Coinbase with 2.5M BTC is the next weak point in the crypto market?

[Vincom]

Coinbase has become super well-known in the market. It was the first crypto company to get listed on the S&P 500 ^[1] and holds custody of up to 12% of all the BTC out there ^[2]. I know lots of folks have a ton of faith in Coinbase, but sometimes even Coinbase can't promise total security for everyone using it.

BlackRock also had a deal that let them pull BTC from Coinbase within 12 hours ^[3], and they're also looking to spread out where they keep their BTC to make things even safer ^[4]. Just recently, we saw Coinbase get hacked, and some of their customer info was compromised ^[5].

I still remember Coinbase didn't want to share their Proof of Reserves because they really value all the info about their customers, like how much stuff they have on Coinbase ^[6]. Now that some of that info has been leaked, it feels like anything could happen, even stuff Coinbase might not expect or be able to handle.

This makes me a bit worried about a possible black swan event down the road if Coinbase gets hit with a big attack and over 2.5 million BTC get stolen from their control. Coinbase is so big now that if it went under, it could be even worse than when Mt Gox collapsed, and they only held around 850K BTC ^[7].

Since I'm not a US citizen, I don't use Coinbase myself, but if it did collapse, it would totally shake up the whole crypto market and hurt my own investments. I really hope Coinbase is putting the best plans in place to keep their and their customers over 2.5 million BTC super safe.

I'd like to know your perspective on this:

• Is Coinbase the next weak point in the crypto market?
• Could Coinbase's collapse drag the entire crypto market into a new crisis?
• Could everything happening with Coinbase be a deliberate setup by market makers?

References:
1. Coinbase jumps 24% on S&P 500 inclusion, biggest gain since post-election pop
2. Coinbase: the standard in crypto custody
3. BlackRock Tightens Bitcoin ETF Withdrawal Rules Amid Investor Concerns
4. BlackRock has a new Bitcoin custodian besides Coinbase
5. Coinbase says hackers bribed staff to steal customer data and are demanding $20 million ransom
6. TRON CEO Justin Sun Criticizes Coinbase for Ignoring Proof of Reserves
7. Mt Gox hack explained

[Oshosondy]

I still remember Coinbase didn't want to share their Proof of Reserves because they really value all the info about their customers, like how much stuff they have on Coinbase [6]. Now that some of that info has been leaked, it feels like anything could happen, even stuff Coinbase might not expect or be able to handle.

Proof of reserve does not have anything to do with users privacy, what that has to do with it is accepting KYC and the second is sharing the KYC information with third parties and also data breaches.

This makes me a bit worried about a possible black swan event down the road if Coinbase gets hit with a big attack and over 2.5 million BTC get stolen from their control. Coinbase is so big now that if it went under, it could be even worse than when Mt Gox collapsed, and they only held around 850K BTC [7].

Coinbase likely have more protection for users coins that data but there is possibility of hack on any crypto exchange at anytime. It is very important not to leave your coins on an exchange.

Could Coinbase's collapse drag the entire crypto market into a new crisis?

The market will fall and survives it. Even the market survived Bybit hack as if nothing happened because other exchanges supported as they do not want the crypto market suffer.

[takuma sato]

I still remember Coinbase didn't want to share their Proof of Reserves because they really value all the info about their customers, like how much stuff they have on Coinbase [6]. Now that some of that info has been leaked, it feels like anything could happen, even stuff Coinbase might not expect or be able to handle.

Proof of reserve does not have anything to do with users privacy, what that has to do with it is accepting KYC and the second is sharing the KYC information with third parties and also data breaches.

This makes me a bit worried about a possible black swan event down the road if Coinbase gets hit with a big attack and over 2.5 million BTC get stolen from their control. Coinbase is so big now that if it went under, it could be even worse than when Mt Gox collapsed, and they only held around 850K BTC [7].

Coinbase likely have more protection for users coins that data but there is possibility of hack on any crypto exchange at anytime. It is very important not to leave your coins on an exchange.

Could Coinbase's collapse drag the entire crypto market into a new crisis?

The market will fall and survives it. Even the market survived Bybit hack as if nothing happened because other exchanges supported as they do not want the crypto market suffer.

