Coinbase blackout

[MARK21]

Doing some research I came across this news from Coinbase, where they report that there was recently a net loss of $430 million in the first quarter, which is based on declining sales and active users.

Coinbase said that they were working on the issue and that the funds were safe. He also added in a tweet:

"We are seeing recovery after implementing a fix, but our teams continue to monitor the situation."

Twitter: https://twitter.com/CoinbaseSupport/status/1524802731763965958

In the event of bankruptcy, the account holders will be considered simple creditors, which means that users will lose their money in the event of the company's insolvency. This part of the disclosure was addressed by the CEO of Coinbase in a series of tweets.

Source: https://bitcoinist.com/coinbase-witnesses-major-outage/

[bittraffic]

As of March 31, 2022, we held $256 billion in custodial fiat currencies and cryptocurrencies on behalf of customers. Supported crypto assets
are not insured or guaranteed by any government or government agency. We have also entered into partnerships with third parties, such as with
the Centre Consortium, as a reseller of USDC, where we or our partners receive and hold funds for the benefit of our customers.

https://investor.coinbase.com/financials/sec-filings/default.aspx
That quote is from 10-Q https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/89c60d81-41a2-4a3c-86fb-b4067ab1016c.pdf

Your coins is not safe in coinbase in the case of bankruptcy. And  they may be able to get them  from you too as it states in that document.

Moreover, because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.

This may result in customers finding our custodial services more risky and less attractive and any failure to increase our customer base,
discontinuation or reduction in use of our platform and products by existing customers as a result could adversely impact our business, operating
results, and financial condition.

What is interesting though is that Cathie Woods who is very much bullish in BTC bought Coinbase stocks when it dropped recently.

[mk4]

Are we really immediately anticipating a bankruptcy just because they currently have a problem with their platform(every platform gets problems) and after a single bad quarter? Multi-billion dollar companies can survive far more than that -$430m net income; assuming they handle it well, of course.

[Dave1]

I guess it might due to the bear cycle and perhaps competition. But I guess Coinbase is still up there with Binance and so maybe they've lost big money. Not seeing though that they will just immediately go bankrupt. They have been in the exchange niche already and had ventures outside if I'm not mistaken. So there is still some money coming in but due to the bear cycle is it expected that it might go down a bit as well. But come bull runs, like last year, Coinbase will make a lot of money again.

[pooya87]

based on declining sales and active users.

All centralized companies that keep going against users' privacy, limit accounts for arbitrary reasons such as "taint", etc. should face the same problems. I still don't think this is the end of Coinbase with bankruptcy but eventually that will happen too.

[Fortify]

Doing some research I came across this news from Coinbase, where they report that there was recently a net loss of $430 million in the first quarter, which is based on declining sales and active users.

Coinbase said that they were working on the issue and that the funds were safe. He also added in a tweet:

"We are seeing recovery after implementing a fix, but our teams continue to monitor the situation."

Twitter: https://twitter.com/CoinbaseSupport/status/1524802731763965958

In the event of bankruptcy, the account holders will be considered simple creditors, which means that users will lose their money in the event of the company's insolvency. This part of the disclosure was addressed by the CEO of Coinbase in a series of tweets.

Source: https://bitcoinist.com/coinbase-witnesses-major-outage/

It feels like you are conflating an accounting loss with a systemic loss connected with funds stored with them. They are simply spending more than the revenue they are generating, rather than facing any sort of security risk. They probably overdid it with advertising and staffing as they tried to capture market share. They'll now have to rein in the spending, which should be simple in comparison. It is rather shocking to see the price decline in their share since listing and naturally the latest price drops in crypto might put off new buyers in future. I'd be wary of storing any coins there based on the terms that they set.

[DapanasFruit]

I could not imagine what can happen to the whole cryptocurrency industry just in case Coinbase can go six feet underground...it would be a big blow to all of us and can put us in the middle of the many big bears all ready to devour anting they can see and get hold of. In other words...we would then be all in the drainage. And news like this comes at the time when the market is really struggling big time due to the Terra saga and we still have to see the bottom. All these and more are just showing the regulators of the need to strictly regulate the industry and make sure every player toe the line for good.

