Is Coinbase a Scam? Is Coinbase Safe and Legitimate Company? Is Coinbase Account Insured?

Is Coinbase a Scam?

If you are thinking about buying and selling cryptocurrency, you have likely come across the platform Coinbase. You may be wondering if this site is legitimate or if it may be a scam. Many have the same question so we have done the research for you here!

Coinbase Facts

Coinbase was founded in 2012, so it is not a brand new operation and has some good track record now since it has been around for almost a decade. While this is good to know, it does not alone indicate that the company is legitimate. The Company is based in the United States and is based out of San Francisco. The co-founders are well known, coming from backgrounds in technology and banking.

Investors

A number of well-known venture capital investment firms have backed Coinbase, further adding to its legitimacy. These firms include Andreessen Horowitz, a world class venture capital fund that has backed companies such as Airbnb, Stripe, GitHub, and Twitter. In total, Coinbase has raised nearly $550 million from dozens of top-tier investors and investment firms, again, further adding to its legitimacy.

Coinbase Size

Coinbase currently has over 56 million verified users in over 100 countries across the globe. According to its website, the quarterly volume traded is over $350 billion. They also have nearly 2,000 employees and hold over $220 billion in assets on their platform, so this is no fly-by-night operation, it is a serious enterprise. It was widely reported that Coinbase estimated their first quarter 2025 revenue to increase about 9 times to $1.8 billion.

Is Coinbase Legitimate

Coinbase IPO

On April 14th, 2025, Coinbase is planning to list on the National Association of Securities Dealer Automated Quotation (NASDAQ) stock exchange. This is a big deal as you will be able to buy and sell shares of the company through various brokerage firms. Estimates are that the company will be trading at an implied valuation of around $100 billion. The Security and Exchange Commission (SEC), which is an independent federal agency that regulates the stock market, has already approved the direct listing of Coinbase. The fact that Coinbase will soon, as a public company, be required to file and report all sorts of documents at regular intervals, such as quarterly reports, annual reports, and certain types of financial data, and that they will now be under SEC regulations, adds even more legitimacy to the company.

Open Coinbase Account

Is Coinbase Insured?

You might be wondering if the deposits you make into Coinbase are insured like deposits in a bank might be insured. This is a somewhat complicated answer.

For Coinbase customers in the United States, your balances of US Dollars in either USD custodial accounts at banks in the United States, USD denominated money market funds, or invests them in liquid US treasuries. You cannot choose or assume your deposit is handled in any particular manner, as it is up to Coinbase as to how they are holding deposits. However, if your funds are held in a US Bank account they are pooled and co-mingled with other users funds and FDIC-insured banks. These pooled accounts do have FDIC protection in place at $250,000 per individual.

For customers outside of the United States, cash is held in dedicated custodial accounts. All of this applies to the fiat currency you have on the Coinbase platform, not your cryptocurrency.

For your cryptocurrency assets on the platform, Coinbase says that they keep 98% of all digital currency in what is known as Cold Storage. Cold Storage means that the asset is kept offline so it is far less susceptible to attack or theft.

The remaining 2% of assets are kept in hot storage, or on online servers, to provide liquidity for the market. The assets in hot storage are ensured in the case there was a malicious attack and customers would not be affected. Keep in mind that this insurance policy would not cover you if your personal account on Coinbase was compromised. If you are a victim of a phishing attack or some other malicious behavior and the attacker was to access your funds, you would not have any kind of insurance protection, this is why it is so important to ensure you have all security protocols active such as 2-factor authentication, a strong and unique password, and that you never share your password.

Is Coinbase Safe?

Summary of Coinbase Legitimacy

In general, Coinbase is a very legitimate company. While there are risks involved with using the services of any company, you can be sure that Coinbase is not an overnight scam that will run away with your money. That being said, there are a lot of risks to using Coinbase, particularly because your money is accessed online and if you do not have adequate security measures in place your account could be compromised. Additionally, if you are using Coinbase you are likely trading or holding cryptocurrency, which in and of itself tends to be a very volatile and risky asset.