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Coinbase warns that bankruptcy could wipe out user funds
- anonu 4y agoThe government only intends to erode confidence in crypto.
- shadowgovt 4y agothe government has no incentive to enhance confidence in Bitcoin when, from their point of view, money is an already-solved problem.
- fullshark 4y agoIf Coinbase goes bankrupt your crypto-coins will be worthless at least.
- talhof8 4y agoSo much for 'read + write + own'
- aaaaaaaaata 4y agoCoinbase barely has an "us too" web3 wallet — they're not a proper web3 company, they're a tradfi bank in sheep's clothing.
- _Algernon_ 4y agoThis boils down to the "not your keys not your coin" mantra that's often repeated in the cryptocurrency community. It is possible to move your coins to your own wallet and manage them on your own. This comes with risks (eg. lost keys). Keeping them on exchange comes with different risks. Anyone holding significant amount of cryptocurrencies should consider the risks of each choice, make an informed decision, and live with the risk that entails. If that's too scary, then you probably shouldn't be in this market.
- tmountain 4y agoThis feels similar to buying a stock’s street name (a proxy for the actual share) vs directly registering a stock in your name. A key selling point of crypto has always been eliminating central control. If someone else is managing your keys, it’s a given that they’ll borrow against those entries in one way or another (putting the money to work so to speak). Risk assessment depends on which someone thinks is more likely, a lost key, or a default. We are living in some pretty wild times given that the later may trump the former.
- kasey_junk 4y agoIn the case of cede & co going bankrupt (a nearly impossible thought) your street side shares would not be used to settle their debts. You don’t need direct registration for that protection. The same is true for your brokerage.
- chaosbolt 4y agoI'm almost sure Coinbase practices fractional reserve and other forms of market manipulation, let's see how that bank run works for people. Some examples: - NuCypher goes up quickly on binance (a few months ago) because a whale is buying there, lots of people try to withdraw on CB to sell on binance, withdrawals start off working but then get locked for 5 hours straight, reddit and other social media had people complaining, no explanation given by CB, just technical issues as always. - Try to sell a few tokens a few weeks ago, it doesn't allow me to put big orders, instead they make me do it in multiple times, in which time the bots (some of which are theirs), front run me and instead of sell at a 5% lower price in one hit I lose 10% just waiting for the UI to allow me to make small order after small order. - Always blocking withdrawals in the most suspicious moments imaginable, just happened to me 3 days ago trying to withdraw USDC, had to wait an hour until that "unexpected error occurred" disappeared. - Human greed, why would they be different from the banks? I see most people don't withdraw their coins, I lend their coins for interest and profit from it, shareholders are happy, I sell my stocks and make money, if a bank run occurs I'll declare bankruptcy or ask the government for help because like a bank if my customers lose their money they might become unhappy and cause the government problems (Coinbase will eventually become a bank if crypto hype keeps growing).
- smoldesu 4y agoIt's crazy that there are still people out there who will defend custodial wallets like this. Not you wallet, not your coins. It's as simple as that. These companies trying to take crypto mainstream are getting so much stuff wrong, it's no wonder they're losing customers and share value.
- theshrike79 4y agoI just moved all my crypto off Coinbase, just to be sure. Coinmotion seems to be a stable-ish option. At least they're not looking for hockeystick growth and aquisition.
- imron 4y agoAs the saying goes, out of the frying pan, in to the fire.
- theshrike79 4y agoI'd be worried if I paid a cent of real money for any of this stuff. 100% of my crypto is from Keybase's XLM giveaways. I'm just waiting for the next stonk to sell it all and move them to actual markets.
- yreg 4y agoWhy not to a non-custodial wallet…?
- deleted 4y ago[deleted]
- IceWreck 4y agoWhy do you use an external service ? Just keep the wallet on your own machine.
- theshrike79 4y agoI had a wallet on my own machine when BTC was a new thing. Lost it. I've intentionally forgot how much self-mined BTC I had in there. It was more than 1. Now I'll rather use a service =)
- mrjin 4y agoWasn't the exchange that stole the user funds?
- Barrera 4y agoAlso read the fine print about the "insurance" Coinbase carries against loss of bitcoin through an attack. It's limited to the hot wallet only. Cold storage is not insured. In other words, the insurance is probably worthless. People with the good sense to realize that Coinbase is not a bank in any sense of the word are unlikely to be affected.
- usrn 4y agoI've been messing with crypto long enough to know how this goes and my coins are already in a local wallet. Coinbase had a good run but don't be stupid. Crypto exchanges aren't insured like consumer checking accounts are in the US and when they're gone they're gone. Geth isn't hard to set up for most of us, it took me about 20 minutes to have it up and running after not using a local wallet for nearly a decade. Remember to write down your password (I can't emphasize that enough. I'd be retired by now if I had done that with the wallet I made in 2011) and back up your wallet. I keep mine in git.
