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CoinMama Review: High Fees, No Way to Cash Out

CoinMama in Brief

CoinMama is a digital currency exchange that caters to complete beginners who want to invest in cryptocurrencies. CoinMama only supports fiat purchases (Euros and US dollars only), but it doesn’t let you convert your cryptocurrency into fiat. In addition, this exchange only supports two digital currencies: Ethereum and Bitcoin. Therefore, CoinMama users that want to cash out their purchases have to sell through some other exchange.

CoinMama’s major downside is that its transaction fees are steep compared to other exchanges. Also, CoinMama does not have a built-in wallet to hold your coins, which means you must create your own wallet through a third party wallet service before you can buy any digital currency. CoinMama’s setup process is made simple, though, thanks to intuitive wallet services like blockchain.info and CoinMama’s easy-to-understand knowledge base articles.

Pros

  • Extremely simple and easy-to-use interface.
  • Directors have decades of IT security and financial management experience.
  • Citizens of over 180 countries and residents of most US states can join.

Cons

  • High fees compared to competing digital exchanges.
  • Only supports two fiat currencies: US Dollars and Euros.
  • The only way to buy digital currency is with a credit or debit card.
  • There’s no way to sell digital currency through CoinMama.
  • Margin trading and other advanced trading options are not allowed.
  • Very little English-language information about CoinMama’s partners and corporate structure is available on the web.

Keep reading our detailed CoinMama review to find out whether or not it is the right place for your virtual currency trades.

What is CoinMama?

History

CoinMama co-founders Ilan Schuster and Laurence Newman are Bitcoin enthusiasts who decided to create a digital currency exchange in 2013 with the goal of becoming “the simplest financial service out there.” CoinMama is owned by a Slovakian company called NBV International, which is in turn owned by an Israeli company called New Bit Ventures. CoinMama’s offices are located in Ra’anana, Israel.

In an interview with cryptoincome.me, CoinMama’s Happiness Officer Martin Kølbæk had this to say about how co-founders Ilan Schuster and Laurence Newman got started.

“Back in the early 2013, our two founders, Ilan and Laurence, wanted to invest in bitcoins. Mind you, this was back in the heydays of crypto where dodgy exchanges and 50% commission was the norm. They got so frustrated that they ended up creating Coinmama, and we’ve been going at it ever since!”

According to Schuster’s LinkedIN profile, CoinMama Co-founder Ilan Schuster worked at Cabify – the Latin America equivalent of Uber. Newman’s LinkedIN profile indicates that he was an account manager at Saxo Bank.

CoinMama’s website states that its mission is “to create the simplest financial service out there – spoken in a language you can understand, and backed by customer service you can count on.”

Like most digital exchanges, CoinMama experienced a huge growth spike when the price of Bitcoin skyrocketed last year. According to Kølbæk, volume grew by 1800% in 2017.

Leadership and investors

leaders
CoinMama lists pictures and short bios of its leaders on the CoinMama website. However, there is not much available information about CoinMama’s two co-founders, Ilan Schuster and Laurence Newman. Both of them seem to have moved on to other projects. Source: CoinMama

CoinMama is run by a marketing professional and a Bitcoin enthusiast. The two co-founders have moved on to other ventures.

  • Asaph Schulman – Co-CEO. Schulman was the VP of Marketing at Checkmarx and Personyze before he became the Co-CEO of CoinMama.
  • Nimrod Gruber – Co-CEO. Gruber made headlines in 2014 for installing Israel’s first Bitcoin ATM. Before getting involved with cryptocurrency, he was a model.
  • Ilan Schuster – Co-founder. According to Schuster’s somewhat sparse LinkedIn page, he worked for a handful of Colombian technology businesses before co-founding CoinMama.
  • Laurence Newman – Co-founder. Last year, he founded Knowers.io– a social network site for connecting knowledgeable locals with globetrotters and tourists.
  • Yaki Oliel – Chief Risk Officer. Before coming to CoinMama, Oliel was Cal-Israel Credit Cards Ltd.’s Chief Compliance Officer.
  • Guy Ben-Yossef – Chief Financial Officer. Yossef brings over 12 years of financial management experience to the team. He has worked at several startups, like CyberBit, LivePerson, Seekatrip and eToro. Before that, Ben-Yossef was the VP of Corporate Finance at an investment house called Meitav.
  • Martin Kølbæk – Chief Happiness Officer. Martin Kølbæk heads up the customer service team. Because Kølbæk is the only CoinMama executive who has met with the press, he likely represents the public face of the company in the media.

