Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Coinbase warns that bankruptcy could wipe out user funds

fortune.com

Post reply on HN
Print view View original

211–220 of 473 posts

Re: Coinbase warns that bankruptcy could wipe out user funds

#211

Post by PheonixPharts »

CyanDeparture wrote: post #161

Can anyone tell me how to set up a wallet on my Mac in order to get my coins off coinbase. Is there any clear guide on how to do that. Every link on Google seems to be spam or downloading potentially malicious software. It's very fustrating because so many people seem to know how to set up a wallet on their computer/Mac however I cannot for the life of me find a clear wallet to download and move my funds to or a guid…

I'm sorry but I can't fathom why you would "invest" in a cryptocurrency you yourself don't even know how to use. This comment reads as an object lesson in exactly what is wrong with the current world of crypto. The entire value prop of crypto currency is that you are in control not major financial institutions, but it sounds like you are very much not in control.

I think the best strategy for someone in your case is to cashout from coinbase into whatever fiat currency you use locally and put that into your bank account.

Re: Coinbase warns that bankruptcy could wipe out user funds

#213

Post by ad »

paulsutter wrote: post #133

This is true for any brokerage account where you have margin enabled. Check your margin agreement carefully. Or better, disable margin on your brokerage account “ people with margin accounts end up as just general creditors in any bankruptcy and recover only a fraction of their assets after some years in bankruptcy proceedings. During bankruptcy, their accounts are frozen and no transactions are allowed” https://www.…

I'd be pretty interested to see how cash account is treated differently; I couldn't find a better reference either. But one advantage over the coinbase situation is at least the margin account falls under SIPC.

Re: Coinbase warns that bankruptcy could wipe out user funds

#214

Post by withinboredom »

rileyphone wrote: post #203
tablespoon wrote: post #195

Earlier quoted context omitted.

> Since coinbase isn’t FDIC insured, it makes sense that if coinbase goes bankrupt, the customer currencies will go away as well. And they aren’t SPIC insured in the situations where crypto is a security. Is Coinbase "loaning" out the Bitcoin users have deposited in it? The reason banks need the FDIC is that they loan your deposits out instead of throwing it in a vault and sitting on it, so if they go under they don'…

No, but the users would be last in liquidation preference, so would end up screwed anyways.

I guess it depends on if those balances are kept on the books as “assets” or not. They may be subject to money transfer laws though, in which case they can’t spend ANY of the deposits.

Each US state has their own laws, and I’m sure some of them are vague enough to not specify the currency in order to regulate transfers of foreign currencies… so that could get interesting if anyone notices that they are money transfer services…

Re: Coinbase warns that bankruptcy could wipe out user funds

#215

Post by sammy2244 »

FYYFFF wrote: post #208

I have been trying, unsuccessfully for 2 years to validate my account on Coinbase. I have over 100k in ETH stored in their wallet, have the highest levels of access to their services but CANNOT trade because they have NO HUMANS available. Their systems DO NOT work and there is NO contact info nor any way to actually reach a person. So I have been trading with others and will never use CB for anything but cold storage…

No post body was provided.

Re: Coinbase warns that bankruptcy could wipe out user funds

#217

Post by bitxbitxbitcoin »

halukakin wrote: post #74

When you buy BTC using coinbase do you really have a wallet somewhere, do you really buy BTC? Or does coinbase allocate BTC to you from its own BTC holdings?

Definitely the latter and the amount of people that don’t understand this is disturbing.

Re: Coinbase warns that bankruptcy could wipe out user funds

#220

Post by mellavora »

tablespoon wrote: post #205
rileyphone wrote: post #203

Earlier quoted context omitted.

No, but the users would be last in liquidation preference, so would end up screwed anyways.

> No, but the users would be last in liquidation preference, so would end up screwed anyways. Cite please, because if true that would be mind-boggling.

not so mind boggling, if you regard it as any other company.

Say you ordered a pair of jeans from Sears, via the catalog. And unfortunately your cash transfer cleared on the day they went bankrupt.

They owe you a pair of pants, or your money back if they cannot deliver the product you ordered.

They also owe their employees money, if they have not issued payroll yet for that month.

They also owe their bondholders money.

They may have also taken out bank loans.

You, as the client, are in line behind the employees and bondholders and other creditors.

probably last in line.

In which case you've lost your pants.

Post reply on HN