Coinbase says it keeps more than 99% of customer assets in cold storage. The exchange disclosed this after Binance lost $6.3 billion in an October 29 hack.
But keeping assets offline raises another question: what stops attackers from getting fraudulent transfers approved?
What Coinbase says it does
In a blog post , Coinbase said its systems and funds were unaffected. It keeps a small share of assets in online hot wallets for withdrawals. The rest stays offline. Its dedicated Custody vault, it says, is 100% cold and segregated on-chain.
To control how those assets move, Coinbase says it splits private keys into separate pieces. It also limits how quickly cold wallets can replenish hot ones. Suspicious activity can trigger a pause, while kill switches can take signing keys offline until the issue is resolved.
Coinbase Cold Storage: 99%+ Asset Protection and the $6.3B Binance Hack
Beyond these security measures, Coinbase says it holds customer assets on a 1:1 basis. It also says those assets are never lent without customer instructions. However, these safeguards and assurances have not been independently verified for this article.
Storing keys versus approving transfers
Binance’s hack shows why protecting private keys is only part of the defense. As Cryptopolitan reported , attackers compromised engineers through a tampered download and a fake job interview. They then used stolen credentials and an internal AI tool to access Binance’s wallet systems.
The attackers moved 233.46 million XRP from five hot wallets in just four minutes. Binance managed to freeze or intercept about $2.85 billion, according to Reuters . But that did not stop the attack. Unauthorized transfers continued for nearly four hours.
The breach also highlights a weakness that Bitwise Chief Investment Officer Matt Hougan described in a memo :
“They are, by design, the least-protected part of the system.”
— Matt Hougan, Bitwise Chief Investment Officer
Majority of the assets that belong to Binance were left in cold storage. The attackers attempted to get access to the less secured funds. For NCC Group , there is a larger lesson to learn than just cold storage. Security measures must ensure that a single compromised company employee cannot allow transfers.
Cold storage is not the same as cold custody
When someone keeps their private keys offline, this makes it difficult for anyone to steal them. However, this protection is useless if an attacker can manipulate people or systems who can approve the money withdrawal. This is why AMINA Bank differentiates between cold storage and cold custody .
Cold storage prevents private keys from being online. Cold custody goes even further than that. It adds more layers of security, such as independent approval processing, splitting authorities, applying physical security methods, establishing recovery policies, and general oversight policies. In this way, no compromised employee or system can possibly accomplish unauthorized transfers.
Why institutions were already shifting
Large investors were already demanding stronger custody safeguards before the Binance attack.
A January Coinbase–EY-Parthenon survey of 351 institutional investors found that 66% prioritized security and key-signing when choosing custodians. That was up from just 8% in 2025.
Regulatory compliance also gained importance, rising from 25% to 66%. Yet investors remained optimistic about crypto, with 73% planning to increase their holdings.
Boston Consulting Group sees custody becoming a vital part of financial infrastructure. For banks, safely storing assets is no longer enough. They also need reliable approval processes, stronger oversight, and the ability to work with multiple providers.
What has not been shown
Still, Coinbase’s 99% cold-storage figure does not tell the whole security story. It shows where the exchange says it keeps customer assets, but cannot guarantee that every transfer is safe.
There is also no universal rule requiring exchanges to keep a fixed percentage of assets offline. Instead, IOSCO emphasizes safeguarding customer assets, keeping them separate and independently checking records.
The Binance breach has not yet shown a lasting shift in customer behavior. Its market impact also appears limited so far. According to Bitwise , Bitcoin fell about 4% on October 30, close to the Nasdaq-100’s 3% decline. Meanwhile, Grand View Research expects the crypto-wallet market to grow from $15.5 billion in 2025 to $100.8 billion by 2033. However, that forecast includes both hot and cold wallets. It does not necessarily mean investors are moving toward cold custody
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