Irish Central Bank Fines Coinbase Unit €3.25M for Safeguarding Breaches

The Central Bank of Ireland has imposed a €3.25 million ($3.65 million) penalty on Coinbase Ireland Limited for inadequate protection of customer funds and for delegating compliance responsibilities to its US parent that should have been handled in-house.

The regulator disclosed the fine on Thursday, a day after finalizing a settlement with the Coinbase subsidiary.

From November 2020 through August 2025, the violations occurred under Ireland's Electronic Money Regulations. Coinbase Ireland, an e-money institution, manages the euro and dollar balances European clients use to buy bitcoin and other digital assets on the Coinbase platform.

By law, those balances must reside in dedicated safeguarding accounts, separated from corporate funds and from customers of other Coinbase entities.

Coinbase’s three failures

The Central Bank identified three violations. Coinbase Ireland placed “excessive reliance” on its US-based parent to design and manage its safeguarding measures, and it lacked the local expertise to supervise that work.

The safeguarding account was underfunded “for lengthy periods of time” due to poor system design and weak control testing. Additionally, the firm had no adequate process to inform the regulator about material changes in its safeguarding practices.

That last point drew the harshest rebuke from Karen O’Leary, the Central Bank’s enforcement director. The regulator noted that the exchange had promised “robust and automated safeguards” when it applied for authorisation in 2019, and that its practices had drifted from those commitments without notification.

“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,” O’Leary said. “Payment and e-money firms have a fundamental obligation to fully safeguard customers’ funds. The Central Bank has made its supervisory expectations in this regard clear: we have no tolerance for weaknesses in safeguarding arrangements.”

The base penalty was set at €4.65 million, with a 30% discount applied for the settlement. The fine and a reprimand still require confirmation from Ireland’s High Court. This is the regulator’s 164th enforcement action, bringing its total fines past €432 million.

Coinbase’s response

In a blog post, Coinbase said it voluntarily reported “many of the items described in the settlement” in January 2024 and resolved most of the related control issues during that year. The company stressed that no customers lost money or access to their funds.

Coinbase outlined five problem areas. During the March 2023 US banking crisis, when Silvergate Bank neared collapse, Coinbase Ireland directed 30 customers to deposit dollars into a Coinbase, Inc. account at another US bank, mixing their funds with those of a separate Coinbase entity.

After Brexit forced the migration of European customers from the company’s UK affiliate, some continued to send deposits to the old UK accounts. For liquidity reasons, euro withdrawals for US and UK customers of other Coinbase units were at times paid out of the Irish safeguarding account, the exchange said.

Coding errors in an internal dashboard left the safeguarding account underfunded by an average of roughly 0.54% of its total obligation through 2023 and the first half of 2024. The firm also failed to tell the Central Bank about changes to its practices.

A daily “Treasury Rebalancing Process” moved funds back into the correct account each day, the exchange said, but that did not stop the initial commingling.

A company spokesperson told Reuters: “These issues largely arose in the context of Coinbase taking steps to protect customers during periods of significant disruption.”

Coinbase stated it has since redesigned its safeguarding calculation, passed two third-party validations with no open findings, posted a €25 million guaranty bond, and hired a dedicated head of safeguarding.

Second Irish fine in a year

This penalty follows a €21.5 million fine that the Central Bank imposed on Coinbase Europe in November 2025 for failing to monitor over 30 million transactions for money laundering and terrorism financing risks.

That unit’s Irish registration lapsed at the end of 2025 as Coinbase shifted its European headquarters to Luxembourg under a MiCA license from the country’s financial regulator.

Coinbase is the largest US crypto exchange and the world’s biggest custodian of bitcoin, holding coins on behalf of most US spot bitcoin ETFs.