As first reported by The Verge, customers using the platform to buy cryptocurrencies such as Bitcoin, Ethereum, and Litecoin began experiencing serious problems this week.
In some cases, users reported being charged multiple times for the same transaction, leading to negative account balances and additional financial issues.
It wasn't long before more and more cases of overcharging appeared online, with Coinbase users across forums and social media complaining that transactions were being charged to accounts more than once.
Some customers attempted to block more funds being removed from their accounts by removing their cards, but this did not appear to work.
Facing a rising volume of complaints and furious customers, Coinbase began investigating the situation, and on Thursday, Coinbase said in a blog post that the issue appears to have been identified.
Recent changes to how card issuers and banks identify cryptocurrency and call up Merchant Category Codes (MCC) appears to have caused the unauthorized withdrawals.
As a result, some purchases made between January 22 and February 11 this year may have been refunded and reprocessed, resulting in extortionate charges, overpayments, and empty accounts.
"Some customers might experience a delay between the issuance of the new charge and the offsetting refund, but ultimately customers should only have a single charge on their card statement," Coinbase says. "We know this experience is frustrating. We are actively working with the card networks and processors to investigate these issues."
In order to placate customers impacted by the transaction disaster, Coinbase has pledged to refund any erroneous charges in full.