Coinbase, the cryptocurrency exchange based in the United States, is facing backlash from its users due to serious delays in processing Solana (SOL) transactions. Reports indicate that users have been waiting over 14 hours to either send or receive SOL, and its users are also raising concerns about the exchange’s liquidity and operational practices.
This situation comes at a time of heightened scepticism in the industry following the collapse of FTX.
The events surrounding FTX exposed serious mismanagement and a lack of transparency within centralized exchanges (CEXs), leading critics to draw parallels between the current issues and that incident.
One investigative journalist reported that his transaction was cancelled after being in a pending status for a full day. Another user noted having two transactions stuck for more than 14 hours.
Prominent user CryptoCurb on X questioned the solvency of Coinbase, calling for immediate Proof of Reserve (PoR) audits. He has also studied the industry for seemingly abandoning PoR audits, which were a key reform measure introduced following the FTX fallout.
He stated, “Coinbase was likely caught staking their customers’ SOL without their consent. This is NOT acceptable if confirmed.” Adding to the uncertainty, the blockchain-tracking platform Whale Alert flagged several large SOL transactions from unknown wallets to the Coinbase exchange.
Amid the ongoing delays and large transfers, users are demanding that Coinbase should provide clear proof of its liquidity and operational integrity. In response to claims, Coinbase Support attributed the delays to technical and blockchain issues.
Another user, known as Sidehustle, raised concerns about Coinbase’s largest Solana validator planning to unstake 567,000 SOL (approximately worth $130 million) at the end of the current epoch.
He has questioned, “Did they run out of liquid SOL and are now waiting until the epoch boundary to process withdrawals?” However, Mert Helius, a prominent developer, attributed the delays to Coinbase’s internal infrastructure, suggesting it struggles to keep up with Solana’s rapid transaction speeds.
Helius clarified, he said, “This has nothing to do with the Solana blockchain. I guess that they just can’t keep up with the tip of the chain because they generalize their indexing for all chains without accounting for their differences.”
There is a growing narrative claiming that Coinbase might be staking customers’ SOL without their consent to generate yield. Some speculate that the delays may be related to the unstaking process, probably needed to replenish operational reserves before executing transactions.
This is not the first time Coinbase has faced scrutiny over its custody practices. Recently, BlackRock filed to amend its IBIT Bitcoin ETF amid user concerns regarding Coinbase’s custodial services. As per reports, investors have called for Coinbase, as custodian, to provide on-chain proof of Bitcoin purchases for ETFs to ensure transparency.
However, an excerpt from the filing says, “Subject to confirmation of the required minimum balance, Coinbase Custody shall process a withdrawal of digital assets from the custodial account to a public blockchain address within 12 hours of receiving an instruction from the client or the client’s authorized representatives.”
In addition to this controversy, Coinbase has recently launched Bitcoin-backed loans for USDC, which has drawn mixed reactions from the crypto community.
Also Read: Banks vs Coinbase: The Deposit War Nobody Is Calling by Its Name
