation, Venezuela has been facing an oil production collapse. Venezuelan crude production fell 29 percent in 2017. Many fear the accelerated fall in Venezuela’s oil output will increase the likelihood of it defaulting on its debts.

Nicolas Maduro, Venezuela's president, addresses members of the media during a press event in Caracas, Venezuela.

Carlos Becerra | Bloomberg | Getty Images
Nicolas Maduro, Venezuela’s president, addresses members of the media during a press event in Caracas, Venezuela.

Toro said that Venezuela’s economic woes have given it a bad credit reputation and that the government was trying to convince itself of the validity of chavismo, the left-wing political ideology established under former President Hugo Chavez.

“This idea that sanctions are hemming demand, that they need to need to get around sanctions, this is chavismo drinking their own Kool Aid and believing their own propaganda.”

‘Desperation breeds innovation’

But one analyst thinks the petro is an “excellent idea” and could serve as a precursor to similar projects from other world leaders, including Russian President Vladimir Putin.

“Putin and Maduro have very similar problems,” Mati Greenspan, senior market analyst at social trading firm eToro, told CNBC in an email last week. “They both have a high dependence on the price of crude oil, which has been rather unstable in the last few years. They both have issues with U.S. sanctions and with the U.S. dollar being the world reserve currency.”

He added: “To think that of all the governments and banks who are toying with the idea it would be Nicolas Maduro who gets there first. I suppose desperation breeds innovation.”

Reports have emerged in recent months of Russia considering a digital version of its own currency, the rouble. Russia’s “cryptorouble” could be used as a means for the country to circumvent Western sanctions, a report in the Financial Times said last month, echoing Maduro’s own plans for Venezuela’s petro token.

CNBC contacted the Russian government’s press office for comment but a spokesperson was not immediately available.

Greenspan gave praise for the country’s plan to back petro tokens with its commodity reserves. Maduro has said petro tokens will each be pegged to the price of one barrel of Venezuelan oil.

“It’s an excellent idea to back the crypto with a hard commodity as the world is currently flooded with baseless money,” he said. “Surprisingly, we’ve seen very little support for this initiative in the crypto community, most likely because it seems the Venezuelans themselves don’t seem to have made up their minds just yet.”

Greenspan added: “In any case, I believe that the petro is actually targeting more institutional investors and other governments. They have more to spend then the crypto-billionaires anyway. No matter what happens, this is going to be an excellent pilot for Putin.”

IHS’ Yergin: Venezuelan economy ‘teetering on falling apart’

Toro, however, expressed severe doubt that other countries — especially Russia — would look to Venezuela’s cryptocurrency for inspiration for their own projects experimenting with the technology.

“There is a science establishment in Russia,” Toro said, adding, “If Russia is going to launch a crypto, they are not going to copy some banana republic. It’s ridiculous. It’s totally silly. I do think it’s mostly noise.”

An expert on cryptocurrencies said he was “not fully convinced” that the petro’s backing in oil and mineral reserves would live up to expectations.

“This is basically an E&P (exploration and production) play from the traditional oil and gas market with a large dose of sovereign risk and room for manipulation,” Charles Hayter, chief executive of cryptocurrency comparison site CryptoCompare, told CNBC in an email.

Countries hit with sanctions are not alone in considering the possibility of their own digital currency. Many around the world are mulling the idea of virtual currency.

Sweden, for example, is looking into the possibility of a digital version of the Swedish crown, the “ekrona.” Cash use in the Scandinavian country has steeply declined in recent years.

Others, including Japan, Singapore and Estonia, are also considering such digital alternatives to hard currency.

ECB imposes payment block on Latvian bank amid US corruption allegations

A sign stands at the entrance to the ABLV Bank AS offices in Riga, Latvia. The country of 2 million became the 18th member of the euro area in January 2014.

The European Central Bank (ECB) stopped all payments by one of Latvia’s largest lenders on Monday, after its liquidity position collapsed in the wake of allegations from U.S. authorities.

The ECB requested Latvia’s banking supervisor impose a moratorium on ABLV bank, the small Baltic nation’s third-largest lender, in order to freeze all payments by the bank on its liabilities.

“In recent days, there has been a sharp deterioration of the bank’s financial position,” the ECB said in a statement Monday.

“A moratorium was considered necessary given that the bank is working with the Latvian central bank and authorities to address the current situation.”

What happened?

Last week, the U.S. Treasury accused ABLV bank of “institutionalized money laundering,” including allowing its clients to conduct business with parties connected to North Korea. This would be in violation of sanctions imposed by the United Nations (UN) following Pyongyang’s nuclear weapons program.

In response, ABLV said the accusations were based on unfounded and misleading information. ABLV is based in Riga but also has an office in Luxembourg as well as a subsidiary in the U.S.

Why is this a crisis?

The moratorium imposed by the ECB — which supervises ABLV from Frankfurt, Germany — comes at a difficult time for Latvia’s banking sector as the head of the country’s central bank was detained by Riga’s anti-corruption agency over the weekend.

The home and offices of Ilmars Rimsevics, who also sits on the ECB’s rate-setting committee, were raided by officers from Latvia’s Corruption Prevention Bureau on Saturday. However, no details about the investigation or the nature of the raids have been made public. Latvian media has suggested the questioning of Rimsevics was not connected to ABLV.

