Coinbase house of cards -- they're leveraging using your BTC

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Coinbase house of cards -- they're leveraging using your BTC | IIICapital twitter.com/IIICapital/status/1521508870920851457

100 sats \ 23 comments \ @ExponentialBTC 3 May 2022 bitcoin

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40 sats \ 3 replies \ @jp 3 May 2022

Should we immediately. Make proof of keys a recurring quarterly event?

16 sats \ 2 replies \ @k00b 4 May 2022

Proof or reserves? Absolutely.

115 sats \ 1 reply \ @cryptocoin 4 May 2022

I suspect jp was referring to Proof Of Keys, which started as an annual "everyone withdraw your bitcoin by Jan 3rd, let's see which exchanges are swimming naked" type of event.

https://www.proofofkeys.com/

25 sats \ 0 replies \ @jp 4 May 2022

Yes

54 sats \ 0 replies \ @AncapHodl 3 May 2022

No time like the present to take your corn off the exchanges.

41 sats \ 0 replies \ @Ge 3 May 2022

Michael Saylor has more btc than coinbase lol its wild when you make the connection sadly everyone I tell these historical events to and what can happen they shake it off and say insurance gots them....little do they know...best day was yesterday to take offline when I did it so much stress off my shoulders knew any day my stack could be frozen or confiscated was always in back of mind

25 sats \ 4 replies \ @tbonesteaks 3 May 2022

I agree with getting your btc off of exchanges, but couldn't these bitcoins be from people who agreed to stake their coins with Coinbase? Why would we assume they are using the bitcoin holdings like a bank?

Also, I feel like this simpsons clip fits nicely in this discussion.

26 sats \ 1 reply \ @beb0 3 May 2022 freebie

I used to use Coinbase and I don't think you can stake Bitcoin. So it is definitely hypothecation.

10 sats \ 0 replies \ @cryptocoin 4 May 2022

From the Bloomberg article in a separate reply to this post:

As of the end of last year, Coinbase held more than $566 million of cryptocurrencies including more than $183 million worth of Bitcoin, according to its 2021 annual report.

But there was no mention of the amount that Coinbase borrowed, but Goldman's first ever bitcoin loan certainly had to be less than $183M.

But Coinbase are shady and this would make me rethink using Coinbase if I still had a trading account open with them.

6 sats \ 1 reply \ @itsrealfake 3 May 2022

context for that simpson's clip is "It's A Wonderful Life"... an excellent film if you're not familiar.

12 sats \ 0 replies \ @tbonesteaks 3 May 2022

Yes! I was hoping someone would know the original too.

40 sats \ 1 reply \ @keeftronics 4 May 2022 freebie

According to this article they used their own BTC, NOT users':

The dollar value of the loan has not been disclosed, but it was collateralized by a portion of Coinbase’s total holdings of 4,487 BTC, worth around $170 million at the time of writing.

https://cointelegraph.com/news/coinbase-took-out-the-first-bitcoin-backed-loan-from-goldman-sachs

0 sats \ 0 replies \ @ExponentialBTC OP 5 May 2022

Thanks for sharing that.

20 sats \ 0 replies \ @cryptocoin 4 May 2022

There was another post, here on SN, using the link for an article from Bitcoin Magazine:

Coinbase borrowed an undisclosed amount of cash that was collateralized by bitcoin in a historic transaction from Goldman Sachs. #25136 https://bitcoinmagazine.com/business/goldman-sachs-partners-with-coinbase-for-banks-first-bitcoin-backed-loan

20 sats \ 0 replies \ @zuspotirko 3 May 2022

And I can't even be mad cause I'd do the same with all those assets and so little regulation...

But honestly I'd shit my pants after a month or so :D

10 sats \ 1 reply \ @k00b 4 May 2022

How do we know they are using customer funds to do this? I would guess they aren't.

20 sats \ 0 replies \ @cryptocoin 4 May 2022

It wasn't stated, so you might be right. The Bloomberg article did show this:

"Coinbase held more than $566 million of cryptocurrencies including more than $183 million worth of Bitcoin, according to its 2021 annual report."

Regardless if it was their own funds, or their customer's bitcoin -- the following is true either way:

If your bitcoin is on Coinbase: Goldman Sachs now has a legal claim to it.

10 sats \ 0 replies \ @JustDavids 4 May 2022 freebie

I’d guess they all do this.

10 sats \ 0 replies \ @Eliezer_Larin 3 May 2022 freebie

15 sats \ 1 reply \ @higuyslol 4 May 2022

Does Coinbase have proof of reserves, like Kraken?

0 sats \ 0 replies \ @ExponentialBTC OP 5 May 2022

As a public company, they have audits. But as we know, there's plenty of room yet for nonsense to occur.

6 sats \ 1 reply \ @cryptocoin 3 May 2022

Here's an article on this, from Bloomberg:

Such borrowers usually post Bitcoin at loan-to-value in the 40% to 60% range, according to Matthew Ballensweig, managing director and co-head of trading and lending at crypto prime brokerage Genesis. The collateral is held by a qualified custodian, and borrowers receive U.S. dollars from the lender at an agreed-upon interest rate.

As of the end of last year, Coinbase held more than $566 million of cryptocurrencies including more than $183 million worth of Bitcoin, according to its 2021 annual report. At the same time, the firm reported it had cash and cash equivalents of $7.1 billion, exclusive of restricted cash and customer custodial funds.

Coinbase Is on Other Side of Goldman’s First Bitcoin-Backed Loan https://www.bloomberg.com/news/articles/2022-05-03/coinbase-is-on-other-side-of-goldman-s-first-bitcoin-backed-loan https://archive.ph/jzJya <-- An archive, which can be easier to read.

6 sats \ 0 replies \ @cryptocoin 3 May 2022

And, an article from Bitcoin Magazine:

Goldman Sachs Partners With Coinbase For Bank’s First Bitcoin-Backed Loan https://bitcoinmagazine.com/business/goldman-sachs-partners-with-coinbase-for-banks-first-bitcoin-backed-loan