Protecting customers’ coins

Legal and regulatory compliance

Coinmama is owned by NBV International, which is headquartered at Boženy Němcovej 8, Bratislava 811 04, Slovakia.

NBV International has a listing on FinStat, a Slovakia-based “fintech startup with main focus on big data, open data, credit risk and analysing public data of companies.” According to the English translation of NBV’s FinStat listing, NBV is owned by CoinMama’s “Chief Happiness Officer,” Martin Kølbæk.

NBV International is in turn owned by New Bit Ventures. New Bit Ventures is headquartered in Israel and is registered with the Financial Crimes Enforcement Network Department of the Treasury. CoinMama’s FinCEN certificate allows CoinMama to do business in several US states.

As is the case in the US, the Israeli government views Bitcoin and other digital currencies as assets, not actual currency. In early 2018, Deputy Governor of the Bank of Israel Nadine Baudot-Trajtenberg noted that there is “no government responsibility” for investors in Bitcoin.

Transactions are carried out with New Bit Ventures Ltd and processed by NBV International with the help of Simplex.

CoinMama’s internal operations are handled by CFO Guy Ben-Yossef and CRO Yaki Oliel. No information concerning audits and other financials are available on the CoinMama website.

Coin listing policies

According to comments from Coinmama’s official Facebook page, plans for adding new coins are “in the works.” However, Coinmama currently supports only two digital currencies: Bitcoin and Ethereum.

Network security

No information regarding security is available on the CoinMama website.

According to Equities.com, Coinmama’s payment processing is handled in part by Simplex. Simplex provides payment processing services for several other digital currency services including Bitstamp, Xapo and others.

Simplex describes itself as a “fully licensed financial institution in the EU.”

Though Simplex doesn’t provide much information about how it protects its assets, the website states that it uses “state-of-the-art AI algorithms” to detect risk and fraud.

Customer Support

CoinMama responds to questions via chat Sunday-Thursday 9:00-18:00 GMT+3 / 2 AM-10 AM EDT / 11 PM-7 AM PDT. The support team also responds to Facebook messages and emails.

Email address: [email protected]

CoinMama reputation

Though most other digital exchanges have highly controversial reputations, there aren’t many complaints about CoinMama on Reddit and other social media sites. In fact, the unofficial CoinMama subreddit only has 21 subscribers and a handful of posts.

The fact that CoinMama pays out referral rewards may explain why many Google search results pages are filled with promotional blogs that paint an overly rosy picture of CoinMama. CoinMama is one of the few exchanges that has an affiliate program.

CoinDesk and CoinTelegraph– two of the most reliable sources of digital currency news on the web– have not published any articles about CoinMama.

How to Join CoinMama?

Who can join?

CoinMama accepts residents of the following US states: Arizona, California, Colorado, Florida, Illinois, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Missouri, Montana, Nevada, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and Wisconsin.

In addition, CoinMama accepts citizens of over 180 countries.

Verification

Individual accounts

All users that buy digital currency on CoinMama must provide three pieces of information: a government issued ID card (passport, national ID card or driver’s license), a utility bill (electric, gas, water, cable, property tax, bank statements and credit card statements are acceptable) and a short form provided by CoinMama.

When submitting your ID, you have to take a picture that includes your face and your ID card, and a note that says “CoinMama.”