The detention of Rimsevics prompted Latvia’s Prime Minister Maris Kucinskis to call an emergency cabinet meeting Monday. Shortly afterward, he told Latvian television that the head of the country’s central bank should resign.

Retail investors would ‘bear the brunt’ of a cryptocurrency market collapse, study says

Bitcoin

Retail investors would feel the impact of a cryptocurrency market collapse the most, while institutional investors would be better protected against such an event, according to researchers.

“At this stage, we think that retail investors would be the first to bear the brunt in the event of a collapse in cryptocurrencies’ market value,” a report released by S&P Global Ratings said Monday.

“We expect rated banks to be largely insulated, given that their direct or indirect exposure to cryptocurrencies appears to remain limited.”

Cryptocurrencies dropped in price significantly amid a sharp sell-off earlier this month. The nascent market has recovered slightly following that decline, but the so-called market capitalization — the price of cryptocurrencies multiplied by circulating supply — is still around $330 billion off a record high posted last month.

The price of bitcoin fell below the $6,000 mark in the midst of a global stock market sell-off in early February, indicating that it shares a correlation to established financial assets.

Nevertheless, the S&P Global Ratings report said that a huge drop in the value of cryptocurrencies would still be unlikely to disrupt financial markets.

“For now, a meaningful drop in cryptocurrencies’ market value would be just a ripple across the financial services industry, still too small to disturb stability or affect the creditworthiness of banks we rate,” Mohamed Damak, S&P Global Ratings financial institutions sector lead, said in a statement Monday.

Digital currencies are not backed by governments and authorities have become increasingly concerned by them due to speculative investing and associated illicit activities.

“We believe that the future success of cryptocurrencies will largely depend on the coordinated approach of global regulators and policymakers to regulate and enhance market participants’ confidence in these instruments,” Damak added.

It said that cryptocurrencies’ underlying blockchain technology could lead to “positive” disruption in finance. Blockchain networks are decentralized, and maintain a continuously growing record of cryptocurrency transactions.

Retirement savings: Money in accounts like IRAs, on average, now tops $100,000

'Retire Inspired' author Chris Hogan on Americans' concerns about the impact of recent market volatility on their retirement savings.

mericans may be turning into a nation of savers.

Fidelity Investments says that the average balance in its customers’ 401(k) and individual retirement accounts (IRA) accounts grew last year to least six figures, driven by a strong stock market and increasing contributions.

Fidelity said the average 401(k) balance rose to $104,300 at the end of last year, 13% higher than in the same period in 2016. Meanwhile, the average IRA balance climbed to $106,000, also a 13% year-over-year increase. That compares to the average 401(k) balance of $77,600 in the fourth quarter of 2012 and an average balance of $76,600 for IRA accounts in the same period in 2012.

Long-term 401(k) savers saw significant increases to their average account balance as well. For workers who have contributed to their retirement 401(k) for 10 consecutive years, the average account balance rose to $286,700, an increase from $233,900 from the year before. For those who have been in their 401(k) retirement plan for 15 consecutive years, the average balance rose to $387,100, up from $318,500 in the fourth quarter of 2016.

Furthermore, the number of savers with at least $1 million in their 401(k) account increased to 150,000 at the end of 2017, which is up from 93,000 a year ago, Fidelity said. The number of investors with $1 million in their IRA account climbed to 152,000, an increase from 109,000 at the end of 2016.

Fidelity found that nearly one third of 401(k) savers increased their savings rate last year, which rose to 8.6% in the fourth-quarter of 2017, a 0.2% increase from the prior year. The average IRA contribution rate increased to $1,730 in the last quarter of 2017, up from $1,590 the year before.

“It’s important for individuals to remember that saving for retirement is a marathon, not a sprint, and that applying a long-term approach to retirement savings strategy helps to put investors in a better position to reach their savings goals,” said Kevin Barry, president of workplace investing at Fidelity Investments.

In an effort to keep the progress on track and to help ensure investors aren’t over-exposed to a market downturn, the company recommends clients check the percentage of stocks within their retirement account. The company reasoned that although the rising stock market is one reason why the average retirement account balance has reached record levels, it may also result in some savers having more stock in their account than they feel comfortable with.

Fidelity also recommends investors “think twice” before tapping their retirement accounts — being aware of the potential downsides before taking out a 401(k) loan.

“For instance, the amount borrowed could miss out on potential market growth, and if someone leaves a job, the loan may have to be repaid in full in as little as 30 days,” the company said, adding that data it compiled found many investors choose to reduce their contribution rate when taking out this type of loan, which increases the negative impact on long-term savings potential.

The company also suggests people consider a “do it for me” investment option — such as a target date fund or managed account — which it says is an “increasingly popular way for individuals to leverage professional investment expertise to help them manage their retirement savings.”

“Fidelity encourages investors ‘stay the course’ when the stock market goes down, but the same approach applies when the market swings upward, as it did in 2017,” Barry said. “Most investors will likely see multiple periods of market volatility during their careers, so sticking to the retirement savings fundamentals can help keep them on the path to their retirement goals.