- vmception 4y agoGeth lol. The worst full/fast synced node software out there? Thats what you choose to write? Just let the people use metamask, more full nodes are nice but theyre not there yet
- alex_suzuki 4y agoWhy on earth would the typical customer that is scared by this announcement choose to run a node instead of just withdrawing to Metamask or a hardware wallet?
- usrn 4y agoMetamask looks like a smartphone app. I don't have a smartphone and keeping crypto on one seems like a bad idea.
- skilled 4y agoWait, can someone explain to me why they would explicitly announce it like this? This almost sounds like they're expecting to go bankrupt, or have plans to close the platform. In the last 7 days they have lost over 50% value, and dropping a news bomb like this is only going to make it worse, isn't it?
- kasey_junk 4y agoThey are required to do so by the SEC.
- ergonaught 4y agoI'm sure someone could. To quote, "In comments shared on Twitter, Coinbase CEO and founder Brian Armstrong said the exchange had "no risk of bankruptcy," and that the disclosure was made due to new rules set by the U.S. Securities and Exchange Commission regarding public companies that hold crypto assets on behalf of others."
- onlyrealcuzzo 4y agoIs something amiss with USDC? If it's even partially backed by other cryptos, it could implode pretty soon.
- legutierr 4y agoIt's fully backed by cash held at US banks and by US Treasuries, per my understanding. And this disclosure did not pertain to those reserves, which are held in trust on behalf of customers as per state money-transmitter laws, which customers would presumably not be treated as unsecured creditors, but only to cryptocurrencies held in Coinbase-controlled wallets.
- luciusdomitius 4y ago3 months ago J Powell (of Kraken, not Fed lol) adviced his users not to keep their crypto on his exchange[0]. Not the best business move either. A possible explanation might be provided here: https://twitter.com/jespow/status/1498112744754606081 https://twitter.com/jespow/status/1498112744754606081 0. https://twitter.com/jespow/status/1494462097161220104?lang=en https://twitter.com/jespow/status/1494462097161220104?lang=e...
- alex_suzuki 4y agoNot your keys, not your coins - indeed!
- ______-_-______ 4y agohttps://nitter.net/brian_armstrong/status/1524233480040710144 https://nitter.net/brian_armstrong/status/152423348004071014... In other words: We only disclosed these risk factors because we were legally required to. Please ignore our SEC disclosure and half-billion dollar quarterly loss, and instead trust my unregulated statements posted on Twitter. There are no risk factors, your money is safe, the music will never stop.
- duxup 4y agoSomehow that’s even less comforting…. But I suppose that’s the rabbit hole crypto fans go down.
- gennarro 4y ago“There are no risk factors” doesn’t inspire much confidence in me, even if this specific situation isn’t of much concern to Coinbase management.
- oefrha 4y agoI get the point, but please don’t use a block quote when it’s not a quote. Two problems: 1. People don’t read the source. 2. People can’t detect subtle or not-so-subtle cues. Case in point: there’s already a sibling discussing “There are no risk factors” as if it’s actually a quote from Brian Armstrong.
- dj_mc_merlin 4y agoI would argue that's the people's problem. How important is what they have to say anyway if they won't read the source and can't detect sarcasm? edit: also, even if it's not a direct quote.. c'mon, it is what he's saying. The SEC made a rule that applies _specifically for crypto companies_, saying they have to disclose that crypto assets under their custody could potentially be taken in a bankruptcy.. and this guy goes on to say what he was just forced to disclose is not true. It doesn't get more obvious.
- malfist 4y ago
- Ecstatify 4y agoSensationalized title and that's from someone who doesn't even like crypto and thinks it's a scam. Title: {Sensationalized title} Intro: {Waffle} Middle: {Sentence that gives context to sensationalized title} Ending: {Facts & figures to legitimise article}
- krono 4y agoWhen a CEO requires 8 twitter posts[1] to essentially convey the message "Don't worry about this legal clause", it sort of has the opposite effect on me. [1]: https://twitter.com/brian_armstrong/status/1524233480040710144 https://twitter.com/brian_armstrong/status/15242334800407101...
- zeroxfe 4y agoThat thread actually seemed like a reasonable response to balance out the "gloom and doom" from the media. Also, not sure why you think "8 twitter posts" are a such big deal -- tweets are limited in size, and twitter has a broad audience, and these types of tweet threads are very common.
