Cryptocurrency exchange Coinbase reported a major outage amid falling crypto prices. The users of the exchange complained about difficulties in withdrawing their funds, which caused a wave of panic among investors.
Coinbase said they are working on the issue and that the funds are safe. It also added in a tweet“We are seeing a recovery after implementing a fix, but our teams continue to monitor the situation.” Social media platforms like Reddit have been inundated with requests about Coinbase having downtime.
The main concern was withdrawals, as huge amounts of money have been sitting in Coinbase users’ accounts for a long time. However, some users reported the issue of not being able to access the app or the website at all.
Coinbase users raised concerns about the difficulty of making a “quick trade” amid an intense bearish market. With bitcoin down nearly 25% in value and general market weakness continuing, the need to make quick trades and withdrawals has now increased.
Coinbase has been going through troubled times lately
Coinbase recently reported a first-quarter net loss of $430 million based on the decline in sales and active users. The revenue decline was directly linked to the slump in trading volume and a 19% drop in monthly users from the fourth quarter.
The network outage followed fears of bankruptcy that users had previously misunderstood due to Coinbase’s quarterly earnings disclosure. Coinbase had mentioned that it held $256 billion in both fiat and cryptocurrencies on behalf of its clients.
In the event of bankruptcy, account holders are considered unsecured creditors, which means users lose their money in the event of company bankruptcy. This part of the disclosure was addressed by Coinbase’s CEO in a series of tweets.
It stated that the disclosure was made taking into account the requirements of the United States Securities and Exchange Commission (SEC) and that the exchange platform is not exposed to the risk of bankruptcy. However, users are also affected by the decline in Coinbase’s stock value.
Related Reading | Coinbase CEO Says RBI ‘Informal Pressure’ Has Disrupted Our Payments
Hard wallet the right way?
Shortly after Coinbase’s CEO clarified the bankruptcy suspicion, the exchange platform faced an outage. However, Twitter users have expressed concerns about keeping money locked in a crypto exchange platform.
In the event of bankruptcy, the exchange platform is obliged to use users’ money to save itself. This notion of losing money through bankruptcy has rocked the crypto exchange’s user base.
At this point, many Twitter users have floated the idea of moving their cryptocurrencies to a hard wallet or hardware wallet.
A hardware wallet stores the user’s private keys in a secured hardware device.
This then allows owners to access their funds using a password or seed phrase. These wallets are a powerful feature of self-custody.
News of the outage came as Binance, the world’s largest crypto exchange, suspended the Terraform Labs Terra (Luna) and TerraUSD (UST) tokens, which plunged 98% and drained the life savings of many investors.
Related Reading | Coinbase CEO clarifies bankruptcy risk
Featured image from UnSplash, chart from TradingView.com