Cryptocurrency exchange Coinbase reported experiencing a major outage in the middle of crypto prices plummeting. Users of the exchange complained about difficulties in withdrawing their funds which had caused a wave of panic among investors.
Coinbase said they were working on the issue and that funds were safe. It also added in a tweet, “We’re seeing recovery after implementing a fix, but our teams are continuing to monitor the situation.” Social media platforms such as Reddit were flooded with queries regarding Coinbase experiencing a downtime.
Main concerns were surrounded around withdrawals as huge amounts of money were stuck in the accounts of Coinbase users for a long time. Some users however reported the issue of not being able to access the app or the website at all.
Coinbase users expressed concerns about experiencing the difficulty to make a “fast trade” amidst an intense bearish market. With Bitcoin losing its value by almost 25% and with continued broader market weakness, the need to make quick trades and withdrawals has now heightened.
Coinbase Has Been Through Choppy Times Lately
Coinbase has recently reported a net loss of $ 430 million in the first quarter which is based on the decline in sales and active users. The fall in revenue has been directly tied to the plunge in trading volumes and a 19% decline in monthly users from the fourth quarter.
The network outage came following the fear of bankruptcy that users had previously misunderstood from Coinbase’s quarterly earnings disclosure. Coinbase had mentioned that it held $ 256 billion in both fiat currencies and cryptocurrencies on behalf of its customers.
In the case of bankruptcy account holders will be considered unsecured creditors which translates to users losing their money in the case of the company’s insolvency. This bit of the disclosure was addressed by the CEO of Coinbase in a series of tweets.
It stated that the disclosure was provided keeping in mind the requirements of the US Securities and Exchange Commission (SEC) and that the exchange platform does not run a risk of bankruptcy. Users, however, have been affected by the drop in Coinbase’s stock value too.
Related Reading | Coinbase CEO Says, ‘Informal Pressure’ From RBI Disrupted Our Payments
Hard Wallet The Way To Go?
Not long after Coinbase’s CEO clarified the conjecture about the bankruptcy, the exchange platform faced an outage. Twitter users have however expressed wariness about keeping money locked in a crypto exchange platform.
In case of bankruptcies, the exchange platform is liable to use the money of the users to bail themselves out. This thought of losing money to bankruptcy has sent jitters across the user base of the crypto exchange.
This is when many Twitter users have presented the idea of moving their cryptocurrencies to a hard wallet or a hardware wallet.
A hardware wallet will store the user’s private keys in a secured hardware device.
This will then allow owners to have access to their funds with the help of a password or seed phrase, these wallets are a powerful feature of self custody.
The news of the outage came as Binance, the world’s largest crypto exchange suspended Terraform Labs’ Terra (Luna) and TerraUSD (UST) tokens, which nosedived by 98% and exhausted the life savings of many investors.
Related Reading | Coinbase CEO Clears Air Regarding Risk Of Bankruptcy
Featured image from UnSplash, chart from TradingView.com