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Coinbase warns that bankruptcy could wipe out user funds

fortune.com

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Re: Coinbase warns that bankruptcy could wipe out user funds

#241

Post by gigaflop »

sureglymop wrote: post #50
prepend wrote: post #2

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. It’s funny to see people shocked (SHOCKED!) when crypto doesn’t have the protections of regular banking and investments. That’s why you don’t invest with stuff that isn’t insured. Those aren’t real rates, they are ris…

What i don't understand is why don't people create their own wallet and keep their funds there? Isn't that the entire purpose? Of course they could still use coinbase as an exchange. But if everyone let's another party "manage" their wallet in what way is it really decentralized...

You can 100% create and manage your own wallets on your own hardware. However, most exchanges have transfer fees, on top of whatever costs are incurred on the network by the transfer. And, if you want to sell on an exchange, you likely need to transfer the tokens into the exchange wallet anyways.

If someone is buying crypto to hold it for years, then wallets and hardware keys and 12-word passphrases make the most sense.

If you're not sure if you'll hold a coin for long, or are speculating, or have less than $5k on the exchange, it might not be worth the hassle (for the indeterminate 'you') to create and manage your own wallets.

Re: Coinbase warns that bankruptcy could wipe out user funds

#242

Post by tablespoon »

mellavora wrote: post #220
tablespoon wrote: post #205

Earlier quoted context omitted.

> 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 mone…

I get that's true in some situations, but is it true in all cases? Say I rent a safe deposit box, put valuable personal property in it, and the bank goes bankrupt. Does the bankruptcy court sell the box-holders' personal property until the bondholders are made whole?

It seems like depositors should be one of the first in line, certainly before bondholders.

Re: Coinbase warns that bankruptcy could wipe out user funds

#244

Post by vmception »

usrn wrote: post #18

I've been messing with crypto long enough to know how this goes and my coins are already in a local wallet. Coinbase had a good run but don't be stupid. Crypto exchanges aren't insured like consumer checking accounts are in the US and when they're gone they're gone. Geth isn't hard to set up for most of us, it took me about 20 minutes to have it up and running after not using a local wallet for nearly a decade. Remem…

Geth lol. The worst full/fast synced node software out there? Thats what you choose to write?

Just let the people use metamask, more full nodes are nice but theyre not there yet

Re: Coinbase warns that bankruptcy could wipe out user funds

#245

Post by [deleted] »

JumpCrisscross wrote: post #167
0daystock wrote: post #159

Earlier quoted context omitted.

Quoted post unavailable.

> have enough to cover maybe 1-2% of all deposits? When the real stuff hits the fan and the buck breaks, there won't be any FDIC to protect any investment The FDIC "is backed by the full faith and credit of the United States government" [1]. Its reserves (a) provide quick cash in case of limited problems, (b) insulate the Treasury and Congress and (c) hold the FDIC leadership accountable. On account of (c), the FDIC…

[deleted]

Re: Coinbase warns that bankruptcy could wipe out user funds

#246

Post by mellavora »

Havoc wrote: post #58

That sounds suspicious to me. In UK at least client money should be segregated especially in the context of custody assets. Really shouldn't enter the same pool of assets as Coinbase's office chairs in case of liquidation

Yes, that is how it would work if Coinbase was regulated as a custodian. Have you confirmed that they are indeed classified in this way, and that your crypo holdings are indeed covered by that classification?

Or are you duck-typing Coinbase as a securities/brokerage firm based only on "look" and "quack"? (where "look" was a quick look without going into the difference between crypto assets and regulated securities issued by a regulated public company)

Re: Coinbase warns that bankruptcy could wipe out user funds

#247

Post by vorpalhex »

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…

It is probably worth reaching out to a lawyer and starting a legal suit. A legal subpeona tends to get humans involved real quick.

Re: Coinbase warns that bankruptcy could wipe out user funds

#248

Post by mattwilsonn888 »

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 would not recommend using wallet software on your personal computer. It makes it a lucrative target. Instead invest in a hardware wallet - either Ledger or Trezor and follow the instructions.

Only purchase the hardware wallet directly from the company website, never used.

Re: Coinbase warns that bankruptcy could wipe out user funds

#249

Post by vorpalhex »

0daystock wrote: post #243

FDIC doesn't even have enough funds to cover 1.3% of all deposits. Consider that before assuming your investments are protected.

FDIC has the weight and backing of a very large government who is capable of creating more fiat currency as needed.

Re: Coinbase warns that bankruptcy could wipe out user funds

#250

Post by tomrod »

I put $200 into a coinbase account (my second go at crypto) at the first "peak" of bitcoin, more or less to teach myself to not invest in hype and to monitor the hype cycle over time.

It's been very interesting to follow this over the recent peak. Coinbase probably doesn't settle each transaction immediately, since Bitcoin and several other cryptocoin transactions per second are still low, instead using internal accounting to satisfy the counterparty transaction.

Fun times. Good luck to Coinbase, they may have just triggered a run!

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