Coinbase says over 99% of customer assets in cold storage after reported Binance hack
In brief
- Coinbase said more than 99% of customer assets are held in offline cold storage.
- Coinbase's update followed a reported $6.34 billion hack at Binance on October 29.
- Coinbase said the Binance breach didn't affect its systems or customer funds.
- Binance said it replenished 98% of affected assets and expanded proof of reserves to 44 coins.
How Coinbase says it holds customer funds
Coinbase's security update, as reported by Crypto Briefing, describes a split between hot and cold wallets. The exchange said it keeps a small portion of assets in internet-connected hot wallets to process withdrawals, and it continuously moves excess balances into offline storage.
That's the core of it.
The rest of the update covers who (and what) can actually move funds. Coinbase said its wallet infrastructure uses distributed private keys, multiple approval requirements and withdrawal limits to prevent unauthorized transfers. Its security systems monitor unusual transaction activity, the company said, and can halt wallet signing operations when suspicious behavior is detected.
Insider risk got its own attention. According to Coinbase, no single employee has standing access to its production wallet signing service, and sensitive changes require approval from multiple personnel. The company said it also uses additional authentication measures to reduce risks from compromised employee devices or credentials.
Custody and the balance sheet
Coinbase reiterated that customer assets are held at a 1:1 ratio and remain customer property. It said those funds aren't lent out or used without customer instructions.
As of September 30, Coinbase reported $377 billion in assets on its platform, alongside $8.6 billion in cash and cash equivalents and $2.2 billion in crypto assets held for investment, according to the company's reported figures.
Binance's response
The Binance attack on October 29 resulted in approximately $6.34 billion in stolen crypto assets, Crypto Briefing reported. Binance said on Wednesday that it had replenished 98% of the affected assets using its own resources (that figure comes from the exchange's own statement). It also said it had expanded its proof of reserves coverage to 44 cryptocurrencies.
Coinbase's message, put simply, is that it wasn't affected and that its wallet setup is designed to prevent unauthorized transfers and reduce risks from compromised employee devices or credentials. Those are the company's own claims, laid out in its security update.
Frequently asked questions
How much of Coinbase's customer assets are kept in cold storage?
Coinbase said on Wednesday that more than 99% of customer assets are held in cold storage. It keeps a small portion in internet-connected hot wallets to process withdrawals and continuously moves excess balances into offline storage, according to its security update.
Was Coinbase affected by the Binance hack?
Coinbase said in a security update that its systems and customer funds were not affected by the Binance breach. The October 29 attack on Binance resulted in approximately $6.34 billion in stolen crypto assets, according to Crypto Briefing.
How did Binance respond after the $6.34 billion hack?
Binance said on Wednesday it had replenished 98% of the affected assets using its own resources. The exchange also said it had expanded its proof of reserves coverage to 44 cryptocurrencies.