You have to send the front and back of whatever ID card you submit. In addition, all submitted pictures must comply with the following guidelines:

  • The image of the ID should be in high quality, so that all the information on it is clearly visible and readable, including small titles; it is recommended not to use a webcam, but instead a regular camera (such as a smartphone camera) or a computer scanner.
  • The image should be clean from any editing or modifications.
  • The portrait on the ID should be clear so that the holder is recognizable (if we were to meet you in person, we should be able to recognize you by your photo on the ID).
  • The image should be in original colors, so there should be no use of image-enhancement tools or applications; black and white images are not accepted.
  • The image should be taken in a properly lit setting and present the ID in its true proportions.

Business accounts

CoinMama only offers one type of account and does not offer special accounts for businesses and institutions.

What You Can Trade on CoinMama

Cryptocurrencies

The only cryptocurrencies available on CoinMama are Bitcoin and Ethereum.

Fiat currencies

CoinMama supports USD and EUR.

Currency exchanges

The only types of exchanges available on CoinMama are: Bitcoin/USD, Bitcoin/EUR, Ethereum/USD, Ethereum/EUR.

Advanced trading

CoinMama only allows simple purchases. Margin trading and other advanced trading functions are not available.

Trading Tools and Fees

CoinMama trading platform

CoinMama offers a very simple, user-friendly interface. To create an account, all you need to do is provide your full name and email address. Then, you can log into the “myaccount” page, which looks like this:

myaccount
The “my account” page gives you two options: Buy bitcoin and Buy ethereum. Source: CoinIQ

If you click one of the two buy buttons, the interface will present you with four different purchase options. The button on the top lets you switch between USD and EUR.

four
The Buy bitcoin menu provides four different “packages.” Source: CoinIQ

Alternatively, you can scroll down and type in a custom purchase.

specific
The slider tool lets you buy as much as 0.58 or as little as 0.012 BTC. Source: CoinIQ

CoinMama apps

CoinMama does not have any apps.

Deposits and withdrawals

Fiat currencies

CoinMama does not accept bank deposits. The only way to buy digital currencies is with a debit or credit card.

Digital currencies

You have to create your own wallet to deposit and withdraw Bitcoin or Ethereum through CoinMama. CoinMama recommends that its users create a wallet through blockchain.info. Blockchain.info wallets accept Ether, Bitcoin and Bitcoin Cash.

Transaction fees

CoinMama’s standard transaction fee adds up to a 10.50% charge. Every time you buy Bitcoin or Ethereum through CoinMama, you have to pay a 5.50% base fee. In addition, CoinMama charges an additional 5% fee on top of the standard transaction charge to cover credit and debit card purchases.

Final word

Compared to other digital currency exchanges, CoinMama seems out of date. CoinMama’s biggest benefit is supposed to be that it is user friendly. However, because its fees are extremely high it’s hard to see where CoinMama fits in. Now that there are plenty of other user friendly digital exchanges, it’s hard to imagine why anyone would put up with CoinMama’s high fees. Though the credit card purchase fees are low in relation to credit card purchase fees on other exchanges, there’s no option to pay any other way. In addition, there is no way to cash in your digital assets through CoinMama.

CoinMama only lets you buy Bitcoin with a debit or credit card. If that’s no what you want to do, this exchange is not for you. CoinMama doesn’t say where it gets the Bitcoin that it sells, but it likely purchases them through some other exchange.

For new traders

Though the core CoinMama interface is easy to use, the fact that CoinMama does not provide digital wallet services may confuse some people who are totally new to digital currency trading. If you’re a complete beginner, you’d probably be much better off with other easy-to-use exchanges like Coinbase or Changelly.

For advanced traders

With CoinMama, selling digital currency is not an option at the moment. Though CoinMama’s blog has hinted that they are working on a selling feature, CoinMama’s high fees will deter high volume traders from signing up. In addition, CoinMama lacks margin trading functionality. Also, advanced order types are not on the menu.

Alex Munkachy

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