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Coinbase, the largest bitcoin and cryptocurrency exchange in the United States, has been struggling lately.
Repeated interruptions to the exchange have left many users locked out of their accounts just as the price of bitcoin has made big moves.
Now, following the reports, Coinbase will soon begin selling blockchain analytics software to the US government, its users are withdrawing bitcoin and looking for alternatives, according to data from Glassnode.
Update 6/23/2020: Coinbase disputed data showing that its users withdrew approximately $ 200 million worth of bitcoins from the exchange following outages and security issues.
According to Coinbase, its internal tools tracked the outflows of approximately 6,500 bitcoins (worth around $ 60 million) on June 8.
“Of the $ 60 million that was withdrawn, about 80% were a single institutional client distributing returns from an initial bitcoin fund,” Coinbase said, adding “routine custody maintenance that involves moving assets between several hot and cold wallets for security “to Glassnode data.
Coinbase, the cryptocurrency and bitcoin exchange based in San Fransico, has suffered a backlash from users … [+]
SOPA / LightRocket images via Getty Images
“If you use Coinbase you should delete your account”, bitcoin and cryptocurrency entrepreneur Matt Odell She said after The Block reported that the US Drug Enforcement Administration (DEA) and the Internal Revenue Service (IRS) intend to purchase licenses from Coinbase for an analytics platform called Coinbase Analytics.
Other influential voices in the bitcoin and crypto community he echoed Odell, asking if Coinbase customers could trust the exchange to keep their data private.
The San Francisco-based exchange responded, promising the blockchain analytics tool, built on its acquisition of blockchain data company Neutrino in late 2019, “does not include any personally identifiable information for anyone, regardless of whether they use Coinbase. or less”.
Coinbase “offers this product to financial institutions and law enforcement to support compliance use cases and investigations,” a spokesperson for the company said.
“This tool only gives them simplified access to publicly available data and at no time do they have access to Coinbase’s internal or customer data.”
These security concerns and recent outages have led Coinbase’s customers to withdraw a near-record amount of bitcoin from the exchange, according to data from blockchain analytics firm Glassnode which was challenged by Coinbase.
Coinbase bitcoin and cryptocurrency exchange users have withdrawn a record number of bitcoins … [+]
Glassnode
Coinbase blamed the June 1 outage on a fivefold traffic spike that caused the exchange’s servers to fail after they were “unable to keep up with this dramatic increase in traffic.”
The coronavirus pandemic and subsequent lockdowns have caused bitcoin trading volumes to rise alongside traditional markets in recent months.
“Cryptocurrency markets have experienced much of the same unprecedented volatility and activity during the traditional markets epidemic, which means that the underlying technology infrastructure has effectively been stressed daily,” said Jim Nevotti, president of the trading software provider Sterling Trading Tech, adding “even seconds of inactivity to switch platforms can have an impact during times of volatility.”
Elsewhere, a Twitter poll of the 5,000 people brought forward by bitcoin and crypto trader Josh Rager at the end of last week showed that two-thirds of people using Coinbase are willing to leave the platform.
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