One of the big players in the world of cryptocurrencies is Coinbase, an exchange based in the United States that has been on everyone's lips due to its role in Bitcoin ETFs and also for its constant friction with the SEC and the CFTC. At this point, Coinbase is something like that great actor and star in the movie, but in real life he has a very bad attitude.
This is perfectly reflected in the recent Cointelegraph Research report, the New Crypto Standard, in which Coinbase is one of the 9 exchanges examined, and where it has been ranked number 6 in global reach, examined and in which it shows a disappointing performance compared to the rest of the competitors, remaining in position #XNUMX in the table.
But what has led such a relevant actor to have such a bad score? Is Coinbase really a safe and trustworthy exchange? Here we will answer those questions and tell you what alternatives you have.
Coinbase, a big player with problems
Coinbase began its history in May 2012, when its founders, Brian Armstrong and Fred Ehrsam, started this company. Initially, the company focused on developing a powerful cryptocurrency wallet and payment platforms, something that earned it rapid expansion due to the adoption of various online businesses that were integrated into its payment platform. It wasn't until 2015, when Coinbase finally transformed into an exchange after the introduction of its service, Coinbase Exchange (later known as GDAX, and in 2018, renamed to Coinbase Pro).
During 2012 and 2018, Coinbase had grown significantly in the United States, acquiring a license in the state of New York (BitLicense), reaching one million users, obtaining great profits and popularity in the community. She was the rock-star of the crypto world in the United States.
Legal problems with the SEC and other global regulators
But in 2019, all that began to change. That year Coinbase wanted to acquire the company Neutrino, a company closely related to the Hacking Team group, which was a company that sold spy software to governments and companies, with which they carried out a large number of crimes. The reaction of the community led the company to retract the purchase and the situation did not escalate.
Then in 2021, the company came under review by the Office of Foreign Assets Control (OFAC). This with concerns that the company may have provided its blockchain service to blacklisted individuals or companies. Later that year, the company agreed to pay $6,5 million to resolve regulatory claims that it reported misleading information about its trading volumes. In the agreement, Coinbase accepted that he had manipulated the trading volume levels of certain cryptocurrencies in order to make profits.
However, Coinbase's biggest problems began with the fall of FTX in 2022. With investments related to FTX, Coinbase began to terminate and close different ventures, in addition to carrying out an internal restructuring. Already in 2023, the problems began to become more present amid regulatory pressure from the United States. In March 2023, Coinbase received a Wells notice from the U.S. Securities and Exchange Commission (SEC), indicating that the SEC intended to initiate enforcement action over Coinbase's staking products.
The SEC's lawsuit was swift and by June 2023, the SEC was already opening the case suing Coinbase, alleging that the company had been acting as an unregistered broker, exchange and clearing agency since 2019. The SEC also alleged that Coinbase never registered its staking service as required by US securities laws, and for this reason Coinbase had to deactivate this service in that country.
Since then, Coinbase has several legal fronts open. For example, he is being investigated for illegal sale of securities, among other charges filed by the SEC. Added to this is also that Coinbase has had problems with other regulators (such as in Japan, where it cannot operate) and has even had to withdraw products due to regulatory problems.
Transferring responsibilities
In any case, you must remember that Coinbase is located in the United States, and this country lacks a legal framework for cryptocurrencies. This causes Coinbase to operate in a kind of regulatory limbo. If Congress passed a restrictive law against cryptocurrencies, Coinbase would certainly not have many options but to leave the country, thereby losing the US market.
You will think it is crazy and that it will never happen, but Coinbase has already considered it by opening an operational office in Bermuda, a well-known tax haven. Coinbase's idea is to use its Bermuda business to offer its international users (all except the United States) products that it cannot offer in its country of origin due to regulatory issues. It sounds like a smart solution, until you know that the SEC has told him that it could lead to a very different trial with criminal charges, if criminal activities are proven.
This situation explains many things, such as the fact that Coinbase does not make public its financial data, its administrative reports, or its financial audits. Basically, Coinbase claims to operate in the United States, following the laws of that country, but at the same time, has an operation in Bermuda where he carries out many of his businesses without any supervision.
A clean safety record?
To all this, the New Crypto Standard report from Cointelegraph Research also addresses other interesting points about Coinbase. For example, the fact that Coinbase has not suffered hacks stands out, something positive for its users. However, the security of an exchange is not only measured by the security of its technological infrastructure, and in this case Coinbase has several weak points.
For example, Coinbase has a service called Coinbase Custody, which can custody cryptocurrencies. But internally, Coinbase uses it to «self-custody the fiat and crypto funds of its users«, at least in Europe. Basically, Coinbase takes care of Coinbase, in the sense that they are the only ones who ensure that they actually comply with the law. To understand it in a simpler way: Coinbase is its own business, its administrator, its control and monitoring, auditor, lawyer, jury and judge, in terms of the custody of cryptocurrencies and fiat funds of its users. A practice that certainly has nothing safe or reliable about it.