- TheCondor 4y agoThey are common and stupid. Write a memo, have the lawyers review it, post it on Coinbase.com, tweet a link, do a press release, etc.
- Redoubts 4y agoor you go to where the people are, and talk in the way that’s expected there.
- krono 4y agoOnly took me 5 words and a contraction to say the same thing, and I'm not even a native English speaker. Edit: All those maybe's and probably's are the most troublesome part though.
- bombcar 4y ago“Pay no attention to the man behind the curtain” would have worked just as well. Before reading that tweet chain I was on the “SEC always requires horribly pessimistic outlooks” and now I’m in the “they’re going bankrupt very soon” camp.
- nolok 4y ago
- floatinglotus 4y agoIt will amusing if people who bark all day about decentralized currencies lose a bunch of money because they still wanted the benefits of a centralized bank to hold their magic coin purses.
- dasz 4y agoIf your crypto isn't actually in your own wallet you are really just someone's creditor. The whole point of crypto wallets is that you don't need such central businesses to hold your cash. Then again there's all sorts of benefits so there's a tradeoff.
- nunez 4y agomtgox redux
- jermaustin1 4y agoI'm still unhappy with this. I had ~5 BTC with them, but have never been able to give sufficient evidence for settlement, and they keep taunting me with monthly settlement emails.
- josephd79 4y agoCoinbase is the AOL of crypto.
- bonestamp2 4y agoIs there a better crypto on ramp though? Coinbase will let me transfer up to $1000 worth of crypto off their platform immediately after purchase even though the funds haven't settled in their account yet. Every other crypto platform I've used, forces a wait of 3, 7 or 10 days before you can withdraw your new crypto.
- themusicgod1 4y agoYes. Doing work or providing a good or service in exchange for bitcoin/crypto.
- deleted 4y ago[deleted]
- bonestamp2 4y agoI like your spirit, but what makes coinbase the best onramp for me is the instant transfer feature. I can't instantly find a gig that pays in crypto or instantly sell something and find a buyer who will pay in crypto.
- josephd79 4y agoYou're correct. Coinbase definitely made it easier for people looking for a quick way to onboard fiat and to join the crypto ecosystem, just like AOL made it easy for people to access the internet back in the 90s.
- AdamN 4y agowut?
- Havoc 4y agoThat sounds suspicious to me. In UK at least client money should be segregated especially in the context of custody assets. Really shouldn't enter the same pool of assets as Coinbase's office chairs in case of liquidation
- smcl 4y agoDidn't it take a fairly long while before client money laws came in even in traditional banking? I don't have a date so I could be wrong, but taking the history of british banking I have a feeling this was a relatively recent thing. Being generous, we're still within the first decade of crypto as an investment instrument, I imagine regulations haven't quite caught up so really it's no surprise newer crypto companies like Coinbase aren't particularly serious about keeping client money/assets separate. And as much as client money should be segregated, some big names are still getting dinged with CASS breaches - Charles Schwab in 2020, for example.
- Havoc 4y agoMost things should have pretty good client money coverage now - basically anything that is deposit taking and then some. >it's no surprise newer crypto companies like Coinbase aren't particularly serious about keeping client money/assets separate. I'd say the opposite. As crypto company I'd be expecting the regulator to be on my ass from day 1 above the pettiest things.
- smcl 4y agoI sincerely believe that you, the user Havoc, are a responsible, sensible person who would handle client money as if you were operating a well-regulated financial services firm, even if such regulations weren't in place. However companies are not necessarily built that way - if they don't have to do follow some rule that could be considered a bit burdensome and (arguably?) not applicable to them, they likely won't. Why follow rules that might not apply to you, given that you are using a new-and-exciting instrument that you could credibly argue fall outside any existing regulations (and if doing so could permit you to speculate and make a bit of extra money)?
- matt321 4y agoIf people loose tons of cash in this fiasco, it will pretty much kill crypto
- aaaaaaaaata 4y agoConsider their ownership, and what it could mean for those parties if Coinbase were sacrificed. It's an interesting theory.
- capableweb 4y agoIf I'd get a nickel every time someone said this, I'd have tons of cash. But, seems that no matter how much people lose in cryptocurrencies, the ecosystem carries on. It might dip for a while, but sooner or later it comes back up. And then it falls... And then...
- z9znz 4y ago> In the event the crypto exchange goes bankrupt, Coinbase says, its users might lose all the cryptocurrency stored in their accounts, too. File this under "how to guarantee your customers flee as fast as possible".
- deleted 4y ago[deleted]
- halukakin 4y agoWhen you buy BTC using coinbase do you really have a wallet somewhere, do you really buy BTC? Or does coinbase allocate BTC to you from its own BTC holdings?
