A Warning to All Crypto Currency Enthusiasts about Coinbase 6/13/17
I came across this article today about Coinbase not offering their services to residents living in the states of Wyoming and Hawaii, but the real issue is those Coinbase users that have bitcoin, ethereum, and litecoin stored in the possession of their Coinbase Wallet. According to the article, Coinbase has suspended the accounts of the those effected residents affectively seizing their funds.
Let this be a wake up call for those of you that read this and still keep their bitcoin and ethereum in their Coinbase wallet. Move it to your desktop or cellphone wallet or better yet, into a cold storage wallet.
You are completely right, I dont understand why people in this market put so much trust into these various exchanges holding all their crypto assets when there are major security flaws at play. You have hackers, frauds in these organization, etc.
The best thing to do is generate an address offline by saving the bitaddress.org to your desktop, and then printing out the QR code to put in a safe place. I wouldnt even trust another hard drive or USB product like trezor. Also, Coinbase is a government regulated exchange. If they dont send you your funds you can technically hold them over the fireplace for it.
is that mean they can not withdraw their money on coin base? why do coinbase suspend their account?
From Coinbase to their Wyoming customers,
"Although we strive to provide continuous access to Coinbase services, Coinbase is indefinitely suspending its business in Wyoming.
The Wyoming Division of Banking has recently communicated regulatory policies which we believe will render continued Coinbase operations there impractical. In particular, we understand that the Wyoming Division of Banking interprets the Wyoming Money Transmitter Act to require licensure of entities which offer hosted wallet services, and that as a condition of such licensure, licensees must maintain dedicated fiat currency reserves in amount equal to the aggregate face value of all funds held on behalf of customers. Although Coinbase securely maintains 100% of all customer funds, it is impractical, costly, and inefficient for us to establish a redundant reserve of fiat currency in equivalent value.
We understand this suspension will inconvenience our Wyoming customers and we apologize that we cannot currently project if or when our services may be restored."
In a nutshell, it was state government regulation that forced their hand to withdraw from Wyoming.
This is a good example of why there might be government regulation. The danger is that the cure will bring with it other problems.
Government regulation will occur to the extent of looking into these exchanges, blockchain does not need regulation.
It was precisely government regulation, specifically the Wyoming Money Transmitter Act, that made them decide to halt service to Wyoming residents. I would hope at the very least that there would be some sort of remedy worked out that those customers would be able to withdraw their funds to another wallet.