With the recent hack of personal information in Coinbase we saw ye another reminder of why mixing coins should be a basic right to everyone and jurisdictions ruling against mixing coins are putting people in danger. If you are able to mix your coins you are at least able to detach yourself from the records that tie your personal information to your addresses. It is essential for privacy to not have your public bitcoin addresses tied to your full name and physical address and mixing solves this, so we should continue to fight a pro-mixing stance including this forum which capitulated by removing signature campaigns for mixing services. Lack of privacy on Bitcoin could put your life in danger so be careful with your utxos and avoid KYC whenever possible. As far as the 2.5M BTC on Coinbase, of course it is always a risk whenever there are big concentration of BTC in a single point, but that is a risk with any asset that is attractive since some parties will accumulate a lot, but the big immediate risk is that your data gets leaked, price dips are temporal, but once your information is out there with your public addresses you become a target, so avoid that by not using KYC as much as possible.

[headingnorth]

The problem with big companies like Coinbase and even Chase (the biggest bank in the US) is they outsource
their customer support to countries like India where your private banking information can be easily stolen by the support staff.

I recently called Chase Bank where I have a bank account in the US to ask where their customer service is located and to my surprise
the man told me he is speaking to me from India! I talked to the Chase fraud department and he said even their fraud department
is located in freaking India! That explains why thousands of US Chase customers had their personal banking information compromised/stolen
and thousands are defrauded every year by Indian scammers.

[Mia Chloe]

~snip

I don't know how factual your claims about their Hodlings are but what I'm sure of is that with that huge a percentage of the total bitcoins in circulation they have as hodlings , they can definitely affect price but for a limited time. The problem is FOMO in the market will increase the induced change in momentum if they make news of wanting to sell off.

However the good news is because of the adoption strength of bitcoin it would fade off eventually but on a general basis it also depends on how the market reacts to it.

[peter0425]

The problem with big companies like Coinbase and even Chase (the biggest bank in the US) is they outsource
their customer support to countries like India where your private banking information can be easily stolen by the support staff.

I recently called Chase Bank where I have a bank account in the US to ask where their customer service is located and to my surprise
the man told me he is speaking to me from India! I talked to the Chase fraud department and he said even their fraud department
is located in freaking India! That explains why thousands of US Chase customers had their personal banking information compromised/stolen
and thousands are defrauded every year by Indian scammers.

This feels racist lol. I do not know what is the correlation about their staff being in India and the chances of said support staff stealing data of their customers. Even if their support staff were Americans for example, anyone could still steal and/or breach customer's privacy if they wanted to. The key is to have only the trusted staff have access to most sensitive data and keep staff happy so they do not think about betraying the bank or the platform.

[headingnorth]

The problem with big companies like Coinbase and even Chase (the biggest bank in the US) is they outsource
their customer support to countries like India where your private banking information can be easily stolen by the support staff.

I recently called Chase Bank where I have a bank account in the US to ask where their customer service is located and to my surprise
the man told me he is speaking to me from India! I talked to the Chase fraud department and he said even their fraud department
is located in freaking India! That explains why thousands of US Chase customers had their personal banking information compromised/stolen
and thousands are defrauded every year by Indian scammers.

This feels racist lol. I do not know what is the correlation about their staff being in India and the chances of said support staff stealing data of their customers. Even if their support staff were Americans for example, anyone could still steal and/or breach customer's privacy if they wanted to. The key is to have only the trusted staff have access to most sensitive data and keep staff happy so they do not think about betraying the bank or the platform.

Being in another country makes it much easier for them to get away with it.
So that is a big deterrent for Americans not to do it when they are in the same country.
Because it would be easy to find out who they are and arrest them.

How is pointing out the fact call centers are outsourced to India being racist? I am sorry you are so sensitive LOL.
You don't mind your most personal financial information being freely accessed by foreign workers who are paid very little?  
Scammers tend to be from foreign countries because it is almost impossible to go after them after they scam you.
That is because US law enforcement has no jurisdiction in another country.

[justinlamode]

The problem with big companies like Coinbase and even Chase (the biggest bank in the US) is they outsource
their customer support to countries like India where your private banking information can be easily stolen by the support staff.

I recently called Chase Bank where I have a bank account in the US to ask where their customer service is located and to my surprise
the man told me he is speaking to me from India! I talked to the Chase fraud department and he said even their fraud department
is located in freaking India! That explains why thousands of US Chase customers had their personal banking information compromised/stolen
and thousands are defrauded every year by Indian scammers.

This is a direct attack on Indians and makes it look like all Indians are scammers. I won't agree to that because there are lots of good people in idea who I have worked with and they delivered efficiently. I will not also allow you have the notion that scammers are only found in India because there are scammers in every country of the world. Therefore, try and refine your statement so that it does not sound racist as someone has already mentioned.

[pushups44]

The problem with big companies like Coinbase and even Chase (the biggest bank in the US) is they outsource
their customer support to countries like India where your private banking information can be easily stolen by the support staff.