- robjan 4y agoThe latter. The Coinbase fees would have to be a lot higher (and variable) if there was one wallet per customer.
- bitxbitxbitcoin 4y agoDefinitely the latter and the amount of people that don’t understand this is disturbing.
- etimberg 4y agoI wonder if this will cause them to go bankrupt because users get scared and leave. Just like Bear Stearns in 2008
- capableweb 4y agoI don't think Coinbase can go bankrupt because users leave the platform. They would go bankrupt because of mismanaged funds in that case. Let's say all users withdraw their fiat currencies and also cryptocurrencies, Coinbase will still have money in their own bank for sure, unless they store their own money on their platform, which is highly unlikely. Even if 100% users withdraw 100% of their funds, Coinbase takes a transfer fee from all of those withdrawals, so they'll get even more money in their account in that case.
- cyberlurker 4y agoThey don't have 100% of the funds on hand, same as most real banks.
- mathieubordere 4y agoMaybe today is the day this charade comes to an end. edit: Premarket Coinbase value drops -26.70% now
- civilized 4y agoRemind me what is the point of holding cryptocurrency again?
- yreg 4y agoA. speculation B. diversification against more tradional assets C. store of value if you don’t have access to any better financial instruments D. keeping some ready on hand to pay off ransomware attacks
- brink 4y agoE. Learning what it's like to be dumped on
- lexapro 4y agoSo far it worked out pretty well
- civilized 4y agoAll except maybe D also apply to Pokemon cards
- AlexandrB 4y agoRegarding B, Is there any evidence that BTC is countercyclical? It seems to have followed the conventional market down over the past week.
- vmception 4y ago
- yrttq123 4y agoIt's very unfortunate that the legal system doesn't have a way of saying: this asset is mine and I'm handing it over to you for safekeeping, but it is still 100% mine which means it cannot be used to payoff creditors in any circumstance whatsoever and can only be returned to its rightful owner, meaning me. It may be fungible, so that it can be shuffled around with assets of other customers, but that doesn't change the fact that the quantity of units I deposited still belong 100% to me.
- skizm 4y agoI feel like saying "We have no risk of bankruptcy" is the same as Musk saying "Funding secured" on Twitter. The statement is provably false and will directly impact stock price.
- bogwog 4y agoIf I had any cryptocurrencies in Coinbase, I’d be transferring it out ASAP after reading this and the CEO’s response on Twitter trying to downplay the risk. That’s a red flag.
- ar_lan 4y agoCoinbase has locked a lot of people's ETH2 funds - there is no way to currently withdraw them. This was always a strange concept to me, but there are a good chunk of customer's who are literally just stuck with Coinbase, like it or not, with their funds being held hostage. I know it's a choice, but it's also been like that for many, many months at this point, when I can imagine most people thought "this would only be this way for a few days/weeks".
- gitfan86 4y agoHow are you going to prove that there is a risk of bankruptcy today if the company doesn't go bankrupt today? How are you going to prove that the phone calls and meeting with the Saudis didn't include funding commitments from the Saudis? I'm not suggesting that these CEOs are 100% honest at all times, I'm sure they are not, but you need actual proof for fraud to have bet committed.
- adam_arthur 4y agoWell, it's objectively true that any company can go bankrupt. And an easy scenario to picture for Coinbase would be if crypto assets all dropped 90% or more in value in a short span of time, and went the way of the beanie baby. Is it a high probability? No, but at least a few percent chance.
- marban 4y agoShareholder letter that ends with #wagmi. GTFOH
- mkr-hn 4y agoAs someone without 250k in the bank (or generally), FDIC insurance is quite reassuring. Banks pay into it like any other insurance, so it would take a huge money-doesn't-matter-anymore shock to overwhelm it. 2008 was pretty close! Crypto wouldn't do any good for me since the utility bills for all the internet infrastructure are paid for with real money (in the "most people exchange it for goods and services" sense). There'd be nowhere to go where even a paper wallet would do me any good. You could execute a 51% attack on a solar-powered NetBSD toaster.
- mattwilsonn888 4y ago> You could execute a 51% attack on a solar-powered NetBSD toaster. I don't think you understand the basics of Bitcoin.
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- deleted 4y ago[deleted]
- monkey_monkey 4y agoIs the Coinbase Wallet safe to use? What would happen if Apple removed the app, would people lose access to funds stored in that wallet?
- drcode 4y agoThese types of wallets generate recovery seed phrases that are widely supported: When you install the wallet, you will be asked to write down a phrase, and you'll be able to type the same phrase into any of 20 other wallet implementations to recover your funds.
