Surge In User Volume Causes Coinbase To Glitch
The cryptocurrency market has been red hot to kick off 2024, with Bitcoin hitting a yearly high of over $64,000 on Tuesday February 28th. The entire crypto market has been booming, and the rise in prices has been accelerating in the past few weeks. The release of spot Bitcoin ETFs has caused a massive surge in cryptocurrency trading volume from both institutions and retail alike and is the likely culprit for the ascent of crypto prices. This explosion in prices has sent investors into a frenzy, and a massive surge in user volume caused a malfunction in the Coinbase app that resulted in Coinbase user accounts temporarily showing a zero balance. As one might expect, Coinbase users were less than pleased and began to panic.
This outage temporarily prevented users from buying or selling on a volatile trading day so it is understandable that users were very unhappy. Users could login to the platform, but were unable to trade anything and account balances read zero, incorrectly. Given past problems with other crypto exchanges like FTX, users panicked. It’s important to note that Coinbase fixed the issue in a matter of hours and currently all is good on the Coinbase app and website. This issue was native only to Coinbase and other exchanges remained functional throughout the outage.
Here is Coinbase CEO Brian Armstrong on the issue, via X: "We had modeled a ~10x surge in traffic and load tested it. This [surge in volume] exceeded that number."
All Customer Funds Are Safe
However, it's worth noting that while no funds were lost, the outage did temporarily prevent users from executing any buying or selling transactions, highlighting the inconvenience caused by the technical glitch. During this period, traders were unable to capitalize on market opportunities or adjust their positions, potentially resulting in missed gains or losses.
Despite this hiccup Coinbase, has reassured its users that their assets remained secure throughout the entire process, and steps are being taken to prevent similar issues from occurring in the future. Coinbase is known as one of the most reputable, compliant, and audited crypto exchanges in the world with a generally flawless reputation outside of a few past technical mistakes. As Coinbase continues to refine its infrastructure and protocols, users can expect a more seamless trading experience with enhanced reliability and security measures in place. With the growing importance of digital assets in today's financial landscape, it's imperative for platforms like Coinbase to prioritize the stability and security of their services to maintain user trust and confidence.
Not The First Coinbase Glitch
Despite the temporary inconvenience, Coinbase users can rest assured that their funds were never at risk. The recent glitch, while disruptive, was isolated to the Coinbase platform and did not affect the actual balances or holdings of users. Following the swift resolution of the issue, all account balances were promptly restored, ensuring that customers remained financially whole.
However, the outage did underscore the importance of robust infrastructure and capacity planning to accommodate surges in trading volume during volatile market conditions. Coinbase CEO Brian Armstrong's acknowledgment of the issue highlights the platform's commitment to addressing and mitigating such incidents in the future, bolstering user confidence in the platform's security and reliability.
But the incident and Coinbase’s handling of the issue was not well received by everybody, and some X users aired their grievances online. Some users said that the outage occurred during a critical time for crypto traders and was unacceptable. Other users brought up the importance of using multiple crypto exchanges.
This is another example of why cryptocurrency investors may want to keep their funds off exchanges when not actively trading, instead choosing other means of custody. Blockchain provides superior methods of self-custody like hardware wallets and multi-signature wallets that offer greater safety than storing funds on an exchange. These other forms of custody may be a bit difficult for a crypto beginner to pick up, but there are plenty of resources out there. Always be careful when moving or accessing your cryptocurrency, and if anything should happen contact a lawyer and law enforcement immediately.
About Levin Law
This incident serves as a reminder of the unpredictable nature of the cryptocurrency market and the importance of having a trusted legal partner like Levin Law by your side. In the event of unforeseen technical glitches or losses due to exchange malfunctions, Levin Law stands ready to assist clients in navigating the complex landscape of cryptocurrency litigation.
With a proven track record of advocating for investors' rights and recovering lost funds, Levin Law offers peace of mind and expert guidance to those affected by such incidents. If you have experienced financial losses or challenges in the cryptocurrency space, don't hesitate to reach out to Levin Law for personalized legal support and representation.
