Coinbase: The New Bank of the Damned?

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O Lord, what manner of beast is this Coinbase, the colossus of the crypto realm, whose very name evokes trust and security, yet whose soul is shrouded in shadows? 🧠💸

Yet, lo! The lawsuits surrounding its recent insider data breach unveil a financial system where the institution, like a sly fox, escapes the burden, while the user, a hapless lamb, bears the brunt of the storm. ⚖️🌪️

Coinbase’s Finance Model That Shifts Risk to Users

In the hallowed halls of traditional banks, deposits are safeguarded by the ironclad chains of regulation and insurance, ensuring that if a thief siphons your funds, the bank, like a dutiful servant, restores your wealth. Yet Coinbase, that inverted titan, operates under a different creed. 🏦💀

It is scrutinized, like a criminal, by the IRS, yet it flouts the sacred duty of protecting its clients. A paradox, a riddle wrapped in a conundrum, where regulation is a tool for the state, but protection is a luxury reserved for the elite. 🤡

This leaves users in a labyrinth of despair. On one hand, Coinbase is treated as a bank when it suits the state; on the other, it shirks the obligations of a bank, leaving its clients to navigate the abyss alone. Critics cry, “This is not negligence-it is a calculated betrayal!” 🧨

“Lose $100,000. Get back a $100, which won’t even cover your Netflix subscription. That’s Coinbase’s fine print,” wrote Sindhya Valloppillil, a columnist at Forbes. 🤡

The tension reached its zenith in May 2025, when Coinbase confessed to a data breach orchestrated by its own contractors. Nearly 70,000 users’ Social Security numbers, IDs, and bank details were plundered, their lives reduced to a digital scrapheap. 🐺

While Coinbase claims no wallets were compromised, in the realm of crypto, identity is currency, and once your data is on the dark web, it is as if you are already dead. 🕯️

Court filings revealed the scheme began months prior, leaving customers in a state of blissful ignorance, unaware of the serpent coiled around their necks. 🐍

“According to personnel knowledgeable of the data breach, in 2024, criminal actors began a campaign of outreach to target and recruit TaskUs employees to join a conspiracy to exfiltrate PII of Coinbase users so that those criminals could steal cryptocurrency assets held by those users. As early as September 2024, TaskUs employee Ashita Mishra joined the conspiracy by agreeing to sell highly sensitive Coinbase user data to those criminals,” the filing reads.

Beyond a mere security lapse, class actions accuse Coinbase of a deeper malaise: outsourcing access while peddling itself as the “safest” option in crypto. A farce, a farce of the highest order! 🎭

Fortress for the Company, Not the User

Coinbase’s fine print reveals the walls of its fortress: liability capped at a pittance, $100 or the fees paid in the past year. A trifle, indeed! 💸

Arbitration clauses, like chains, bind customers, while indemnification provisions force them to foot the company’s legal bills. A cruel jest, this “safeguarding”! 🤡

In April, Coinbase announced changes to its user agreement that added two clauses limiting class action lawsuits and requiring lawsuits to be filed in New York. The changes apply to disputes initiated after May 15.

On May 14, Coinbase disclosed a data breach.

– Molly White (@molly0xFFF) May 20, 2025

In other words, the company has fortified itself against claims, while exposing its customers to the wolves of the legal wilderness. A true masterstroke of modern capitalism! 🧠

Coinbase is not a fringe exchange but the only publicly listed US crypto exchange with more than $400 billion in assets under custody. A monolith, a colossus, whose influence could reshape the financial world. 🏛️

Thus, this inverted model may ripple through the cosmos. It is the reference point for regulators and Wall Street, a beacon signaling whether crypto is maturing into mainstream finance. 🌍

If the blue-chip gateway normalizes a framework where users absorb losses while the company shields itself, that precedent could shape the industry far more than any token experiment. A dystopia, perhaps? 🤖

It would turn Coinbase into something beyond a custodian of crypto assets, ultimately making it the prototype for a financial system where surveillance is mandatory and protection is optional. A new religion, perhaps? 🙏

“Coinbase is treated like a bank when it comes to surveillance – but not when it comes to safeguarding users. Its ‘secure and trusted’ image is unraveling,” Valloppillil added. 🧵

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2025-09-29 02:33