Other highlights of Coinbase
To all this we can add some points that you may find interesting about Coinbase:
- Do not offer insurance against theft or hacking of your platform. If Coinbase were hacked and your funds are in fiat, Coinbase has a legal duty to respond to you, but in the case of cryptocurrencies, Coinbase does not have that duty and even though it is the basis of its business, there is no type of insurance for these cases.
- Coinbase Proof of Reserve is issued and audited by Coinbase Custody. Another case of selling and buying the product.
- Coinbase assures that the company is audited by Deloitte, but the conclusions of said audit are not public.
- Their platform has been rated as the third worst platform in terms of accessibility. The main reasons for this situation are the fact that the interface is heavy, lacking clear and easy-to-use options, in addition to hiding basic information for our operations (e.g. the real final cost of commissions for each operation).
- Coinbase's fees are by far the highest in the industry. For example, in their Staking service (where it is available) there are no entry or exit commissions, but there are commissions on each reward you obtain, which pThey can reach up to 35% of the reward obtained. In the case of trading, something similar happens in that the commission structure is dynamic and changes according to the volume mobilized in the last 30 days within the exchange.
- Coinbase's support and customer service is by far the best. worst rating has within the cryptocurrency sector. There is no user rating platform where Coinbase feedback is moderately positive. Electronic support on the Web and by mail is available in German, English, Portuguese, Spanish, French, Japanese, Italian, Dutch, Polish, Russian and Thai, but there is no personalized phone support in those languages, only in English and only Available for the United States and Canada.
- Another point in which it stands out in an average way is in user support. First, it stands out positively for the number of languages it offers: English, German, French, Italian, Polish, Turkish, Russian, Arabic, Chinese, Indonesian, Spanish, Filipino, Portuguese, Romanian, Vietnamese, Ukrainian, Japanese and Korean. It is the largest selection of languages in the sector. But what is gained, is lost in the effectiveness of that support. The main reason is that users indicate that support is late, its responses are often automatic, and problem resolutions can take days or weeks to complete.
- Services with limited accessibility. Due to Coinbase's legal problems, many of its services are not widely accessible where it operates. For example, Coinbase offers futures and perpetuals for trading. But this only in certain jurisdictions and under the warning that by entering these services they are using a service provided by Coinbase Bermuda, a tax haven in which if you operate you may have problems with the authorities of your country for operating financial services illegally. regulated.
Get to know the best alternative to Coinbase: Bit2Me
After learning about the legal and regulatory problems associated with Coinbase, you are probably wondering: How can a platform of this type have such a situation? Certainly, Coinbase has shown little care for its activity towards users.
In this situation, it is advisable to look for an alternative that offers a safe environment to operate with cryptocurrencies and fiat money, complying with legal regulations and providing consumer protection in case of problems. Furthermore, it is crucial that this alternative offers easy-to-use and secure services to trade cryptocurrencies freely.
Fortunately, there is an alternative that meets all these requirements: Bit2Me. In fact, this is clearly reflected in the New Crypto Standard report, where Bit2Me took first place among the nine exchanges examined in the report.
Bit2Me has been operating in the cryptocurrency sector uninterruptedly in Spain since 2014, complying with Spanish and European Union regulations. Additionally, it is backed by renowned players such as Inveready, Telefónica, Investcorp and BBVA, and uses cutting-edge technology in partnership with companies such as Ledger Enterprise, Mastercard and Jumio to ensure the security of cryptocurrencies.
Bit2Me adapts to your needs
Bit2Me not only has experience in the cryptocurrency sector, but also offers a variety of services and solutions tailored to the individual needs of users. For example, Bit2Me Wallet provides a secure and easy-to-use crypto wallet that allows you to make cryptocurrency-to-cryptocurrency payments or use the Bit2Me Wallet to Bit2Me Wallet option for instant, commission-free trading.
If you have a business and want to accept cryptocurrency, Bit2Me Commerce allows you to do so with ease, even converting the funds received into the fiat currency of your choice. If you prefer to trade cryptocurrencies, Bit2Me Pro offers over 100 cryptocurrency pairs to trade in a professional and controlled environment.
Additionally, Bit2Me offers services such as Bit2Me Earn, which allows you to stake over 32 cryptocurrencies to generate rewards, and Bit2Me Launchpad to launch new crypto projects. It also offers the Bit2Me Card, a debit card that allows you to pay with crypto funds.
Security and confidence at all times
One of the most notable advantages of Bit2Me is its impeccable security record: in more than 9 years of operation, it has never been hacked. The Bit2Me team focuses on keeping user funds safe through advanced protection measures.
In addition, Bit2Me is distinguished by its policy of total transparency, providing users with access to public audits and certifications that verify the correct functioning of the exchange. Lastly, Bit2Me prides itself on offering quality customer service, available in 8 languages through multiple communication channels, demonstrating its commitment to customer satisfaction.
In short, all of these reasons make Bit2Me an attractive option for those looking for peace of mind and security when trading cryptocurrencies.