Coinbase Holds a Whopping 966,230 Bitcoin ($7B) in Cold Wallet

[Theb]

I don't think that they are advertising it but they are just showing how liquid their company. If they are holding nearly a million Bitcoin then this just shows how capable they are on paying their customers back on what they will withdraw or what they will buy. Even if they don't advertise such information they are still in the cross hair of hackers trying to infiltrate there system, it's how crypto exchanges/services work and they are aware of the risk involve running a digital and online business. That info might gain a lot of attention from hackers but I think they are well secured for any kind of attacks to steal it, this isn't even an official statement from Coinbase and this is just a report coming from another source.

[Pearls Before Swine]

I just hope they have really really FIERCE security and are guarding their stash like hawks.

Seriously.  Didn't Mt. Gox get most of their bitcoin 'stolen' from cold wallets?  I don't remember if it was Karpeles who stole it or someone else but I do remember that he'd had multiple cold wallets locked up in the offices and that they'd gone missing, which just shows you what can happen.

But coinbase is not Mt. Gox.  Gox was almost a one man operation and Karpeles shouldn't have been entrusted with a single satoshi, whereas coinbase is a big regulated exchange and I doubt they're keeping that much bitcoin in a cold wallet where an employee or someone else can steal it.  At least I hope they're not doing that.  But I also wonder where a safe enough place would actually be to store that much.  Anywhere you can think of can be robbed as long as someone knows where the coins are. 

Using multiple locations would be best in my opinion.  Hopefully coinbase has insurance on the coins they're holding.  I'm *almost* sure they're required to by the U.S. gov't.

[gentlemand]

Hopefully coinbase has insurance on the coins they're holding.  I'm *almost* sure they're required to by the U.S. gov't.

Nah. There's no legal requirement for crypto insurance. The fiat will be covered by conventional banking policies.

Note the wording here - https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured- 'all digital currency that Coinbase holds online is insured' so that means hot wallets only which is 2% of all funds. For all the rest you're in their hands entirely.

And I wonder whether their policy would actually pay out for any of that 2%.

[1Referee]

It's probably closer to 2 million Bitcoin if you add that they hold the Xapo 'bunker' funds and GBTC's funds.

Other exchanges lag behind Coinbase, but still have sizeable cold wallets from its depositors and own funds. BitMEX has around 265,140 BTC ($1.94B) while Bitstamp comes in third with 229,490 BTC ($1.67B). Other top exchanges by assets under its custody are Bitfinex (146,120 BTC), Kraken (136,780 BTC), Bittrex (131,340 BTC), and Coincheck (35,090 BTC)

Don't forget about Huobi holding ~300,000BTC and Binance with ~400,000BTC. Still no match for Coinbase, but they deserve to be in that list for sure.

With time, more legacy financial institutions will offer custody services, which should translate into a Coinbase exodus because it's more convenient for people to entrust the institutions they are familiar with than a native crypto company. More competition is welcome.

[gentlemand]

With time, more legacy financial institutions will offer custody services, which should translate into a Coinbase exodus because it's more convenient for people to entrust the institutions they are familiar with than a native crypto company. More competition is welcome.

I wonder. It's definitely healthier to be spread around but there may be an element of 'you go first' that stifles it.

I would be more inclined to go with an operation that had been doing it for years with a flawless track record than some old stager that had recruited a bunch of cryptobro assholes and told them to get on with it.

If that BTC is gone it's staying gone. I'd want devoted monks tending to it, not some clueless newly created subsidiary with little emotional investment.

[exstasie]

Nah. There's no legal requirement for crypto insurance. The fiat will be covered by conventional banking policies.

Note the wording here - https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured- 'all digital currency that Coinbase holds online is insured' so that means hot wallets only which is 2% of all funds. For all the rest you're in their hands entirely.

And I wonder whether their policy would actually pay out for any of that 2%.

As we found out with Bitpay, it all depends on the circumstances. Their insurance claim was denied after they sustained a 5,000 BTC loss from a spearphishing attack.