- capableweb 4y agoAlso, correct me if I'm wrong (long time ago I used iOS), but even if Apple removes the application from the App Store doesn't mean it'll be deleted from your phone automatically. At least I remembered that I was still able to use some apps even after they were deleted from the App Store some years ago.
- nathias 4y ago> That shouldn't happen. Why? I have no problem with this. The problem is just if you're advertising that you'r safe etc. then when you lose it isn't just a loss, it's a scam. Most of the centralized crypto will hopefully be fully replaced with defi solutions in the near future.
- paulsutter 4y agoThis is true for any brokerage account where you have margin enabled. Check your margin agreement carefully. Or better, disable margin on your brokerage account “ people with margin accounts end up as just general creditors in any bankruptcy and recover only a fraction of their assets after some years in bankruptcy proceedings. During bankruptcy, their accounts are frozen and no transactions are allowed” https://www.bogleheads.org/forum/viewtopic.php?t=20582 https://www.bogleheads.org/forum/viewtopic.php?t=20582 (sorry couldn’t find a better reference searching on my phone)
- ad 4y agoI'd be pretty interested to see how cash account is treated differently; I couldn't find a better reference either. But one advantage over the coinbase situation is at least the margin account falls under SIPC.
- _nhynes 4y agoNow the real question is whether bankruptcy would topple USDC since Coinbase is one of the major backers [0]. It's holding steady right now, but so was UST a few days ago. USDC has $48B supply and is propping up DeFi apps on many other networks (just look at AAVE [1] and Curve [2], two multi-chain protocols), so if it falters, there could be massive fallout. [0]: https://www.centre.io/usdc https://www.centre.io/usdc [1]: https://app.aave.com/markets/?marketName=proto_mainnet https://app.aave.com/markets/?marketName=proto_mainnet [2]: https://curve.fi/pools https://curve.fi/pools (search USDC)
- capableweb 4y agoI don't think you can really compare UST and USDC like that. USDC has major backing by very large players in the space while UST is backed by... just Terra? But I agree on the last part, if USDC looses its peg, large parts of the ecosystem will be fucked. But considering who is managing + supporting USDC, it'll take a large event for USDC to lose its peg.
- deleted 4y ago[deleted]
- corydori 4y agoCoinbase is such a shit company...My interactions with them have been absolutely awful. The ended up trying to use a AMEX gift card attached to my papal to buy some crypto, got no error but the funds never went through. Apparently they didn't like that transaction and was flagged as fraud. I was told I can't open a support ticket or have it reviewed for 2 months, "they can't disclose the reasoning behind this." So I had to dump everything I had built up in that account into USD and withdraw it.
- vmception 4y ago> So I had to dump everything I had built up in that account into USD and withdraw it. Had to? You had the option of withdrawing it all to unhosted wallets on the respective networks.
- monkeydust 4y agoWould this situation be same as FTX, Binance as far as we know?
- bitxbitxbitcoin 4y agoYes.
- ffsgsgdfsfsf 4y ago
- CyanDeparture 4y agoCan anyone tell me how to set up a wallet on my Mac in order to get my coins off coinbase. Is there any clear guide on how to do that. Every link on Google seems to be spam or downloading potentially malicious software. It's very fustrating because so many people seem to know how to set up a wallet on their computer/Mac however I cannot for the life of me find a clear wallet to download and move my funds to or a guide on how to do it. If I downloaded this - https://bitcoin.org/en/download https://bitcoin.org/en/download - is that a way to do it? I can't download this in the UK, so is it safe to download it via a VPN and install it that way? Thank you so much to anyone who sees this and replies.
- illegalsmile 4y agoIf you only hold bitcoin that wallet would work, another popular one is electrum. If you want to store multiple coins in one application then Exodus or Atomic would be two good choices. You're looking for a non-custodial wallet and as always, protect your keys to protect your coins, you are the bank at this point.
- CyanDeparture 4y agoIt's just bitcoin I'm storing, is that one I've linked to above a non-custodial wallet or a custodial wallet?
- bitxbitxbitcoin 4y agoA custodial wallet. The original custodial wallet, in fact.
- lawn 4y agoThe correct term is non-custodial. A custodial wallet means someone else holds your keys, but a non-custodial wallet lets you hold them yourself (which Bitcoin Core does).
- 4y ago
- qgin 4y agoIt’s frustrating when someone says “oh don’t worry about this legalese” when it suits them. When the tables are turned, they have no problem using every inch of that legalese against you and to protect themselves. If it doesn’t matter, don’t include it in the contract.
- vorpalhex 4y agoThis is the way. The contract is always binding. I always immediately treat anyone who says "don't worry about (something in the contract)" as somewhere between suspicious and hostile.
