Topic: Is Coinbase insured? - page 4. (Read 821 times)

(!!!) While I wouldn't have any specific info to agree or disagree with that, that is... quite a claim. File it under, "big, if true".

Seriously, $100B+ is a... lot of money. Somebody should... look into this. (And I'm not being sarcastic here).



Would it? Why?

One thing that has been very clear in the last 10 years is that most investors in Bitcoin don't want to hold their own keys. Indeed, the idea that a major investor would want to go to the trouble of creating a ultra-high-security facility to hold millions in physical assets is bonkers. These investors deal with a a trading screen and nothing else, and they work in fancy air conditioned offices, not at Fort Knox. They are very happy to pay another company like Coinbase to deal with all of that because their business is finance, not security.

All of these investors invest in Bitcoin under the assumption that it's effectively just like buying stock in APPL or NVDA in terms of safety and convenience. If that structure was shaken, all of the "big" money would pull out of Bitcoin, and most average consumers would be terrified to hold more than a few hundred dollars lest they be robbed or killed for their keys.

I think more people need to understand that Bitcoin's current price is based on millions of consumers investing in Bitcoin, not a few of us hardcores on Bitcointalk.org .

It will leave them with a lot of losses. Most of which cannot be reclaimed.
These companies spend a lot to protect themselves if situations like that happen.
The worst part is there is nothing you can do about it, the money is gone. Sure, some people might get what they're owed, but those are mostly the top guys that can make a lot of noise. Cases like this take so much time in court and even after 3 years some people would not have received anything and may never receive it.
This is why leaving your money in an exchange is never advisable. They will tell you how safe your money is and all, but that's what everybody does, you don't expect them to tell you that your money is unsafe with them.

If anything like that were to happen, for the short term, Bitcoin price would also take a major hit, but after a while, it will be corrected.

I personally have had doubts for a long time about their lack of transparency. They hold a lot of Bitcoin on behalf of Spot ETF providers. How do we know they are not playing the likes of Blackrock with paper Bitcoin? There is a huge risk that if Coinbase are pulling an FTX & claiming to hold coins they don’t have, we see the biggest rug pull ever, on par & maybe worse than Gox. Every time Bitcoin pumps hard over 2024, Coinbase goes down, with people unable to access funds or buy/sell Bitcoin. I don’t think they have enough Bitcoin to satisfy demand.

You don't need to wait for what before you take action; all that's needed is safety. Never hold your coins on a centralised exchange or a custodial storage. Be your own security boss, and that will save you from the stress of thinking about what might happen later. 

Just as Coinbase advised their users to use whatever security means necessary to protect their credentials from being accessed by thiefs since they won't be held responsible for any loss incurred by such action customers, as you need to be responsible for your own security; in other words, they should not hold anyone responsible other than themselves.


The quote from their policy's below should be able to explain that better. It means even with that large amount that they hold, there is a level of damage that the exchange will incur that every customer will have to suffer for the loss as no one will be refunded, so it's high risk to even trust a third party to hold your fund for you. They even made it clear that crypto currency is not a legal tender, which means your deposit is not protected by FDIC like they do for banks, which protects customers deposits. 
 
In conclusion, it always goes back to the regular preaching in forums. Not your key, not your coin. 

It would likely create a fiasco similar to the Mt. Gox incident. Since their assets are primarily in Bitcoin and other cryptocurrencies, I don't understand what guarantees the security of that money.

It would be catastrophic in the short term. It would create tremendous panic, BlackRock funds would suddenly be in the possession of a hacker, and with the most popular exchange going bankrupt, it would, without doubt, shake a lot of weak hands.

From what you quoted that they said, being partially insured does not cover for full insurance, which is in other terms what we may be termed as what can be of benefit to them and not their users, if we are considering a centralized exchange or platform, then we should know that there is no secured insurance cover that can stand in for us in case of anything happened, we should know that once we are under a centralized platform, nothing is secured.

(Before I start this topic, I just want to say that I don't want to pick on Coinbase here specifically, but they are the biggest with over 10% of all Bitcoin being held for customers, so they are a good example--but assume here that this question could apply to any digital asset custodian).

Today, Coinbase is holding over $100 billion in Bitcoin.

While I am sure they go to great lengths to secure this money (!), we'd have to concede there is a non-zero chance they could lose some or all of this Bitcoin to theft or simply losing it.

And then what?

Coinbase offers this vague promise on their website that they are "partially insured", but does anybody know what that actually means? If they are hacked and the addresses get destroyed or stolen (we'd never know which), then... where would that leave Coinbase depositors?