Mentioned in This Article
1. What are the Coinbase allegations?
The Coinbase allegations center on a public accusation by Ari Paul, founder of BlockTower Capital, who says the exchange lost roughly $25 million of his firm's assets and concealed more than $1 billion in hacks affecting about a dozen institutions. Coinbase denies the claims. In an opinion column published on October 20, Onramp chief executive Michael Tanguma argues that the dispute exposes a gap in how companies govern the bitcoin they hold.
Paul has said that ongoing litigation prevents him from publishing the evidence behind his statements, while Coinbase rejects the substance of the accusations. For several weeks, participants across the industry have argued over which side is telling the truth. The claims remain unproven, and nothing in the dispute has been established by a court or an independent examiner.
Tanguma's argument does not take a side on the facts. His point is that the debate itself reveals a structural weakness: outsiders have no way to confirm either version. The only available evidence is the credibility of the accuser and the denial of the custodian, an outcome he finds striking for an asset built on the principle that no participant should have to take anyone's word.
2. Why an unverifiable dispute matters for bitcoin
Bitcoin (BTC) was designed so that ownership and transfers can be checked by anyone on a public ledger. Tanguma observes that this design philosophy sits awkwardly beside a situation in which a company's holdings, and the question of whether they still exist, depend on a statement from a third party. When the assets sit with a custodian, the ledger proves that coins exist at an address, but it does not show who has authority to move them or what internal rules govern that authority.
In his view, bitcoin on a corporate balance sheet should be treated as a controls problem rather than a purely technical one. The questions a custody arrangement must answer are the same ones a board already asks about cash at a bank or securities at a brokerage: who has access, who signs off on a transfer, and how an outsider can confirm that the money is still there.
The distinction matters because custody is the point where a decentralized asset meets ordinary corporate duties. Finance teams must reconcile balances, auditors must confirm that assets exist, and directors must show that safeguards are in place. A public blockchain can confirm that a balance sits at an address, but it cannot say whether the people controlling that address are authorized, whether more than one of them must agree to a payment, or whether a former employee still holds a copy of the credentials. Those are questions of internal governance, and they have to be answered by the company's own arrangements.
That framing shifts attention away from the headline dispute and toward the arrangements that make such disputes impossible to resolve. If a company cannot demonstrate its own holdings to auditors, directors and counterparties without relying on one institution's word, the column suggests, then the company has accepted a level of trust that its other financial accounts would never require.
3. The questions no board can answer
Traditional corporate accounts arrive with governance built in. Bank and brokerage relationships typically provide named users, defined roles, rules for approving withdrawals and records of who did what. According to Tanguma, buying bitcoin frequently strips those features away and replaces them with a single exchange login or a hardware wallet that one employee keeps.
Directors, he writes, are increasingly asking what happens when the person holding the keys leaves the company, falls for a phishing attempt or dies. The column points to cases where the answer was costly. The chief executive of the Canadian exchange QuadrigaCX died in 2018 while holding the only keys, and about $190 million in customer assets became inaccessible, according to a report by the Ontario Securities Commission. Prime Trust, a custodian, could not reach its legacy wallets in December 2021 and still could not 18 months later, when Nevada moved to place the company in receivership.
Survey data cited in the piece points the same way. A Deloitte poll of 200 chief financial officers at companies worth billions of dollars found that 42% named accounting and control complexity as an obstacle to holding crypto, nearly matching the share that cited price volatility. Tanguma concludes that the asset's price swings were rarely the main barrier; the harder problem was proving who controls the funds and how they are protected.
4. Physical and digital threats are growing
The risks facing holders are rising from two directions, the column says. On the physical side, Jameson Lopp's public tracker of attacks on crypto owners records more than 360 incidents since 2014. It counts 86 of them in 2025 and more than 60 so far in 2026. Such attacks, often called wrench attacks, force owners to hand over access under threat, and they put a premium on arrangements in which no single person is able to move funds alone.
Coinbase's own 2025 breach is cited as an example of how stolen information feeds coercion. Criminals bribed customer-support staff to obtain customer data, including names, addresses and balances. Coinbase estimated the incident could cost the company $400 million, and security researchers described it as a wake-up call, because a list of who holds how much, and where they live, is exactly what a coercive attacker needs.
The digital threat is also evolving. Tanguma writes that artificial intelligence has industrialized fraud, with cloned voices, convincing messages that impersonate executives and ever more polished social engineering. When bitcoin sits behind a single credential, one successful deception can move the entire balance, and because transfers are generally irreversible, the loss is often permanent.
5. Why do the current fixes fall short?
According to the column, today's common approaches move risk around instead of removing it. Self-custody places it in one person, which creates a key ceremony every time an employee joins or leaves. Exchange custody places it in one company, leaving the client without keys and often without visibility into how its assets are handled.
Existing assurance tools are described as similarly limited. Audits, trust charters and service-organization control reports examine the custodian rather than the customer's own controls. Proof-of-reserves exercises offer a snapshot of balances at a moment in time without showing the rules that govern who can spend them. Tanguma adds that single institutions can simply end: he points to the shutdown of BitMEX after 11 years, with withdrawals left open, as a reminder that any one counterparty has a finite lifespan.
His proposed answer relies on bitcoin's native multisignature capability, which requires several keys to authorize a transaction. The keys would be held by independent, regulated institutions so that no single party can move or lose the funds. The company itself would hold legal title to the bitcoin, with named users, defined roles, approval policies for withdrawals and an auditable trail of every action.
6. Institutions are already splitting custody
The column sees early evidence that large institutions are heading in this direction. Morgan Stanley's proposed bitcoin exchange-traded fund names two custodians, Coinbase and BNY Mellon, rather than relying on a single holder. Spreading custody across two firms reduces the chance that one failure or one dishonest actor puts the entire pool of assets at risk.
Tanguma regards that step as only halfway. In his reading, dividing assets among custodians still leaves the owner depending on each custodian's statements about what it holds. The stronger standard, he argues, would let an owner verify its holdings directly, so that confirmation does not hinge on any custodian's word, whether that word is a denial, a confirmation or an attestation.
7. The case for single custodians, and the reply
The column acknowledges that single custodians have real advantages. A single counterparty means one contract, one integration and one relationship to manage, and many companies value that simplicity. Spreading custody over several institutions demands coordination, shared standards and operational discipline that, in Tanguma's words, much of the industry has so far avoided.
Cost and speed are part of that appeal, since a single provider can usually onboard a company faster and answer to one support team. The trade-off, the column implies, is that every convenience also concentrates dependence on one firm's systems and staff.
He accepts both points but argues that simplicity only counts when the simplified system can be checked. A custodian unable to demonstrate what it holds has not removed complexity; it has hidden it. Building systems that need less trust than a single intermediary is hard, he writes, but it is the industry's central task.
8. What boards should ask next
Tanguma's conclusion restates his thesis: corporate adoption of bitcoin will stall as long as companies cannot show who controls the funds, who approves their movement and whether the assets still exist. Directors do not need to become experts in the technology, he says. They should pose their usual questions about control and approval, then add one more: what remains intact if any single person or institution disappears?
A custody setup that cannot answer that question clearly, he writes, is a risk disclosure waiting to be written. He expects the industry to look back with astonishment at the period when a new form of money was kept behind a single login. Readers should note that the piece is an opinion column. Its prescriptions, including multi-institution custody with named-user controls, are the author's position, and the allegations against Coinbase that prompted it have not been proven.