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

281–290 of 473 posts

Re: Coinbase warns that bankruptcy could wipe out user funds

#281

Post by usrn »

vmception wrote: post #244
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

Meh, I'm using it in lite mode. It works fine that way. I'll probably set up a full node at some point.

Re: Coinbase warns that bankruptcy could wipe out user funds

#282

Post by jmathai »

tablespoon wrote: post #242
mellavora wrote: post #220

Earlier quoted context omitted.

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.

The difference here is that the bank never has any ownership of what’s in the safe deposit box.

When you buy crypto with coinbase, they hold that crypto in a custody account they have keys to. It’s not guaranteed how the court would rule on distributing those assets in case of bankruptcy.

From the article “it is possible, however unlikely, that a court would decide to consider customer assets as part of the company in bankruptcy proceedings even if it harmed consumers”.

Re: Coinbase warns that bankruptcy could wipe out user funds

#283

Post by JumpCrisscross »

withinboredom wrote: post #214
rileyphone wrote: post #203

Earlier quoted context omitted.

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…

> if those balances are kept on the books as “assets” or not

Yes, they appear as a "customer custodial funds" current asset and "custodial funds due to customers" current liability on Coinbase's balance sheet [1]. Under current law, Coinbase's customers have a claim to those assets.

Look at a brokerage's balance sheet, on the other hand, and you see special line items for segregated cash and securities. If a broker-dealer goes under, "it ordinarily is liquidated under SIPA, not the Bankruptcy Code," where the SIPC "asks a federal court to appoint a trustee to liquidate the firm and protect its customers" [2]. The first priority is customer assets. Creditors second. Coinbase isn't similarly regulated, in part because it has fought tooth and nail against being needed to.

[1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/89c60d8... page 5

[2] https://www.mondaq.com/unitedstates/investment-strategy/6631...

Re: Coinbase warns that bankruptcy could wipe out user funds

#284

Post by themusicgod1 »

bonestamp2 wrote: post #143
josephd79 wrote: post #55

Coinbase is the AOL of crypto.

Is there a better crypto on ramp though? Coinbase will let me transfer up to $1000 worth of crypto off their platform immediately after purchase even though the funds haven't settled in their account yet. Every other crypto platform I've used, forces a wait of 3, 7 or 10 days before you can withdraw your new crypto.

Yes. Doing work or providing a good or service in exchange for bitcoin/crypto.

Re: Coinbase warns that bankruptcy could wipe out user funds

#285

Post by paulcole »

PheonixPharts wrote: post #211
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…

Tens (hundreds?) of millions of Americans "invest" in stocks they have no idea how to "use" (disclosure: I'm one of them). They're just numbers on a computer screen and nothing more.

Should be more encouraging that this guy wants to figure it out instead of pointing and jeering at him.

Re: Coinbase warns that bankruptcy could wipe out user funds

#286

Post by hnxs »

chill1 wrote: post #274
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 usually don't bother to login to comment, but I felt compelled in this case. The other replies include a lot of bad advice. You sound like you don't have much of experience actually using bitcoin (or cryptocurrencies). So the best (most secure and easiest) solution is to buy a hardware wallet and use the wallet app which they provide. I suggest either Trezor [1] or Ledger [2]. Do not buy a hardware wallet from seco…

What happens if ledger goes out of business? I recall users being able to access their funds when Ledger had a systems outage some time in the past few years.

Re: Coinbase warns that bankruptcy could wipe out user funds

#287

Post by pbmango »

This conversation is especially interesting given the FDIC is probably the most decentralized component of traditional financial infrastructure.

It has cost taxpayers effectively nothing and rests on mutual insurance across the system. Yes there is a line of credit to the Treasury but the overall security it has provided for 70 years is probably hard to measure compared to the Fed buying/selling activity. I know there are probably teams working on this for crypto already (without the law mandate).

Re: Coinbase warns that bankruptcy could wipe out user funds

#288

Post by runjake »

You should move your crypto out of Coinbase or any other exchange's wallet into your own cold wallet.

In Coinbase's case, you can move that crypto to any wallet, including Coinbase's Coinbase Wallet app, where you have possession of the private key and should still have access to those funds if CB were to go south.

But yeah, welcome to the world of currency not backed by guns, so to speak.

Re: Coinbase warns that bankruptcy could wipe out user funds

#290

Post by [deleted] »

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…

[deleted]
Post reply on HN