Coinbase goes offline amid market crash

On October 27, the digital currency markets crashed once again, sending some coins down by double digits percentage-wise.

As usual, one of the main gateways to the so-called decentralized world, Coinbase (NASDAQ: COIN), was down for many users.

Twitter user Crypto Whale brought the outage to the attention of his hundreds of thousands of followers. Once again, we see how the myth of decentralization is a lie and how an outage on one website can cause mass panic and the inability to sell amidst major price pullbacks and corrections.

#CoinBase is offline again.

— Mr. Whale (@CryptoWhale) October 27, 2021

Why does Coinbase often go offline during crashes? is one of the largest digital currency exchanges. It recently went public with a valuation of $86 billion, making it larger than many international banks by market cap.

Yet, it seems that despite this huge valuation and the vast resources that come with it, Coinbase has been unable to secure the hardware needed to deal with large influxes of users during crashes. This same problem plagued Coinbase in the 2017 bull market, and along with the abysmal customer support it’s renowned for, it seems that the firm has been either unable or unwilling to keep its website online during peak demand.

However, it’s noteworthy that Coinbase rarely experiences outages or downtime during influxes of users who want to buy digital currencies. When BTC and other altcoins are red hot, Coinbase seems to manage the increased demand on its servers just fine. Yet, when digital currency prices pullback or crash, it appears that Coinbase is unable to handle the traffic.

This ought to give regulators, who are increasingly studying the antics of large actors within the industry, food for thought.

Coinbase under fire for its LEND platform

Coinbase has never missed a trend in the digital currency space. It listed several arguably illegal securities and ICOs, although it was more careful than Binance in this regard, and more recently, it attempted to take advantage of the DeFi and NFT cash grabs.

Unfortunately for Coinbase, its foray into DeFi came a little late, and just as U.S. regulators are beginning to get tough on so-called decentralized lending. The Securities and Exchange Commission (SEC), headed by Gary Gensler, launched an investigation into Coinbase’s proposed LEND platform.

The investigation caused Coinbase CEO Brian Armstrong to go on an ill-educated tirade on Twitter, displaying a complete lack of knowledge about securities laws and making paranoid allegations that the SEC was somehow unfairly targeting Coinbase while other companies were allowed to offer yield on digital currency unchecked. He called the actions of the SEC “intimidation tactics” and labeled them “sketchy.”

1/ Some really sketchy behavior coming out of the SEC recently.
Story time…

— Brian Armstrong (@brian_armstrong) September 8, 2021

Coinbase has since proposed regulations it says would be friendly to innovation within the industry, prompting the SEC to remind Armstrong and his company that they set the rules with a mandate to protect investors and not to further any firms’ agenda.

Coinbase also paid a $6.5 million settlement in early 2021 when the CFTC accused it of reporting misleading transaction data. This puts it in a long line of digital currency exchanges which have been fined or which are under investigation for questionable behavior. Coinbase did not admit to any wrongdoing when it paid the settlement.

Coinbase names identity of Satoshi Nakamoto as a major threat to its business

Interestingly, when Coinbase went public in 2021, it listed one of the major threats to its business as the revelation of the identity of Satoshi Nakamoto, Bitcoin’s inventor.

It’s clear to those who understand the situation why this would be a threat: Satoshi Nakamoto is, in fact, Dr. Craig Wright, and he has a history of being outspoken about firms like Coinbase, who he labels as “bucket shops,” and their selling of worthless tokens and potential illegal securities to unsophisticated investors.

Dr. Wright has repeatedly claimed that he will be confirmed as Satoshi Nakamoto beyond doubt by the evidence presented in the Kleiman v Wright ‘trial of the century,’ set to begin in November.

If Coinbase is right about Satoshi’s identity being an existential threat, then it may soon be caught up in an extinction event that’s set to sweep through the digital currency industry. CoinGeek will be reporting on the case, and Coinbase’s fate, as it unfolds.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—a from BitMEX to BinanceBitcoin.comBlockstreamShapeShiftCoinbaseRipple and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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