I recently called Chase Bank where I have a bank account in the US to ask where their customer service is located and to my surprise
the man told me he is speaking to me from India! I talked to the Chase fraud department and he said even their fraud department
is located in freaking India! That explains why thousands of US Chase customers had their personal banking information compromised/stolen
and thousands are defrauded every year by Indian scammers.

This is a direct attack on Indians and makes it look like all Indians are scammers. I won't agree to that because there are lots of good people in idea who I have worked with and they delivered efficiently. I will not also allow you have the notion that scammers are only found in India because there are scammers in every country of the world. Therefore, try and refine your statement so that it does not sound racist as someone has already mentioned.

There are scammers in all countries and all ethnicities. Many Indians are hard-working and honest, so they should not be swept under careless generalizations. There are potential security issues related to outsourcing, but this is not in any way related to the ethnicity of the people who are outsourced.

[headingnorth]

The problem with big companies like Coinbase and even Chase (the biggest bank in the US) is they outsource
their customer support to countries like India where your private banking information can be easily stolen by the support staff.

I recently called Chase Bank where I have a bank account in the US to ask where their customer service is located and to my surprise
the man told me he is speaking to me from India! I talked to the Chase fraud department and he said even their fraud department
is located in freaking India! That explains why thousands of US Chase customers had their personal banking information compromised/stolen
and thousands are defrauded every year by Indian scammers.

This is a direct attack on Indians and makes it look like all Indians are scammers. I won't agree to that because there are lots of good people in idea who I have worked with and they delivered efficiently. I will not also allow you have the notion that scammers are only found in India because there are scammers in every country of the world. Therefore, try and refine your statement so that it does not sound racist as someone has already mentioned.

A direct attack on Indians? LOL. You sound like a drama queen. Get a grip.
Not all Indian are scammers but the fact is many scammers come from India.
There are scammers in every country, but we are talking about Coinbase and Chase
and their outsourced call centers. And all the outsourced call centers in the world are
located in India nowhere else.

I don't think it should be legal for Coinbase and other US companies to pull this crap. I hope they are sued.
They should not be allowed to give foreign workers access to customers private financial data without their knowledge or consent.

That is a massive security hole in the system begging to be abused.

[Publictalk792]

This is a direct attack on Indians and makes it look like all Indians are scammers. I won't agree to that because there are lots of good people in idea who I have worked with and they delivered efficiently. I will not also allow you have the notion that scammers are only found in India because there are scammers in every country of the world. Therefore, try and refine your statement so that it does not sound racist as someone has already mentioned.

You made very important point and I get why you feel that way. You are right to say that it is not fair to say all people from one country are same especially in negative way. It is wrong to think that everyone from same place is like that. Fact is that you have worked with good people from India who did their jobs well shows that those kinds of big negative statements are wrong.
It is also important to keep in mind like you said scams do not just happen in one country. There are dishonest people everywhere in world. So it is not right to blame one group of people.

[X-ray]

I'd like to know your perspective on this:

• Is Coinbase the next weak point in the crypto market?
• Could Coinbase's collapse drag the entire crypto market into a new crisis?
• Could everything happening with Coinbase be a deliberate setup by market makers?

1. Centralized third party custody always a weak point, because there's always risk of social engineering and so on.
2. Definitely
3. I'm not really sure but it's highly unlikely though

This is why self custody is important thing, beside to let you take care of your money, it also reduce centralization of holder like this, we all know anything can happen and no system is safe especially in centralized system. But we can only just hope something like that didn't happen.

I mean have you heard coinbase's user data leak because the attacker bribed their overseas support agents?

[davis196]

Is Coinbase the next weak point in the crypto market?
Could Coinbase's collapse drag the entire crypto market into a new crisis?
Could everything happening with Coinbase be a deliberate setup by market makers?

Comparing Coinbase to Mt.Gox seems weird to me. I'm not the biggest fan of Coinbase, I've heard many horror stories of Coinbase customers with blocked accounts. People keep using centralized exchanges because it's more convenient, but convenience comes at a cost.
However, I do believe that Coinbase has way better security than Mt.Gox or any other centralized crypto exchange.
Nobody knows what would happen with Coinbase in the future. Even if such "black swan event" happens, the cryptocurrency prices would crash for several months and recover afterwards, so there's no reason for panic. The bankruptcy(or hack) of the biggest crypto exchange cannot cause the destruction of the entire crypto industry.

[FortuneFollower]

It may happen, or it may not - we cannot be sure about such platforms that are centralized and are vulnerable to different stuff, and we already saw how big exchanges got tricked into different stuff, or getting injected with software that breaks into the system.

I do hope that won't be the case, though.