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Author Topic: What if Coinbase and other Wallet services take all of our coins and run away?  (Read 219 times)
MohammadMDP
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April 15, 2018, 09:17:10 AM
 #1

In the future there will be billions of dollars stored in Wallets, what if one day they decide to stop and shut down their services and transfer all the money to their own wallet and confirm the transactions and convert all of their coins(Bitcoin and any other Altcoins) to USD and disappear?
How can we get our money back? whom can we sue? how can we prove how much coins we had in their wallet? 
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April 15, 2018, 09:18:33 AM
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I think it's a possibility. Many of the wallets in the past ran away......
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April 15, 2018, 09:38:47 AM
 #3

Then what benefits does it have against bank accounts when there is no security guarantee?!
In bank accounts if the bank you have money in, bankrolls, up to an amount guaranteed by central bank will be given back to you by central bank.
but in Coin Wallets, it's like you give your money to an unknown person and ask them to hold it safe and secure for you!! is't that idiotic?
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April 15, 2018, 10:07:24 AM
 #4

WTF thats fucking scenario Grin. But I think, they will not escape easily. Because there will be many people around the world looking for them. They will never be calm in their lives when doing such a thing.
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April 15, 2018, 10:24:44 AM
 #5

But how they will be able to transact without password.  Password is in owner's custody how any other person even including wallet owner can make transaction. 
Though they may close their business and in this case I think owners of coins in their exchange will be suffering loss.  But chances of closure are very low because business is handled by group of persons.  One may quit other may enter.
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April 15, 2018, 10:29:46 AM
 #6

I’m pretty sure your money is safe with Coinbase, aren’t they government insured or some shit? I don’t use them any way but if you want peace of mind & absolute sole ownership of your coins then you need to be the only person with access or in control of your private keys.




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April 15, 2018, 10:48:59 AM
 #7

It has happened in the past which is why you should never store too much of your coins on the exchanges. Hold most of it on your own computer or an offline wallet, for exchanges just keep the amount you wish to trade with, an exchange can be hacked or closed at any time

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April 15, 2018, 10:51:57 AM
 #8

In the future there will be billions of dollars stored in Wallets, what if one day they decide to stop and shut down their services and transfer all the money to their own wallet and confirm the transactions and convert all of their coins(Bitcoin and any other Altcoins) to USD and disappear?
How can we get our money back? whom can we sue? how can we prove how much coins we had in their wallet? 

You're describing an exit scam. Many wallets and exchanges have exit scammed. This is why you should never use exchanges as wallets, or use hosted/web wallets. The old saying goes, "If you don't control the private keys, you don't own the bitcoins."

Coinbase is probably the least likely to cut and run. They're really transparent and hold licenses where they operate. But they could always get hacked or otherwise compromised and lose customer funds that way. If that happens -- worst comes to worst -- they declare bankruptcy and leave things to the courts.

I’m pretty sure your money is safe with Coinbase, aren’t they government insured or some shit?

USD in their custody is FDIC-insured. Maybe other fiat money is insured, too. But cryptocurrency definitely isn't.

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April 15, 2018, 11:00:24 AM
 #9

Whether or not Coinbase will get hacked or not, will just simply run away with your money or not, it's still best to hold your bitcoin on your own wallet whereas you control the private keys. That way, you truly have ownership to your bitcoin.

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April 15, 2018, 11:04:04 AM
 #10

In the future there will be billions of dollars stored in Wallets, what if one day they decide to stop and shut down their services and transfer all the money to their own wallet and confirm the transactions and convert all of their coins(Bitcoin and any other Altcoins) to USD and disappear?
How can we get our money back? whom can we sue? how can we prove how much coins we had in their wallet? 
They are registered company, mostly based in US, Canada so it like a bank scam your money, i think that it is impossible.
Anyway, if you are still worry about them, you should use blockchain wallet.
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April 15, 2018, 11:11:29 AM
 #11

There is always a risk when you keep your funds in an exchange wallet or other wallet you don't own your private keys of. An exit scam is highly unlikely but theoretically possible. I personally think that the risk of a hack would be higher.

It is why you should not keep your funds on exchanges. Only have it on the exchange if you are trading. Keeping them in cold storage would be the safest.

By the way, all digital currency that Coinbase holds online is insured. If Coinbase were to suffer a breach of its online storage, the insurance policy would pay out to cover any customer funds lost as a result. Coinbase holds less than 2% of customer funds online. The rest is held in offline storage.

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April 15, 2018, 11:21:07 AM
 #12

In the future there will be billions of dollars stored in Wallets, what if one day they decide to stop and shut down their services and transfer all the money to their own wallet and confirm the transactions and convert all of their coins(Bitcoin and any other Altcoins) to USD and disappear?
How can we get our money back? whom can we sue? how can we prove how much coins we had in their wallet? 
Some cryptocurrrency exchanges are regulated by governments, meaning that the government know who owns that exchange so this is probably an unlikely scenario. If a regulated exchange do this, of course it is easy to sue them. And also, if they will take all the cryptocurrency on their service and sell it for fiat, it is now possible to trace the person who did it. But as an investor, if you really care about the security of your coins, why would you trust other services to do it for you if you can secure them by your own? many people are missing the point that exchanges and wallet have different functions, exchanges should not be used as a wallet, it should only be used for trading.