- tfang17 4y agoThis is standard verbiage in financial docs of this sort
- vmception 4y agoGood dips to buy, I rarely see literal FUD by the definition of the acronym. Some crypto is being firesold, COIN stock is being firesold Is it the bottom idk
- cm2187 4y agoIt’s amusing for someone who works in finance to see the crypto market re-doing the last century of financial scandals and regulations in fast forward. Discovering capital gain taxes, market manipulations, the necessity to separate firm money from client money for brokers…
- cheschire 4y agoSeems vaguely similar to how the wild west had to re-do civilization and industrialization in fast forward.
- vmception 4y agoNot your keys not your coins
- vmception 4y agoOh wow literal fear uncertainty and doubt! This is where I make my best trades because the information asymmetry is so high! My favorite kind of dip
- tomcat27 4y agois gemini on similar situation?
- FYYFFF 4y agoI have been trying, unsuccessfully for 2 years to validate my account on Coinbase. I have over 100k in ETH stored in their wallet, have the highest levels of access to their services but CANNOT trade because they have NO HUMANS available. Their systems DO NOT work and there is NO contact info nor any way to actually reach a person. So I have been trading with others and will never use CB for anything but cold storage. (Which they're great at)... The company is the worst I have ever dealt with. There is no way to interact with a person. So if something does happen, you have NO RECOURSE. Based on my experience, they will be bankrupt. This is a certainty. You cannot have a financial entity that has ZERO human interaction or service. No trust, none at all...
- sammy2244 4y ago
- vorpalhex 4y agoIt is probably worth reaching out to a lawyer and starting a legal suit. A legal subpeona tends to get humans involved real quick.
- dehrmann 4y agoFor $100k, this is absolutely worth it.
- rogual 4y agoI've been in that situation before with Coinbase, getting ignored and slow-rolled by their know-nothing support team. I submitted a complaint to the CFPB, not expecting much as I'm not in the US, and shortly afterwards Coinbase started replying to me properly. I eventually got my account back. Maybe worth a go.
- uncomputation 4y agoWhy do you say Coinbase is good for cold storage? It’s not custodied so in the event they went bankrupt/sanctions compliance/TOS violation, they could lock you out forever. A hardware wallet is good for cold storage. Coinbase is a hot wallet.
- AlwaysRock 4y agoSo best practice is to continue to hold your coin in a personal wallet and move to an exchance like coinbase when you need to sell?
- paulpauper 4y agoThey will make you do tons of ID verification to sell, take forever.
- paulpauper 4y agolol I guess the Superbowl ad was not so smart and a harbinger of things to come. For 2023 I guess we can look forward to no more crypto ads.
- ar_lan 4y ago2025 will probably be another boom, though.
- paulpauper 4y agoi dont think so
- AlwaysRock 4y agoTo clarify, this means just the crypto stored on their website but not in their wallet?
- zendaven 4y agoCorrect, the assets you have in a wallet (something you have a secret phrase for) are not controlled by Coinbase.
- noodles_nomore 4y agoCoinbase limits withdrawals in times when crypto crashes by removing the 'financial services' header in the settings where your connected bank accounts are listed. I don't know if they still do that, but I saw this as recently as a few months ago. You can still empty your account by going through the account deletion process. It will give you the option to sell all your crypto (and maybe to send it to a wallet, I don't know) and do a full withdrawal. Afterwards you can still stop the deletion process if you think you want to keep the account anyway (e.g. I was worried the transaction would somehow not complete and then not have access to the account).
- jmyeet 4y agoThis isn't an FDIC issue. This is an Securities Investor Protection Corporation ("SIPC") issue. The SIPC was greated almost 50 years ago to cover investors in a similar fashion to FDIC against the loss of custody assets in the case that a broker goes bankrupt. Like FDIC, there are limits. The point here is that crypto isn't covered by the SIPC [1]. So the Coinbase disclosure (required by the SEC) is correct: there is no protection for your Coinbase custody assets in the cse of insolvency beyond being a general creditor. This seems like a good thing for investors and customers to know. [1]: https://www.sipc.org/for-investors/what-sipc-protects https://www.sipc.org/for-investors/what-sipc-protects
- 0daystock 4y agoFDIC doesn't even have enough funds to cover 1.3% of all deposits. Consider that before assuming your investments are protected.
- tomrod 4y agoI put $200 into a coinbase account (my second go at crypto) at the first "peak" of bitcoin, more or less to teach myself to not invest in hype and to monitor the hype cycle over time. It's been very interesting to follow this over the recent peak. Coinbase probably doesn't settle each transaction immediately, since Bitcoin and several other cryptocoin transactions per second are still low, instead using internal accounting to satisfy the counterparty transaction. Fun times. Good luck to Coinbase, they may have just triggered a run!
