Is Coinbase Safe?

With over half a billion dollars in funding, serving 30 million users in 102 countries, Coinbase is one of the biggest cryptocurrency companies around. However, bigger isn’t always better. Coinbase user accounts keep getting hacked, raising multiple questions and most importantly: is Coinbase safe?

Coinbase was founded in 2012 by Brian Armstrong and Fred Ehrsam. The cryptocurrency exchange doesn’t have any headquarters and is regulated by the U.S. Security and Exchange Commission. Coinbase is a fully regulated and licensed Bitcoin exchange.

Coinbase enables users to buy and sell Bitcoin along with 20 other cryptocurrencies. The exchange supports several payment methods, including wire transfers, debit cards, and credit cards. Coinbase is a bit different from conventional cryptocurrency exchanges as it allows users to buy crypto using fiat currencies.

All digital currencies held online by Coinbase are insured. However, Coinbase does not cover any losses resulting from the compromising of individual Coinbase accounts. Moreover, if you’re a US resident, your Coinbase USD wallet is protected by the FDIC, up to a maximum of $250,000 – a benefit you won’t find in most other online services.

Coinbase.com is a custodial service which means that users do not have any direct access to the funds stored at Coinbase or the private keys controlling them.

In some extreme cases, Coinbase can and has frozen user’s accounts without prior notice. If that doesn’t shock you, Coinbase’s customer support is well-known for its slow response time and lack of actual assistance. If you encounter any issues on the platform, it could be a while before Coinbase takes any action and resolves the issue of your Coinbase wallet.

What is a Coinbase Wallet?

Coinbase has a built-in wallet where users can keep their cryptocurrencies on the Coinbase platform. However, several crypto experts don’t recommend you maintaining crypto inside the Coinbase wallet.

It’s recommended that once you’ve bought crypto via Coinbase, you should immediately transfer the cryptocurrencies to a hardware wallet as exchange wallets aren’t safe. If your account were to get hacked, any cryptocurrencies in your exchange wallet could get compromised.

Is Coinbase Vulnerable?

Cryptocurrency exchanges such as Binance and Coinbase have become a hot target for cybercriminals and other hackers maximizing their skills by hacking accounts and wallets for cryptocurrencies and digital currencies.

Cryptocurrencies have evolved and are increasingly becoming widely accepted, making hacking attempts on exchanges and individual user accounts an everyday norm. Like other exchanges, Coinbase isn’t exempted from hacking attempts.

While Coinbase might believe that they’re leading the security space, several users have a very different take, stressing that the company is vulnerable to hacks.

Coinbase Hack

Coinbase users have reported losing thousands of dollars in different cryptocurrencies due to multiple hacks. It’s worth mentioning that individual Coinbase accounts have been victims of such hacks and not the company itself. However, that doesn’t mean that Coinbase is safe from hacking attempts.

A Coinbase user reported his account getting hacked and losing thousands of dollars. Upon investigating the incident, it turns out that the supposed hack was, in fact, a sim swap attack. The scammer gathered information about the individual such as their full name, email address, phone number, birthday, and much more.

The scammer knew the individual had a Coinbase account. With that valuable information in hand, the scammer called the individual’s phone carrier and requested that he needed his phone number swapped to a different sim card.

The sim swap took place where the individual lost control of their number for 30 minutes, enough for the scammer to hack into his email account, reset the password, and move to the Coinbase account, making the transfer to another wallet.

Coinbase Response to the Hack

Since the security of an individual’s email account is solely their responsibility, there’s nothing Coinbase can do in this case. It’s worth mentioning that Coinbase took their time to respond to this particular incident.

Unlike Binance, which has SAFU, Coinbase doesn’t insure its users in case their account gets compromised. They only insure users up to $250,000 if Coinbase itself gets hacked. Truth be told, each crypto account holder is at risk of having their account hacked, and it’s only a matter of time until it happens to someone else.

Coinbase says that such account breaches are rare. At the same time, the cryptocurrency exchange stresses the fact that they have never been hacked. Although Coinbase hasn’t been hacked yet, there’s undoubtedly active risk which users and investors should be wary of.

Pros and Cons of Coinbase

Here’s a list of the pros and cons of trading via Coinbase:

Pros	Cons
Accepts fiat currencies	High fees than other exchanges
User-friendly interface	Some coins are not supported
Hosts genuine cryptocurrencies
Funds are secure if Coinbase is hacked

Is Coinbase Safe?

Coinbase is pretty safe as far as exchanges can get. The cryptocurrency exchange has a better reputation than other cryptocurrency exchanges. Come to think of it, Binance was hacked in 2019, but Coinbase hasn’t ever been hacked.

The company follows strict security protocols to ensure the security of its users. They include:

• The website runs on an HTTPS connection
• Crypto wallets are secured with AES-256 encryption
• 98% of funds are stored offline
• Two-factor authentication for all accounts

The security of a user account comes down to the actual user and not the exchange, meaning you shouldn’t share your login information or private wallet data with people you don’t trust.

Is it Safe to Link a Bank Account to Coinbase?

Several cryptocurrency exchanges operate in the shadows, and many of them are a scam. However, Coinbase is a regulated company that holds licenses in all regions in which it operates.

Linking your bank account to Coinbase is safe as long as you don’t store cryptocurrencies on the Coinbase digital wallet. If you’re regularly trading, make your trade, and then move the coins or funds back to your secure hardware wallet.

Should You Store Cryptocurrencies on Coinbase?

Storing cryptocurrencies on Coinbase or any other exchange is not safe. This is because your digital identity is linked to your crypto wallet. If your account were to get hacked, you could lose out on your cryptocurrencies stored in the wallet, just like most people have experienced on Coinbase.

The best strategy to secure your account and the cryptocurrencies stored in the account is to be proactive in educating yourself on Blockchain, such as how exchanges work, how crypto wallets work, and the security features an exchange employs to secure its user’s cryptocurrencies.

It’s important to understand that hackers, third-party trackers, government agencies, tax authorities, and other regimes operate within the crypto game, meaning the only way to be truly safe is to keep your private keys private and store cryptocurrencies in a secure crypto wallet.

In a Nutshell

Coinbase offers a user-friendly and secure platform with its built-in digital wallet. While they are growing in size, their customer support significantly lacks in purpose. Just last week, Coinbase was down for over an hour amid the massive cryptocurrency plunge. Fortunately, the security of the cryptocurrency exchange remained intact, and users’ accounts weren’t targeted.

Frequently Asked Questions

Are there risks with Coinbase?

Yes, there are security risks when you are selling or buying cryptocurrencies on multiple platforms, such as Coinbase. In 2021, several Coinbase users reported their accounts got hacked and their funds have been stolen, which is why you should be wary. To enhance privacy and security on cryptocurrency trading platforms, you can use a VPN to hide online blueprints and stay anonymous when buying or selling cryptocurrencies. 

Will Coinbase refund me if I got scammed?

You can report hacking or stealing incidents, or reimbursement issues to the Coinbase help centre and explain everything in detail. If your claim is valid, Coinbase reps can initiate requests for a refund.

Can Coinbase be trusted?

Coinbase is a trusted cryptocurrency exchange where tons of users trade, sell and buy coins online. However, cryptocurrency trading platforms are not completely secure due to security vulnerabilities.