Coinbase warns users could lose their crypto holdings if company goes bankrupt
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Re: Coinbase warns users could lose their crypto holdings if company goes bankrupt
#2> "Because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors," the company said.
Re: Coinbase warns users could lose their crypto holdings if company goes bankrupt
#3A whole bunch of people could learn the hard way the difference between "custodial wallets" and "your own wallet" very, very quickly. I've been telling friends who are into BTC to get their holdings off of Coinbase and into their own wallet (or cash out to fiat and disconnect their bank account from Coinbase -- I have no idea if claw-back is a thing here but why wait to find out?). Personally I moved holdings to Blue, Muun, and Electrum... I'm sure there are other fantastic options as well but I favor those that allow moving BTC on the Lightning network.
Re: Coinbase warns users could lose their crypto holdings if company goes bankrupt
#4No different than traditional banks, which have barely enough insurance to cover approximately 1% of deposits.
Re: Coinbase warns users could lose their crypto holdings if company goes bankrupt
#5No different than traditional banks, which have barely enough insurance to cover approximately 1% of deposits.
Are we just pretending the FDIC doesn't exist?
From the article:
> It's a different scenario from traditional investments. Many bank accounts, including checking and savings, are insured by the Federal Deposit Insurance Corp. for up to $250,000 per account if the bank goes under, while the Securities Investor Protection Corp. helps if a broker or dealer goes bankrupt.
Re: Coinbase warns users could lose their crypto holdings if company goes bankrupt
#6A similar discussion from when their earnings report came out last month: https://news.ycombinator.com/item?id=31338355
Re: Coinbase warns users could lose their crypto holdings if company goes bankrupt
#7No different than traditional banks, which have barely enough insurance to cover approximately 1% of deposits.
Are we just pretending the FDIC doesn't exist? From the article: > It's a different scenario from traditional investments. Many bank accounts, including checking and savings, are insured by the Federal Deposit Insurance Corp. for up to $250,000 per account if the bank goes under, while the Securities Investor Protection Corp. helps if a broker or dealer goes bankrupt.
Are you pretending FDIC covers more than 1% of all deposits? If so, please refer to the Fed website for a sobering realization.
Re: Coinbase warns users could lose their crypto holdings if company goes bankrupt
#8Earlier quoted context omitted.
Are we just pretending the FDIC doesn't exist? From the article: > It's a different scenario from traditional investments. Many bank accounts, including checking and savings, are insured by the Federal Deposit Insurance Corp. for up to $250,000 per account if the bank goes under, while the Securities Investor Protection Corp. helps if a broker or dealer goes bankrupt.
Are you pretending FDIC covers more than 1% of all deposits? If so, please refer to the Fed website for a sobering realization.
> Are you pretending FDIC covers more than 1% of all deposits?
It doesn't have to cover all of deposits, it has to cover failures. The chances of every bank in the country simultaneously collapsing is slim (and you've got bigger problems at that point than your balance). No one's lost a penny worth of FDIC-insured funds since 1933.
Re: Coinbase warns users could lose their crypto holdings if company goes bankrupt
#9Earlier quoted context omitted.
Are we just pretending the FDIC doesn't exist? From the article: > It's a different scenario from traditional investments. Many bank accounts, including checking and savings, are insured by the Federal Deposit Insurance Corp. for up to $250,000 per account if the bank goes under, while the Securities Investor Protection Corp. helps if a broker or dealer goes bankrupt.
Are you pretending FDIC covers more than 1% of all deposits? If so, please refer to the Fed website for a sobering realization.
The difference is that if you're putting more than $250k into a bank account the bank pulls you aside and discusses proper financial planning and investment. Or you're smart enough to know already what you're getting into.
The FDIC protects retail investors, so even if a banks holdings are not 100% covered, the uncovered portions are for non-retail customers and other holdings, not your savings account.
Re: Coinbase warns users could lose their crypto holdings if company goes bankrupt
#10Earlier quoted context omitted.
Are you pretending FDIC covers more than 1% of all deposits? If so, please refer to the Fed website for a sobering realization.
> Are you pretending FDIC covers more than 1% of all deposits? It doesn't have to cover all of deposits , it has to cover failures . The chances of every bank in the country simultaneously collapsing is slim (and you've got bigger problems at that point than your balance). No one's lost a penny worth of FDIC-insured funds since 1933.
It's amazing how quickly we forget history, apparently ignoring the bank crisis of the 1980s and complete failure of FSLIC. Multiple banks collapsed costing tax payers billions of dollars and the institution the government created to insure deposits failed spectacularly.