[Twinkledoe]

I could not imagine what can happen to the whole cryptocurrency industry just in case Coinbase can go six feet underground...it would be a big blow to all of us and can put us in the middle of the many big bears all ready to devour anting they can see and get hold of. In other words...we would then be all in the drainage. And news like this comes at the time when the market is really struggling big time due to the Terra saga and we still have to see the bottom. All these and more are just showing the regulators of the need to strictly regulate the industry and make sure every player toe the line for good.

It will add more panic to the already nervous crypto holders. But will this be avoided if they have insurance in place already? Like the SAFU of binance. I am not a user of Coinbase so I am not familiar with their insurance, if there's any. But with their loss, I think, they have options how to get back on their feet. They have been in this industry for so long they already know what to do for bugs and other attacks on their system.

[_act_]

I am not a user of Coinbase so I am not familiar with their insurance, if there's any. But with their loss, I think, they have options how to get back on their feet. They have been in this industry for so long they already know what to do for bugs and other attacks on their system.

Why ain't you a user of Coinbase? Because they are custodial wallet and exchange company?

If I can remember vividly, the best wallet I have ever thought before was coinbase, but later I knew it was because I was a newbie and I did not know much about cryptocurrencies. Coinbase is a centralized wallet and exchange and a good reason not to use it for any type of holding which is related to cryptocurrencies.

[Jawhead999]

Coinbase is a centralized wallet and exchange and a good reason not to use it for any type of holding which is related to cryptocurrencies.

Actually Coinbase also have non custodial wallet named as "Coinbase wallet", but it's closed source. The other "Coinbase" is centralized wallet, you can buy or sell crypto, the last is "Coinbase pro" which is a centralized exchange.

But with their loss, I think, they have options how to get back on their feet. They have been in this industry for so long they already know what to do for bugs and other attacks on their system.

Only work if they loss isn't higher than their reserved insurance, if they loss more than their insurance... I doubt they can at least maintain their services and not abandon it like Mt.Gox. After many years Mt.Gox plan to refund their clients funds, I don't see anyone claiming their already got their funds back

[pawanjain]

I guess people are finally becoming aware that their coins stored on an exchange are never safe as long as you hold them on an exchange.
I think Coinbase rolled out this announcement at a wrong time since the market is currently in a down trend.
People are in a panic already and this statement by Coinbase would have made people kind of paranoid.
The best thing for people to do is hold the coins on a non-custodial wallet but before doing that make sure you have enough knowledge about wallets and private keys.

[_act_]

Actually Coinbase also have non custodial wallet named as "Coinbase wallet", but it's closed source. The other "Coinbase" is centralized wallet, you can buy or sell crypto, the last is "Coinbase pro" which is a centralized exchange.

A close source wallet is not good to be used but there are other reasons not to use Coinbase wallet which is noncustododial. I know the OP is more about Coinbase itself and not coinbase noncustododial wallet. The more people know about coinbase, the more they are directed to Coinbase custodial wallet and exchange which is what I am not really happy about except for those that already know what not having private key means that they are giving the control of their coins to Coinbase.

[Findingnemo]

Just a temporary issue and soon it will be rectified, actually I don't think coinbase is a company which is at the risk of going into bankrupt because it is one of the biggest exchange also their stocks are live on the market so the chances of more cryptocurrency adoption is the company will get bigger along with their stock value.

No matter how big the exchange is your funds are not safe, it can be hacked at anytime and the exchange may not be able to return the amount in that case we can think it is going bankrupt.

[Cricktor]

I guess people are finally becoming aware that their coins stored on an exchange are never safe as long as you hold them on an exchange.

