Coinbase Retail Customer Fund Safety: One Last Clarification
Weeks after much debate around safety of retail customer funds on Coinbase, there is yet another statement from the exchange. The debate was initiated last month when Coinbase CEO Brian Armstrong said revealed the truth behind Coinbase fund safety of retail customers.
At the time, Armstrong said the exchange might not be able to recover the customer holdings in case of bankruptcy. He also admitted the company had not disclosed this to its customers until the risk was highlighted in a filing.
A couple of days after Armstrong’s statement, the exchange’s chief financial officer Alesia Haas said all investor assets are ‘absolutely safe’. The CFO was asked if it was possible that courts could force Coinbase to divert customer money to its creditors. In reply, she said if it comes to it, there is very small tail risk that it still could happen.
Coinbase Legal Officer Chips In
Paul Grewal, Coinbase chief legal officer, on Thursday clarified that the exchange’s fully audited ledger identifies each customer’s account. The customer’s fiat and crypto holdings are identified and account activity is tracked in real time. He added that there is never a situation where customer funds could be confused with corporate assets, asserting Coinbase fund safety.
“Your funds are your funds, and your crypto is your crypto. Coinbase maintains internal systems, like a bank or a broker.”
Grewal also clarified on fears around repurposing customer funds. Coinbase does not lend or take any action with customer assets, unless the customer specifically instructs us to, he explained.
“Coinbase always holds customer assets 1:1. This means that funds are available to our customers 24 hours a day, 7 days a week, 365 days of the year.”
‘Crypto Volatility Is Inevitable’
The chief legal officer reiterated that volatility in crypto or any market is inevitable. “We can’t control it, but we do plan for it.” That is why, through the ups and downs of crypto over the last 10 years, Coinbase has focused on building, scaling through the highs and innovating through the lows, he explained.
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