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April 15, 2018, 11:25:26 AM
 #13

In the future there will be billions of dollars stored in Wallets, what if one day they decide to stop and shut down their services and transfer all the money to their own wallet and confirm the transactions and convert all of their coins(Bitcoin and any other Altcoins) to USD and disappear?
How can we get our money back? whom can we sue? how can we prove how much coins we had in their wallet? 

That's why it not advisable to store your coins in a wallet wherein you don't hold your own private key. As long as they have access to your coins then it is considered not totally yours. As what others say, it is not your coin if you don't hold the private key. Just store your coins in a hardware wallet or paper wallet as long as you hold the private key then it is your coin and it is safe. The same goes with storing your coin in exchanges. When the exchange decided to shut down then they will bring your coins as well so it would be considered as lost already. If there is no rule yet about cryptocurrencies then you cannot sue anyone.

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April 15, 2018, 11:30:15 AM
 #14

In the future there will be billions of dollars stored in Wallets, what if one day they decide to stop and shut down their services and transfer all the money to their own wallet and confirm the transactions and convert all of their coins(Bitcoin and any other Altcoins) to USD and disappear?
How can we get our money back? whom can we sue? how can we prove how much coins we had in their wallet? 
It is possible to happen since coinbase is a centralised exchange. But I think, the owner of coinbase don't have mental disorder to do that because his name, reputation and securities are at risk when he will run out the money of the people.
If our money in cryptocurrency will totally lose, we are not compensated rather if you will lend your capital or savings in a bank, there is a chance that your money may return with due process of law.

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April 15, 2018, 11:43:52 AM
 #15

How that idea came into your mind? You're too imaginative dude Grin

Anyway, Coinbase is a one of the most trusted wallets so I'm pretty sure that its developers will not run away with all of our money. But going back to your assumption, if they robbed all of our money then the police authorities will hunt them because what they did is against the law. It doesn't matter anymore if what they robbed is in form of fiat or crypto (which is not regulated by the government), larceny will remain larceny and it will not change.

In this scenario, I think our money will not return to us anynore unless the accused ones will tell where they hide our money. But honestly, I doubt that our money will be retrieved as exact what they have been stolen so I think we can't really do anything but to let our authorities to do the rest.  

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April 15, 2018, 11:45:35 AM
 #16

Well that's kind of like what happened with Mt. Gox, if you look at things a certain way. They were required to pay back everyone who lost money years after the fact, in USD terms, not Bitcoin. That's probably similar to what will happen to Coinbase should it find itself in the same situation. As for proving how much, the courts will probably see to it that all data prior to the shutdown is kept and used for crediting the proper amount of money.

But yeah, it's a shitty situation to find yourself in. This is why you never use online wallets/exchanges to store a sizable amount of money. Keep it in a personal desktop/hardware wallet and you won't have to worry about any provider going out of business.

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April 15, 2018, 11:47:43 AM
 #17

Well this is the reason why people are being told to use a non-contract wallet where your private key isn't being held by someone other than yourself because if you do not control your private keys then you do not entirely control your coins. Use non contract wallets like myetherwallet and once you register you get your own private key to keep safe by yourself without it being stored by the site.



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April 15, 2018, 11:57:36 AM
 #18

Big services like Coinbase are unlikely to exit scam because the people behind them are well-known, and it's hard or even impossible to tumble and launder huge amounts of Bitcoins - they would be tracked sooner or later, just like it happened with Mt. Gox. But there are other risks for big exchanges, they might get hacked or their employees/owners might come up with some sophisticated scam like faking being hacked. And as for smaller exchanges, they made exit scams in the past and made traders lose money in many other ways, so in general it should be a rule of thumb to never keep your coins on exchange - the fees are so low now that it's not a problem to just send coins to exchange every time you want to sell some.

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April 15, 2018, 12:17:49 PM
 #19

In the future there will be billions of dollars stored in Wallets, what if one day they decide to stop and shut down their services and transfer all the money to their own wallet and confirm the transactions and convert all of their coins(Bitcoin and any other Altcoins) to USD and disappear?
How can we get our money back? whom can we sue? how can we prove how much coins we had in their wallet? 

That is always a possibility as many exchanges have done this in past. You should check about the owners of those exchanges before using them.
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April 15, 2018, 12:23:13 PM
 #20

If this is happen there's nothing we can do. Only accept the fate and try to looking for change from the loss.

There's a problem that i ever read. Where one of the exchange user lost his balance suddenly and after told the exchange there's nothing solution can be found.

While this exchange still operating.

So i mean, even exchanges that still operating can't gave any solution, how if it lost already.

So, in every effort there must be risks.

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