Maybe, I'm not so sure about it. Likely too many don't have a clue what "Not your keys, not your coins!" means. On the other hand, you have to keep in mind that people need to keep their computers and smartphones safe and clean to store and use their own wallets safely, unless they use hardware wallets properly. I have some doubts regarding the ability of safe computing of the "average Joe/Jane" even when they are in crypto.

I think Coinbase rolled out this announcement at a wrong time since the market is currently in a down trend.
People are in a panic already and this statement by Coinbase would have made people kind of paranoid.

I have no words how poorly Coinbase communicated it, especially in present heated times.

The best thing for people to do is hold the coins on a non-custodial wallet but before doing that make sure you have enough knowledge about wallets and private keys.

It has advantages and disadvantages to hold your funds in self-custody. You're in charge to have enough knowledge and ability to store your wallet(s) and keys safely. Sure, it's not rocket science. There's an obvious disadvantage when you have your funds in your own wallet(s): if market movement requires a timely reaction, e.g. to sell some amount of your coins you'll likely face mempool congestion and high fees required if many users have the same urge as you do. Probably it's good to keep some healthy balance how much you have in self-custody and how much you leave on the exchange. I have the majority in my own self-custody wallets and only a minor part on an exchange.

[BlackHatCoiner]

Are we really immediately anticipating a bankruptcy just because they currently have a problem with their platform(every platform gets problems) and after a single bad quarter?

According to their terms and conditions, they're already prepared for this bankruptcy scenario, which should have made the users who hold money there a little cautious. They have 100% control over their users. If they predict their business won't be profitable in the upcoming months, they can pretend to have got hacked.

But, who am I kidding, with this private data they're constantly selling to governments, chain analyzers and advertisers, they can maintain themselves without any additional fees.

But as explained by @Mk4 coibase is a multi billion dollar company and they monopolize the US market. I done think so that they will pull out a shady behaviour like we are assuming right now.

Binance owns more than they do.

[franky1]

this is standard terms and conditions of all exchanges.
your crypto assets are not protected by the banking charters deposit insurance.
this has always been a case of 'not your key, not your coin'

though contractually businesses are deeming what they have in custody to belong to their customers. in a bankruptsy it does not mean the business separates the assets from its business and just hands out the assets to the customer.

instead the assets become part of the accounting total of the businesses 'wealth'(or lack of) and then when separately accounting what all the creditors that the business owes are totalled up, including all the legal costs of lawyers, courts and accountants to form this total debt.. then the funds are equally divided up of whats left over..

in short you get 'pennys on the dollar' back
and you cant demand that you get the coin deposited back in the coin form you deposited.
its instead all sold and converted to fiat, the law guys are paid first,(courts, lawyers,accountants) and then whats left of the fiat is distributed to customers. YEARS LATER (EG see mtgox saga)

with that said. although the stable coin drama caused some drama about liquidity of coinbase and other things. what seems to be happening here is certain people want to cause a bank run on bitcoin by trying to coax a withdrawal rush. thinking that the withdrawal rush would then leave the market order books lacking 'supply' to then cause their highschool dumb economic thoughts of a demand rise,.

sorry but it is not that simple to think that less coin on an exchanges mysqyl BALANCE sheet, correlates to a orderbook, or vice versa.(alot of people store coin in coinbase, but never put it on orderbooks)

but with all that said.
if you are not a day trader that needs funds in an exchange each day. take it out. keep it on your own private key.
if you are a day trader, well keep on trading, just be aware of the risks that if an exchange had to close, it could be years before you see any reimbursement. and that reimbursement wont be 100%

[mk4]

According to their terms and conditions, they're already prepared for this bankruptcy scenario, which should have made the users who hold money there a little cautious. They have 100% control over their users.

Being prepared for a bankruptcy scenario doesn't necessarily mean that they're actually anticipating bankruptcy, no? Especially for an industry that's very prone to black swan events.

If they predict their business won't be profitable in the upcoming months, they can pretend to have got hacked.

Unprofitable companies can survive years and years if the major reason for unprofitability is because of money invested in R&D.