The Central Bank of Ireland has fined Coinbase Ireland 3.25 million euros ($3.6 million) over alleged breaches of its safeguarding and outsourcing obligations, the regulator said Thursday.
The Irish division of Coinbase Global failed to establish an adequate outsourcing governance framework, the central bank said. Safeguarding and outsourcing requirements underpin the protection of customer funds, obliging companies to keep them adequately funded and monitored and to set up procedures for reporting material changes to the regulator.
Regulator Cites Reliance on U.S. Parent
The CBI said Coinbase Ireland placed excessive reliance on the U.S.-based Coinbase Group as an outsourced service provider to implement safeguarding processes and controls. It also said the firm failed to adequately safeguard customers' funds through inadequate system design and insufficient control testing.
Coinbase Discloses Account Issues
In a statement following the announcement, Coinbase said that when crypto-friendly bank Silvergate was on the verge of collapse in 2023, it instructed 30 customers to deposit funds into an alternate account held by Coinbase at another U.S. bank. Those funds were therefore held alongside funds belonging to customers of another Coinbase entity, a breach of safeguarding requirements.
Coinbase also referred to euro withdrawals by U.S.- or U.K.-based customers being paid from Coinbase Ireland's safeguarding account, and to coding errors that led to the account being underfunded by an average of 0.54% in 2023 and the first half of 2024.
"No customer suffered any financial loss as a result of these matters, and no customer was ever unable to access their funds," Coinbase said.
Second Irish Penalty in a Year
The penalty arrives almost one year after the CBI fined Coinbase Europe 21.4 million euros for breaching anti-money laundering obligations between 2021 and 2025.
