Ireland fined Coinbase €3.25 million over customer fund safeguarding lapses

Coinbase Ireland, the Irish unit of crypto exchange operator Coinbase Group, admitted breaching customer fund safeguarding and outsourcing rules and accepted a €3,252,618 fine, the Central Bank of Ireland said on Thursday.

The regulator said the breaches of the Electronic Money Regulations 2011 ran from Nov. 1, 2020, to Aug. 19, 2025. The Central Bank and Coinbase Ireland reached a settlement on Wednesday.

The sanctions comprise a reprimand and a monetary penalty of €4,646,597, which a 30% settlement discount lowered to €3,252,618. The sanctions are subject to High Court confirmation and take effect once confirmed.

The Central Bank said Coinbase Ireland, an e-money institution, fell short in three areas. It relied too heavily on the U.S.-based Coinbase Group to run safeguarding processes and lacked enough local expertise to oversee the management of customer funds. Inadequate system design and too little testing of controls meant the account set aside for safeguarding went without full funding for long stretches. It also lacked adequate internal control, escalation and governance processes to identify and report material safeguarding changes to the regulator.

"Payment and e-money firms have a fundamental obligation to fully safeguard customers' funds," Karen O'Leary, the Central Bank's director of enforcement, said in a statement. "The Central Bank has made its supervisory expectations in this regard clear: we have no tolerance for weaknesses in safeguarding arrangements."

O'Leary said what firms disclose and promise at the authorization stage is critical to the regulator's assessment. "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," she said.

According to Bloomberg, a Coinbase spokesperson said that in 2023 Coinbase Ireland told its customers to move money into other bank accounts that Coinbase held, as protection against losses from bank failures during a U.S. banking crisis. The spokesperson said the step mixed customers' funds with money held for other Coinbase entities, which "was not in line with regulatory safeguarding requirements." The spokesperson added that customers neither lost money nor were cut off from their funds.

The Central Bank found that Coinbase Ireland permitted customer money to be commingled with assets kept in other places, even though it had pledged when authorized in 2019 to run strong, automated protections, according to The Irish Times. The regulator said the mixing made it more likely that those funds could be lost, The Irish Times said.

The Central Bank previously fined Coinbase Europe €21.5 million after it did not screen over 30 million transactions for possible links to laundering or terror financing, according to The Irish Times.