Coinbase detailed its customer asset protection system following Binance’s hot wallet incident, saying it was not affected by the event. The disclosure outlined how the exchange protects customer funds through offline storage, transaction controls and restricted employee access.

In a post, Coinbase said its funds and infrastructure remain secure and described a multilayered control system covering asset storage, transaction signing and employee access to internal systems.

More than 99% of assets stored offline

Coinbase uses both hot and cold wallets. Hot wallets hold a portion of assets to support withdrawals and off-platform use, while the remaining assets are kept in cold storage.

According to the exchange, more than 99% of customer assets are held in cold wallets. Coinbase regularly rebalances funds between its storage systems based on deposit and withdrawal demand, transferring excess funds from hot wallets back to cold storage.

Customer assets held through Coinbase Custody are stored entirely offline and are also segmented on-chain, the company said.

Transaction and access controls

Coinbase said it applies several layers of control to transactions. Private keys for cold wallets are split into parts, and the full key is never reconstructed, including when a transaction is signed.

In hot storage, no employee has persistent access to the signing service. Changes to the production system also require the participation of multiple employees.

The company said these controls eliminate a single point of failure. The theft of a device, a server breach or the actions of one employee should not allow an attacker to sign a transaction or recover a private key, according to Coinbase.

Coinbase also limits the volume of assets that can be transferred from cold wallets to hot wallets. If its systems flag unusual activity or a surge in withdrawals, the operations team reviews transactions before processing them.

Emergency kill switches provide another layer of protection, allowing Coinbase to halt some or all transfers if it detects suspicious activity. Some of these mechanisms fully disconnect signing keys from the network. Access can be restored only after the company checks its systems and determines the cause of the incident.

The exchange also restricts employees’ persistent access to work services. Under its “just-in-time” access model, permissions are granted only for a defined period, while critical actions and system changes require multiple approvals and two-factor authentication.

Coinbase previously called for preparations to protect bitcoin against quantum threats.

Source: Incrypted