The Central Bank of Ireland has fined Coinbase Ireland Limited €3.25 million ($3.65 million) for failing to safeguard customer funds and for relying excessively on its US parent company to run compliance functions it was required to control itself.

The regulator announced the penalty on Thursday, one day after reaching a settlement with the Coinbase subsidiary, according to its official press release.

The breaches spanned November 2020 to August 2025 under Ireland's Electronic Money Regulations. Coinbase Ireland, an e-money institution, issues the euro and dollar balances that European customers use to buy bitcoin and other crypto assets on the Coinbase platform. Irish law requires those balances to be held in dedicated safeguarding accounts, walled off from corporate money and from the customers of other Coinbase entities — the ring-fencing rules at the heart of this case.

Three Findings by the Regulator

The Central Bank identified three failures. First, Coinbase Ireland placed "excessive reliance" on its US-based group to design and operate its safeguarding controls while lacking the local expertise to oversee that work. Second, its safeguarding account was underfunded "for lengthy periods of time" owing to poor system design and weak control testing. Third, the firm had no adequate process for flagging material changes in its safeguarding practices to the regulator.

That final failure drew the sharpest language from Karen O'Leary, the Central Bank's director of enforcement. The regulator said Coinbase Ireland promised "robust and automated safeguards" when it sought authorisation in 2019, and that the firm's practices later drifted from those commitments without notice.

"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 Central Bank set the base penalty at €4.65 million and applied a 30% discount for settling. The fine and a reprimand await confirmation from Ireland's High Court, the final step before the penalty takes effect. It is the regulator's 164th enforcement outcome, bringing its lifetime fines past €432 million.

Coinbase's Response

In a blog post, Coinbase said it self-reported "many of the items described in the settlement" in January 2024 and fixed most of the underlying control issues that same year. The company stressed that no customer lost money or lost access to funds. The outcome nonetheless underscores the regulator's stance that safeguarding weaknesses are sanctionable in their own right, regardless of whether customers ultimately lose money.

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

After Brexit forced the migration of European customers away from the company's UK affiliate, some continued sending deposits to the old UK accounts. Euro withdrawals for US and UK customers of other Coinbase units were also at times paid out of the Irish safeguarding account for liquidity reasons, 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 additionally did not inform the Central Bank of 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 prevent the initial commingling.

"These issues largely arose in the context of Coinbase taking steps to protect customers during periods of significant disruption," a company spokesperson told Reuters.

Coinbase said 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

The penalty follows a €21.5 million fine the Central Bank imposed on Coinbase Europe in November 2025 for failing to monitor more than 30 million transactions for money laundering and terrorist financing risk. That unit's Irish registration lapsed at the end of 2025 as the exchange shifted its European headquarters to Luxembourg under a MiCA license — the EU's Markets in Crypto-Assets framework — 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.

This article first appeared on Bitcoin Magazine and was written by Micah Zimmerman.