- ck2 4y agoBrings back really bad memories of Crypty, lost so much to their stupidity and then missed out on the settlement.
- smoyer 4y agoNo surprise ... Use your own wallet!
- deleted 4y ago[deleted]
- pbmango 4y agoThis conversation is especially interesting given the FDIC is probably the most decentralized component of traditional financial infrastructure. It has cost taxpayers effectively nothing and rests on mutual insurance across the system. Yes there is a line of credit to the Treasury but the overall security it has provided for 70 years is probably hard to measure compared to the Fed buying/selling activity. I know there are probably teams working on this for crypto already (without the law mandate).
- runjake 4y agoYou should move your crypto out of Coinbase or any other exchange's wallet into your own cold wallet. In Coinbase's case, you can move that crypto to any wallet, including Coinbase's Coinbase Wallet app, where you have possession of the private key and should still have access to those funds if CB were to go south. But yeah, welcome to the world of currency not backed by guns, so to speak.
- chollida1 4y agoThose of us who were around in 2008 remember when Lehman went bankrupt. In that case they were the custodian for hedge funds assets. Lehman held those assets, in some cases because the British government force them to. This really caused 2008 to spiral as now hedge funds that were perfectly fine got locked up and had to pull assets from the market due to Lehman holding their assets which caused even more selling and the feed back loop continued as funds sold their best assets first(think the Microsofts of stock world). A coin bankruptcy would be the same thing, retail probably doesn't matter too much but if COIN held institutional funds, those guys do need to have liquidity for redemptions. This would mean alto of sell pressure on other exchanges and would lead to the best and highest quality crypto assets getting hammered down as funds fled to cash/stable coins. Solana would probably crash and then shut down the network, even though they still try to claim they are a decentralized network:) ETH and BTC would see very sharp drops in the first few days and then bounce back as people need to put money somewhere. DEFI would feel this sell pressure and have alot of failings due to liquidity pools bein drained in this rush to quality. At best they'd get shutdown, at worst they'd just fail and go away. You'd also expect the algo based stable coins to break the peg, even the well collateralized DAI would probably break. Tether would probably continue on just fine as that's probably what most institutional funds would go to and I've given up on trying to predict its demise,
- ur-whale 4y agoNot your keys ...
- elpakal 4y agoAnyone want to invest whatever pennies they get on their Coinbase bankruptcy dollars on a new coin I just thought of? bankruptcoin - any coin exchange leftovers can be converted to coin and yolo’d.
- deleted 4y ago[deleted]
- sizzle 4y agoBright red flag that screams “not your keys not your coins” Pull out all your funds into your own wallet
- bacan 4y agoSo Coinbase is gonna be bankrupt pretty soon i guess
- dqpb 4y agoIf Vanguard went bankrupt, would customers lose all their stocks?
- kasey_junk 4y agoNo. SIPC would make the customers whole first before letting any creditors access their shares. The issue is Coinbase is not handled by SIPC (or similarly the FDIC).
- dehrmann 4y agoI'm going to get a few details wrong, but mutual funds and ETFs go to creative legal efforts to prevent this. Funds are usually independent entities that pay the fund house for management and marketing services. If the fund house goes under, it doesn't hold the assets in its funds, so fundholders aren't screwed.
- lamontcg 4y agoCoinbase popping and everyone with their funds/crypto still there gets ruined is probably in my top 5 signs that the crypto apocalypse is nigh and the Ponzi ends. I still expect that the current downturn reverses later this year, and Coinbase isn't popping yet they're just having to disclose that risk. But given a real melt down in the broader economy and something like commercial mortgage backed securities popping, I expect that Coinbase would melt down. Even though I'm not as negative as everyone else over current conditions, it is probably time to seek shelter (or that if there is a bounce later this year it is probably a profit taking opportunity before the crash)
- Animats 4y agoYes. Do not keep funds in "hosted wallets" for more than a day or two. Of course, Coinbase wants you to keep your money with them, so they can dip into your funds. Do they offer a service where funds in your Coinbase account sweep daily into a non-hosted wallet of your choice? No? How about that.
- joeblow21 4y ago
- la_fayette 4y agoWhat is the point in using coinbase anyway? It is just an expensive place to buy crypo assets, I don't get the value proposition, since you have so many cheaper and simpler places to buy crypto...
- tu7001 4y agoI don't understand why Coinbase have troubles, Crypto has arisen a lot, so the should have great interests.
