Coinbase Warns of Transaction Halts As Bitcoin Plummets
Coinbase (NASDAQ: COIN) seems to have been halting some transactions on its platform due to what it refers as “elevated error rates.”
“We’re currently investigating elevated error rates across Coinbase.com (web and mobile). Customers may have trouble trading or completing a buy/sell,” said the firm’s advisory.
This comes shortly after bitcoin suffered a nearly 5% sharp decline, bringing the level back down to the $35,000-mark.
Just this month, Coinbase reported in Q3 2023 a quarterly total revenue of $674.1 million, a drop from Q2 2023’s $707.9 million. While the firm labeled this “a strong quarter,” it recorded its lowest trading volume since Q4 2020, only managing to post $76 billion. This is a decrease from last quarter’s $92 billion and last year’s $159 billion.
The firm points to low volatility environment for the decline in consumer transactions while the decrease in institutional transactions are said to be due to “lower Markets volume.”
READ: Coinbase Q3 2023 Financials: “Strong Quarter” Is Weakest Volume Traded In Three Years
Coinbase’s advisories on its services have been highlighted by observers, including concerning clauses in the terms of service for the firm that raised doubts about the stability of stable coin USDC.
Still, according to the X user Rho Rider, both Coinbase and Circle, the organizations behind USDC, have incorporated clauses in their terms of service that relieve them of any obligation to redeem USDC for $1 USD. Circle’s guarantee for redemption only extends to Circle account holders, while they have barred retail customers from holding such accounts.
The most concerning aspect of the post is that, based on the terms of service for Coinbase and Circle, USDC holders seemingly have no inherent rights to redeem their tokens for cash. If either of these organizations found themselves in an illiquid position, they could choose not to purchase redemptions, potentially rendering the USDC worthless.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
