Zcash founder Zooko Wilcox-O'Hearn has sharply criticized cryptocurrency exchange Coinbase for aggressively pushing gambling-like features to its user base.
On Saturday, Zooko took to X (formerly Twitter) to voice his intense frustration over the platform's tactics.
“Talked to a user (a vulnerable, young, unsophisticated, financially poor user) who has the Coinbase app, and it has started prompting them to gamble on sports and the price of Bitcoin,” Zooko stated. “I hate this with a burning passion and it makes me ashamed to be part of this industry,” he added.
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Defending “financial freedom”
Coinbase CEO Brian Armstrong has made it clear that there is a need to find the right balance.
The CEO defended the inclusion of prediction markets on the platform by leaning on libertarian principles of personal choice. "I’m pro-freedom," Armstrong argued.
"Consenting adults should be able to do what they want with their own money, as long as they’re not harming others. I don’t want companies patronizing users."
Armstrong further pushed back against the stigma of the word "gamble."
The Coinbase boss has noted that “there’s no perfectly safe investment, and what counts as acceptable is highly subjective,” he noted.
Adjusting promotional strategies
Armstrong has concluded that Coinbase's promotional strategies might need adjustment.
"That said, it doesn’t feel right to aggressively promote high-risk products to unsophisticated users," Armstrong admitted. "There’s a difference between making something available and making it the focus of the app."
The Coinbase CEO outlined several potential platform updates that could give users more control. "We can mitigate this with clear disclosures, AI-powered financial literacy tools, and personalized experiences," he proposed. "Users could set preferences during onboarding (e.g. enable/disable certain categories) so the app reflects what they want, without forcing those choices on everyone else."
The legality and moral standing of such features should be left to voters and lawmakers. Corporate executives are not supposed to be in charge of such decisions, according to Amtsgrong. "Private companies shouldn’t be the ones drawing those lines," he said.
The measured exchange ended on a respectful note, with Zooko replying, "Thanks for the thoughtful response, Brian."
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