- tim333 4y ago>in the event it ever declared bankruptcy, “the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings.” Coinbase users would become “general unsecured creditors,” That's terrible. Coinbase act very much like stockbrokers but with crypto instead of stocks and should segregate client funds the same way. If you deposit a 1000 Apple shares say with eTrade and they go bust the Apple shares are still yours and can't be taken to pay eTrades debts - that's how it should be. Otherwise it's just asking for the brokers to legally steal your investments by paying themselves huge bonuses and then saying oops, we're broke.
- daniel-cussen 4y agoOh so they're doing the goldsmith does when he realizes he always had a baseline amount of gold in the vault no matter to whom it belonged?
- jo6gwb 4y agoHere's a great analysis for why Coinbase and other exchanges with similar legal structures pose a risk to customers should the exchange ever declare bankruptcy. https://www.creditslips.org/creditslips/2022/02/what-happens-if-a-cryptocurrency-exchange-files-for-bankruptcy.html https://www.creditslips.org/creditslips/2022/02/what-happens... TLDR: In bankruptcy, it is likely to be treated as a debtor-creditor relationship, not a custodial (bailment) relationship.
- mdoms 4y agoWait if Coinbase users don't control their own wallets then how do they spend their bitcoins?
- robinjhuang 4y agoThis might have been mentioned already, but the more accurate comparison would be to stock brokers. Robinhood has SIPC insurance up to $500k in case they go bankrupt. Crypto has no such insurance.
- calltrak 4y agoI had a couple of hundred dollars with coinbase and they were going to charge me 30% to get the money out. I thought to myself want a bunch of thieving cunts.
- stjohnswarts 4y agoSo why don't people also keep their wallet keys somewhere in their homes as well? That's all you need to access your funds, coinbase is just a convenience. To do otherwise seems insane especially if you have more than $1000 in there.
- bagels 4y agoThis was all I needed to take all my coins out and put them in my own wallet. Bye, Coinbase!
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- aunterste 4y agoThat is why 'custodial' crypto is not better than a bank account, it's worse by the prevailing FDIC insurance coverage. On the other hand, retail customers can't be trusted with their wallet keys..
- prepend 4y agoSince coinbase isn’t FDIC insured, it makes sense that if coinbase goes bankrupt, the customer currencies will go away as well. And they aren’t SPIC insured in the situations where crypto is a security. It’s funny to see people shocked (SHOCKED!) when crypto doesn’t have the protections of regular banking and investments. That’s why you don’t invest with stuff that isn’t insured. Those aren’t real rates, they are risk adjusted rates for not having insurance. It’s fine to invest in these products, but scary because people aren’t doing due diligence and have unrealistic expectations. The CEO’s statement that they won’t go bankrupt it just comical. Of course he thinks they won’t. Few bank CEOs think that. But real banks and brokerages have insurance for their customers in the rare situation that they go bankrupt.
- derbOac 4y agoThe only exception I might take to what you're saying is that one of the main reasons for crypto is resistance to central authority, so the emergence of a situation where something like this can happen should be edifying. It's not the first time this has happened; people seem to forget about Mt Gox. These exchanges need to be part of the crypto schema. Crypto theory is so focused on the chain and not the infrastructure that builds up around it. Anyway, I completely agree with what you're saying but it has special meaning when you're talking about something that's supposed to transcend the need for regulatory structures like FDIC.
- Melting_Harps 4y ago> The only exception I might take to what you're saying is that one of the main reasons for crypto is resistance to central authority, so the emergence of a situation where something like this can happen should be edifying. Explain. > It's not the first time this has happened; people seem to forget about Mt Gox. False equivalence, MTGOX wasn't a Publically traded company with tons of VC money and lots of institutional funds (Ark et al) backing them; Mark embezzled funds and had horrible OPSEC that led to a massive hack. He tried covering this up, Coinbase reporting a massive loss is definitely not the same thing. > These exchanges need to be part of the crypto schema. Crypto theory is so focused on the chain and not the infrastructure that builds up around it. Coinbase has been the bane of the Bitcoin ecosystem since MTGOX folded. They are not a representation of what the 'Crypto' schema needs, in fact I'd argue CASH is a superior product in very conceivable way. And what exactly is Crypto theory, exactly? The Infrastructure was meant to be P2P, as noted in the White paper by Satoshi: exchanges are merely a response from the growing Market to cater to the increase in demand, and the truth is they still exist. Kraken, Binance, Gemini etc... still exist and will for some time. The number of exchanges isn't the issue in 'Cryoto land,' it's the scams and I'm glad Coinbase being a pusher of these worthless alts deserves to suffer. My worry is what happens to their BTC if they decided to unload to cover losses.