The Central Bank of Ireland fined Coinbase Ireland 3.25 million euros for shortcomings in safeguarding customer funds and overseeing outsourced services.
According to CoinDesk, the Central Bank of Ireland (CBI) said Coinbase’s Irish unit relied excessively on U.S.-based Coinbase Group when establishing the processes and controls used to safeguard customer money. The regulator said deficiencies in system design and gaps in control testing prevented funds from being properly protected.
The fine, equivalent to approximately $3.6 million, stemmed from issues involving which account held customer money and whether the account contained the required amount.
Coding errors created a shortfall in the safeguarding account
According to Coinbase, euro withdrawals by customers in the U.S. or the United Kingdom were paid from the account Coinbase Ireland used to safeguard customer funds. Coding errors caused the account to hold an average of 0.54 percent less than the required amount in 2023 and the first half of 2024.
Another issue arose when Silvergate came close to collapse in 2023. Coinbase redirected 30 customers to an alternative Coinbase account at another U.S. bank. The money deposited there was held alongside funds belonging to customers of another Coinbase entity, which was found to violate safeguarding obligations.
Coinbase: Customers suffered no losses
Coinbase said none of its customers suffered financial losses as a result of the issues and that no customers were unable to access their money. The company therefore maintained that the account and control deficiencies during the period did not result in customer losses.
The penalty is separate from the group’s previous fine in Ireland. About a year ago, the CBI fined Coinbase Europe 21.4 million euros for breaches of anti-money laundering obligations during the 2021–2025 period. The new decision concerns Coinbase Ireland’s processes for safeguarding customer funds and overseeing outsourced services.
Not investment advice.