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Coinbase's Chief Legal Officer Clarifies: All User Funds Are Safe

 


Coinbase's Chief Legal Officer explains why, despite all the Fear, Uncertainty, and Doubt (FUD), users' funds are safe on the platform.


In a blog post accompanied by a tweet on Twitter, Grewal noted that Coinbase's disclosure, made in a 10Q report, caused some noise about how Coinbase holds cryptocurrencies and what happens to them in the highly unlikely event of bankruptcy of the company could happen.


The CLO clarified that Coinbase has more than $6 billion in the bank and is financially strengthened while having legal and operational protections for customers to buy, access and withdraw their cryptocurrencies.


In the blog post, Grewal noted that customer assets have always been protected and emphasized that Coinbase maintains internal systems to track customer funds. He added that a fully audited ledger identifies their account, fiat and crypto holdings, and tracks their account activity in real-time.


According to him, there is never a situation where user funds are confused with company assets. He also clarified. that Coinbase does not repurpose user funds as it does not lend them or take any action unless specifically instructed to do so.


Coinbase's chief legal officer said that while some banks and financial institutions use customer funds for commercial purposes, they often only hold a fraction of their customer assets at any given point in time. However, Coinbase holds all customer assets and holds them ready for transfer.


He pointed out that Coinbase recently updated its end user agreement to explicitly state this legal protection that is included for institutional clients in the event of custodian bankruptcy.


“This is not a change in the way we do business. We believe that digital assets in our custody have always been Article 8 financial assets, but have made this clear so there is no doubt.”

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