Ireland Fines Coinbase Unit €3.25M Over Safeguarding Failures

Coinbase Ireland Fined by Central Bank of Ireland

The Central Bank of Ireland has imposed a €3.25 million ($3.65 million) fine on Coinbase Ireland Limited for deficiencies in safeguarding customer funds. The breaches occurred between November 2020 and August 2025, violating the country’s Electronic Money Regulations.

Coinbase Ireland, an e-money institution, manages euro and dollar balances used by European customers to trade crypto assets on the Coinbase platform. Regulations require these funds to be held in dedicated safeguarding accounts, separate from corporate funds and other Coinbase entities’ customer holdings.

Key Findings from the Central Bank

The Central Bank identified three primary failures: excessive reliance on Coinbase’s US-based parent for safeguarding controls, a lack of local expertise to oversee those controls, and an underfunded safeguarding account due to system design flaws and inadequate testing. Critically, the exchange failed to inform the regulator of material changes to its safeguarding practices.

Karen O’Leary, the Central Bank’s director of enforcement, emphasized the severity of the lapse, stating that failing to adhere to prior assurances or report changes is “completely unacceptable.” She reiterated the regulator’s “zero tolerance” for weaknesses in safeguarding arrangements.

Coinbase’s Response and Remediation

Coinbase disclosed “many of the items” in the settlement in January 2024 and addressed most control issues throughout the year. The company maintains that no customer funds were lost or inaccessible. Specific issues included commingling of funds during the March 2023 banking crisis, continued deposits to outdated UK accounts post-Brexit, and temporary use of the Irish safeguarding account for withdrawals related to other Coinbase units.

Coding errors also led to the safeguarding account being underfunded by approximately 0.54% on average through the first half of 2024. Coinbase has since redesigned its safeguarding calculations, passed third-party validations, posted a €25 million guaranty bond, and appointed a dedicated head of safeguarding.

Recent Regulatory Action

This penalty follows a €21.5 million fine issued in November 2023 for failures in anti-money laundering (AML) and counter-terrorist financing (CTF) monitoring. Coinbase Europe’s Irish registration lapsed at the end of 2023, with the exchange relocating its European headquarters to Luxembourg under a MiCA license.

Source: Bitcoin Magazine