It sounds like Coinbase's policy would cover a typical hot wallet hack scenario.

[gentlemand]

As we found out with Bitpay, it all depends on the circumstances. Their insurance claim was denied after they sustained a 5,000 BTC loss from a spearphishing attack.

It sounds like Coinbase's policy would cover a typical hot wallet hack scenario.

What is a typical hot wallet hack?

Most of the reported ones were probably inside jobs. It looks like Bitpay underwent what's likely to be the most common technique and blithely assumed they'd be covered. I wouldn't have paid them out either though.

I wonder whether Coinbase sat down with the insurer and spelled out or had it spelled what scenarios would be covered or not.

[exstasie]

As we found out with Bitpay, it all depends on the circumstances. Their insurance claim was denied after they sustained a 5,000 BTC loss from a spearphishing attack.

It sounds like Coinbase's policy would cover a typical hot wallet hack scenario.

What is a typical hot wallet hack?

Most of the reported ones were probably inside jobs.

Coinbase's insurance policy apparently covers inside jobs too.

The devil is in the details. We obviously aren't privy to a line-by-line breakdown of their insurance policy. Hopefully we'll never find out.

The recent breaches at Binance or Upbit are two examples. It could be a physical penetration of their servers or something else but the point is fraudulent, unauthorized transfers where adequate duty of care was exercised.

It's worth noting, while Massachusetts Bay denied Bitpay's claim and took the matter to court, the two ended up settling for an undisclosed amount.

Filed yesterday, a court order dismissed the suit between BitPay and Massachusetts Bay Insurance Company, a subsidiary of Hanover Insurance, without prejudice. According to the court order signed by US District Judge Steve Jones, the two sides “have reached a settlement in principal”.

[gentlemand]

It's worth noting, while Massachusetts Bay denied Bitpay's claim and took the matter to court, the two ended up settling for an undisclosed amount.

Interesting. I thought they'd gotten a flat refusal. I can't believe any employee would be stupid enough to do what they did and I can't believe their system was open to that type of entry from an office drone computer but I know nothing about these things.

[exstasie]

It's worth noting, while Massachusetts Bay denied Bitpay's claim and took the matter to court, the two ended up settling for an undisclosed amount.

Interesting. I thought they'd gotten a flat refusal. I can't believe any employee would be stupid enough to do what they did and I can't believe their system was open to that type of entry from an office drone computer but I know nothing about these things.

Same. All these years I'd been operating under the assumption that the court tossed out the case, simply because it seemed so stupid and Massachusetts Bay was putting up a fight. It was only just now that I realized the whole matter was swept under the rug and the insurance company paid out something under the policy.

It'll be interesting when we finally see a case like this go to trial and get some real precedent.

[guigui371]

Interesting to note that the article list the "major" exchanges but forgets Binance.

Other exchanges lag behind Coinbase, but still have sizeable cold wallets from its depositors and own funds. BitMEX has around 265,140 BTC ($1.94B) while Bitstamp comes in third with 229,490 BTC ($1.67B). Other top exchanges by assets under its custody are Bitfinex (146,120 BTC), Kraken (136,780 BTC), Bittrex (131,340 BTC), and Coincheck (35,090 BTC).

Binance has at least 155,000 BTC in cold storage  :
https://bitinfocharts.com/bitcoin/address/3E35SFZkfLMGo4qX5aVs1bBDSnAuGgBH33
https://bitinfocharts.com/bitcoin/address/34xp4vRoCGJym3xR7yCVPFHoCNxv4Twseo

[Juggy777]

https://beincrypto.com/coinbase-holds-a-whopping-966230-bitcoin-7b-in-cold-wallet/

According to recent reports, Coinbase has a whopping 966,230 Bitcoin in its cold wallet. The exchange is increasingly becoming like a ‘bank’ which stores a growing number of deposited cryptocurrency assets.

Other exchanges lag behind Coinbase, but still have sizeable cold wallets from its depositors and own funds. BitMEX has around 265,140 BTC ($1.94B) while Bitstamp comes in third with 229,490 BTC ($1.67B). Other top exchanges by assets under its custody are Bitfinex (146,120 BTC), Kraken (136,780 BTC), Bittrex (131,340 BTC), and Coincheck (35,090 BTC)

.

