The Central Bank of Ireland has fined Coinbase’s Irish e-money arm €3,252,618 for failing to protect customer money and for leaning too heavily on its US parent to run those controls.
This is the second penalty that Ireland has imposed on Coinbase’s European operations in under one year.
Five years of safeguarding gaps
The regulator stated that the breaches ran from November 1, 2020, to August 19, 2025, and they fall under the Electronic Money Regulations 2011.
Coinbase Ireland Limited issues e-money that customers swap for fiat. The customers can then use these funds to trade across the platform. The exchange found itself in hot water as a result of the rules that touch on keeping those funds segregated.
The Central Bank listed the problems it had with Coinbase Ireland operations, stating that it lacked an adequate outsourcing framework and depended on the US-based Coinbase Group to run safeguarding controls built for Irish and EU rules.
The apex bank also stated that the exchange did not keep enough in-house expertise to supervise that work. It also said that it found that Coinbase Ireland’s designated safeguarding account was underfunded for long stretches because of weak system design and thin control testing.
Internal escalation was also insufficient to flag material changes to the Central Bank.
Coinbase Ireland admitted to the contraventions and agreed to the facts that the Central Bank levied. The initial penalty that was imposed on it was €4,646,597, but it was later cut by 30% under the settlement scheme, landing at €3.25 million.
The penalty also came with a reprimand. However, the sanctions are yet to take effect, as they still need High Court confirmation.
What is the regulator saying about the penalty?
The settlement itself was reached a day before the announcement. Karen O’Leary, the Central Bank’s Director of Enforcement, said payment and e-money firms have a “fundamental obligation to fully safeguard customers’ funds.”
O’Leary said that they have “no tolerance for weaknesses in safeguarding arrangements.”
Since the announcement, Coinbase’s share price (NASDAQ: COIN) has dropped by over 3.8%, trading around $170.
How did the funds get mixed?
According to Coinbase’s own account, five historical issues brought it to the point of being fined, and it says that it has now fixed those issues.
It said that during the 2023 US banking stress around Silvergate Bank, it directed 30 customers to deposit into a Coinbase Inc. account at another US bank. It said this action caused the mixing of Irish customer money with funds tied to a different Coinbase entity.
A similar mixing happened after a post-Brexit migration, when some customers kept sending money to old UK accounts. Euro withdrawals for US and UK customers of other Coinbase units were also paid out of the Irish safeguarding account for liquidity reasons.
The fourth issue was a coding error in the dashboard used to size the daily safeguarding requirement. That left the account short by roughly 0.54% on average across 2023 and the first half of 2024, the company said. The fifth shortcoming was a failure to tell the Central Bank about changes to its safeguarding setup.
The exchange said that no customer funds were lost, nor were the customers unable to access their funds. It also stated that it flagged many of the items to the regulator in January 2024.
Its spokesperson said the problems “largely arose in the context of Coinbase taking steps to protect customers during periods of significant disruption.”
What has Coinbase changed?
The company says it has added a €25 million guarantee bond and hired a dedicated head of safeguarding before the Central Bank made the role an industry requirement.
It also says that its new safeguarding process has been through two third-party validations since January 2025, with nothing left outstanding. Coinbase has also moved its European headquarters to Luxembourg.
This is familiar ground for the regulator. In November 2025, it fined Coinbase Europe €21.5 million over transaction-monitoring gaps that left more than 30 million transactions unchecked for money-laundering risk, a penalty that was called the fourth-largest ever imposed by the Irish financial regulator.
Cryptopolitan reported that the settlement was $24.7 million at the time.
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