Coinbase Clearing To Banks Goes Down

In today's edition of YIYL, (You Invest, You Lose), we take a look at the big boys in the space, Coinbase, the exchange that has grown from a niche trading platform into a massive publicly traded company and in my opinion a shitcoin casino. Coinbase investors clearly feel this service is too big to fail, but it doesn't mean they are not failing regularly.

A few weeks ago, I mentioned Coinbase were handing out free money to Georgians after having to deal with an insider trading scandal too, then add to that the bear market and you can imagine that their operations are under pressure and cant afford to have any more cock ups.

Yet here we go again, this week the U.S., Coinbase, suffered a six-hour-long outage in which they couldn't take payments or make withdrawals involving U.S. bank accounts.

They later narrowed down the problem to an issue creating ACH transfers, and tweeted

"rest assured, your funds are safe". Six hours later, the company marked the incident as resolved.

Coinbase said it was an isolated incident that affected US users on the platform but they are not stuck and would still be able to make direct purchases using a debit card or PayPal account.

Funds are SAFU

Rest assured our balance sheet is strong and our providers have ample liquidity, where have we heard that before? I am not here to drive FUD, I am just saying that funds are NEVER SAFU when you're using a custodian.

Leaving your money on an exchange means you're trusting another service provider to honour your redemptions when you need it. Ask people how well that worked out for them leaving their money with Celsius or any of the other service providers that went bust.

There is nothing wrong with leaving a few bucks on an exchange if you want to mess around or pay a few friends using the service, but leaving a substantial amount of your net worth or funds you cannot afford to lose, now that is risky business.

If you want to trust a custodian, you're better off leaving it with banks that can be bailed out by governments, not that I would recommend that either. There is nothing better than self custody funds, be that physical precious metals or bitcoin,

Talk about the price

Coinbase has not had a good time since launching its IPO and it has trended down from around $350 a share to as low as $64 as we see this week, which is 82% drop in value since launch. If anyone was holding this for longer than a year, you got creamed, you can ask anyone betting on Cathie Wood about that.

I am poking fun, but I don't see coinbase going bust anytime soon, we have plenty of other companies that are way worse off, and I am sure as they let go of their market share users move to the likes of Coinbase and FTX, in addition, they could easily juice things by raising capital to acquire some assets they way FTX is doing.

Coinbase needs to work on keeping their service online at scale, which is not easy, centralised platforms have a limit and it feels as if they've reached that already and need to streamline.

A good place to start would be to clear out some of the obvious unregulated securities they are dumping on the public, but that's just one mans opinion.

Source:

• decrypt.co

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