I'm not sure they should be advertising this. I just hope they have really really FIERCE security and are guarding their stash like hawks.

That’s a huge amount even if we’re talking about a major crypto exchange here, it seems that people there just deposit funds and forget about it. @alyssa85 they’re advertising it because they wish to tell people that they’re biggest exchange in the crypto industry and users funds will be safe with them.

[ecnalubma]

Likely they are boasting their holdings and prove to other exchanges that they are the mammoth in the space. No wonder since they operated early and maintain good liquidity during their early operations. For sure its a nightmare for them to secure that accounts.

[alyssa85]

That's a pretty big amount of money in equivalent, if that assets were deposited in a bank, it will have an insurance that deposits will get a certain maximum amount in case something happen to the money. I wonder what would be coinbase approach to ensured that big funds, Binance have a SAFU funds, how bout coinbase?

I am just concern about this a lot because of the trends that big exchanges are being hack, we have upbit recently.
https://www.theblockcrypto.com/post/48578/south-korean-crypto-exchange-upbit-gets-hacked-loses-nearly-50m-worth-of-ether

Coinbase have insurance for their hot wallets but not their cold wallets.

I'm astonished that users are storing so many coins with them. People keep trusting these online providers of wallets and then cry afterwards when they lose their coins.

[BChydro]

all digital currency that Coinbase holds online is insured' so that means hot wallets only which is 2% of all funds. For all the rest you're in their hands entirely.

And I wonder whether their policy would actually pay out for any of that 2%.

If all the coins held by Coinbase is insured then it is a great idea that the rest of the exchanges should follow as the security of exchanges are a major concern and when the government legalize these exchange i expect them to insure all the assets and all the exchanges should be forced to enforce that rule and if that happens then the traders can trust keeping the funds in the exchanges even if we are not trading.

[Lucius]

I'm astonished that users are storing so many coins with them. People keep trusting these online providers of wallets and then cry afterwards when they lose their coins.

It's easier and more secure to make a Coinbase account, then to install BitcoinCore or download Electrum. Although owning private keys is something that every user should do, inexperience can sometimes cost too much. Electrum wallet users know it best, a phishing attack that is still ongoing caused thousands of lost/stolen BTC.

So in some cases, using Coinbase makes sense - because if you can't trust yourself, you have to trust someone else. Still the concentration of millions of Bitcoins at several exchanges it's nothing positive, far from it, it poses a major security risk.

[aardvark15]

That’s pretty amazing that they hold 5% of all Bitcoins mined at this point. They are one of the better exchanges and possibly the best.

[gentlemand]

all digital currency that Coinbase holds online is insured' so that means hot wallets only which is 2% of all funds. For all the rest you're in their hands entirely.

And I wonder whether their policy would actually pay out for any of that 2%.

If all the coins held by Coinbase is insured then it is a great idea that the rest of the exchanges should follow as the security of exchanges are a major concern and when the government legalize these exchange i expect them to insure all the assets and all the exchanges should be forced to enforce that rule and if that happens then the traders can trust keeping the funds in the exchanges even if we are not trading.

Pay closer attention. 98% of their coins are not insured and it'll probably be impossible to obtain insurance for the cold stuff. If they could they no doubt would.

[tonyvo2017]

It is hoped that Coinbase will be a reputable exchange and will always hold speculative assets safely. because after announcing this information, it was a move that helped Coinbase be peeked at by money-loving hackers. Now they will find ways to attack Coinbase to get more bitcoins. I think exchanges should not publish such information, they should only send notification emails to accounts registered on their exchange.

[Dart18]

They should really not be advertising it.

Who the hell did leak this numbers to those bloggers or Coinbase transparent about this numbers?
Now, it could be the reason for more attacks in their website. Although they might have a better security than other exchanges they could still be holes where hackers could get in.
Just one wrong move could risk every coin they hold.