Central Bank of Ireland Fines Coinbase Unit €3.25 Million Over Customer Fund Safeguarding Failures

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Central Bank of Ireland Fines Coinbase Unit €3.25 Million Over Customer Fund Safeguarding Failures

The Central Bank of Ireland has fined Coinbase Ireland Limited €3.25 million ($3.65 million) for failing to safeguard customer funds and for leaning on its US parent to run compliance functions it was supposed to control itself. 

The regulator announced the penalty on Thursday, one day after it reached a settlement with the Coinbase subsidiary.

The breaches ran from November 2020 to August 2025 under Ireland’s Electronic Money Regulations. Coinbase Ireland, an e-money institution, issues the euro and dollar balances European customers use to buy bitcoin and other crypto assets on the Coinbase platform. 

The law requires those balances to sit in dedicated safeguarding accounts, walled off from corporate money and from customers of other Coinbase entities.

The Central Bank found three failures. Coinbase Ireland placed “excessive reliance” on its US-based group to design and run its safeguarding controls, and it lacked the local expertise to oversee that work. 

Its safeguarding account was underfunded “for lengthy periods of time” because of poor system design and weak control testing. And it had no adequate process to flag material changes in its safeguarding practices to the regulator.

That last point drew the sharpest language from Karen O’Leary, the Central Bank’s director of enforcement. The regulator said the exchange Ireland promised “robust and automated safeguards” when it sought authorisation in 2019, and that the firm’s practices drifted from those commitments without notice.

“Failing to adhere to the assurances made during the authorisation process or to inform us of material changes as happened in this case is completely unacceptable,” O’Leary said. “Payment and e-money firms have a fundamental obligation to fully safeguard customers’ funds. The Central Bank has made its supervisory expectations in this regard clear: we have no tolerance for weaknesses in safeguarding arrangements.”

The Central Bank set the base penalty at €4.65 million and applied a 30% discount for settling. The fine and a reprimand await confirmation from Ireland’s High Court. It is the regulator’s 164th enforcement outcome, bringing its lifetime fines past €432 million.

In a blog post, Coinbase said it self-reported “many of the items described in the settlement” in January 2024 and fixed most of the underlying control issues that same year. The company stressed that no customer lost money or lost access to funds.

Coinbase laid out five problem areas. During the March 2023 US banking crisis, as Silvergate Bank neared collapse, Coinbase Ireland directed 30 customers to deposit dollars into a Coinbase, Inc. account at another US bank, mixing their funds with those of a separate Coinbase entity. 

After Brexit forced the migration of European customers from the company’s UK affiliate, some kept sending deposits to the old UK accounts. Euro withdrawals for US and UK customers of other Coinbase units were at times paid out of the Irish safeguarding account for liquidity reasons, the exchange said.  

Coding errors in an internal dashboard left the safeguarding account underfunded by an average of roughly 0.54% of its total obligation through 2023 and the first half of 2024. And the firm did not tell the Central Bank about changes to its practices.

A daily “Treasury Rebalancing Process” moved funds back into the correct account each day, the exchange said, but that did not prevent the initial commingling.

“These issues largely arose in the context of Coinbase taking steps to protect customers during periods of significant disruption,” a company spokesperson told Reuters.

The exchange said it has since redesigned its safeguarding calculation, passed two third-party validations with no open findings, posted a €25 million guaranty bond and hired a dedicated head of safeguarding.

The penalty follows a €21.5 million fine the Central Bank imposed on Coinbase Europe in November 2025 for failing to monitor more than 30 million transactions for money laundering and terrorist financing risk. 

That unit’s Irish registration lapsed at the end of 2025 as the exchange shifted its European headquarters to Luxembourg under a MiCA license from the country’s financial regulator.

Coinbase is the largest US crypto exchange and the world’s biggest custodian of bitcoin, holding coins on behalf of most US spot bitcoin ETFs. 

This post Central Bank of Ireland Fines Coinbase Unit €3.25 Million Over Customer Fund Safeguarding Failures first appeared on Bitcoin Magazine and is written by Micah Zimmerman.