Did I just get defrauded by Coinbase? I bought 10 bitcoins, 4.5, and .4 on Oct 18/19 @ around $150-160.  On Oct 24, within almost the hour that the coins were supposed to arrive, I receive the following email for all 3 transactions:


  On Oct 18, 2013 you purchased 10.00 BTC via bank transfer for
  $1,556.76.
  
  Unfortunately, we have decided to cancel this order because it appears
  to be high risk. We do not send out any bitcoins on high risk
  transactions, and you will receive a refund to your bank account in
  3-4 business days.
  
  Please understand that we do this to keep the community safe and avoid
  fraudulent transactions. Apologies if you are one of the good users
  who gets caught up in this preventitive measure - we don't get it
  right 100% of the time, but we need to be cautious when it comes to
  preventing fraud.
  
  You may have more luck trying again in a few weeks. Best of luck and
  thank you for trying Coinbase.
  
  Kind regards, The Coinbase Team


I didn't think it was a big deal after doing a little research since they have squared things away with similar situations, and I've made a 10BTC transaction in the past, but i was a bit worried because of the size of the transactions and the movement of the market.  I ask this how could this be fixed?

6 days later, I finally get a response:


  Sorry for the confusion on that. It looks like your recent purchases
  were canceled due to appearing high risk, and a refund has been sent
  to your bank account.
  
  I know it must be frustrating to have this happen, but it's an
  unfortunate necessity that we exercise caution when selling bitcoin
  online in order to protect ourselves and the bitcoin community from
  fraudulent transactions. While bitcoin transactions from one account
  to another do not face this kind of cancellation, we can't guarantee
  the sale of bitcoin to every account due to the high risk nature of
  selling them online. If you try a purchase at a later time then you
  may have success getting it to go through. Please don't hesitate to
  shoot me an email if you have any further questions!
  
  -Rees D. Sloan
  
  Customer Support Specialist


This response really didn't tell me anything.  So I ask what my other options are and here is there next response:


  Hi _ ,
  
  I am extremely sorry for the confusion on this. I've taken further
  steps to review your account and at this point we've been able to get
  you whitelisted. Any future purchases you make from this point forward
  will not encounter this cancellation. Unfortunately, since the refund
  has already been sent out on these original purchases, I'm unable to
  push through or re-create the original transactions.
  
  Again, I apologize for the frustration this has caused. If you need
  further assistance please let me know and I'll be happy to help!
  
  -Rees D. Sloan
  
  Customer Support Specialist


Something really just doesn't add up here.  At the date and time that the bitcoins were supposed to be added to my account, the price was at like ~199 and 200+ on bitstamp and mtgox.  Thats ~$50 increase since the time i bought it, costing me nearly $7-800. 

So what did coinbase do with the ~$2500 that was in limbo for so long?  And what happened to the bitcoins that was purchased at much cheaper prices?

I mean coinbase could have just denied these transactions right away, and I could have went to another site to buy it right away.

The thing that really hurts about this is that none of this money was mine.  I am just a student and I finally convinced family and friends that bitcoin is a worthy investment and they finally trusted me giving me this money to invest.  Is there anyway that this could be reconciled?
No, you were not defrauded because you did not lose anything real.


You did not lose 10 BTC.
You did not lose $1,556.76.
You lost potential, yet unrealized gain as a result of the delay in processing your order.


You may have not had access to either amount for a period of time because of the flag thrown on your transaction.

AFAIK, Coinbase does not publish its criteria for flagging transactions. Doing so would likely make it more difficult to detect transactions that would defraud them. 

One way to look at it is that this is not Coinbase's fault. Coinbase has to protect itself from both financial and legal liability. It can refuse to do business with anyone it so desires if it feels the transaction may not be made with legally obtained funds by people with whom it can legally conduct business.

If you are unhappy with the delay, and that's enough of a transgression for you not to use Coinbase again, then that's your decision to make. However, this can happen with anyone as automated and needfully paranoid as Coinbase.