Reddit user Dazzling_Substance posted on the r/Coinbase subreddit on Monday warning the community that the Coinbase merchant SegWit – a bitcoin scaling solution – implementation is broken. The issue was deemed to be severe as it was causing the loss of customers bitcoin.

Dazzling_Substance claims to have confirmed the issue with the bitcoin core developers on IRC. @kyletorpey has commented on the situation and also confirmed the problem:

Update: This issue is confirmed real. — Kyle Torpey (@kyletorpey) March 13, 2018

According to the reddit post, when a payment is sent using a Coinbase payment gateway, the bitcoins are not received as they have not updated the BIP70 to use segwit addresses. In other words, the internal payment tracking system for Coinbase loses transactions that are sent to non-segwit addresses:

“You will also be unable to contact any form of support for this since they do not have any contact for their merchant services. Example: bitcoin:35cKQqkfd2rDLnCgcsGC7Vbg5gScunwt7R?amount=0.01184838&r=https://www.coinbase.com/r/5a939055dd3480052b526341”

The post further explains that the merchant system Coinbase is using has no dedicated support team and Dazzling_Substance has been waiting since Monday for a response.

The reddit thread was divided as to whether the blame lay with Coinbase or the choice of SegWit as a scaling solution. However, it was pointed out that other exchanges and payment providers have implemented SegWit with no issue and it appears clear that the blame lies with Coinbase on this account.

Coinbase implemented SegWit last month after pressure from the community which included a petition of over 12,000 signatories. It was hoped the upgrade would help to alleviate the high fees that had been plaguing the bitcoin network over December and January.

CryptoGlobe will cover the story as it develops.