Base clarified that transferring ETH to Coinbase is for security and auditing, rejecting claims that the funds were being sold.
By Temitope Olatunji
Edited by Marco T. Lanz
Updated
3 mins read
Base, a Layer 2 scaling solution, has denied allegations of selling its Ethereum ETH $1 585 24h volatility: 4.0% Market cap: $191.05 B Vol. 24h: $12.82 B holdings amid rumors that it was offloading all its sequencer fee earnings to Coinbase. Kabir, a member of the Base team, refuted the claim, emphasizing that the project remains committed to the growth of the Ethereum ecosystem by reinvesting all its earnings and resources. He noted that Base has onboarded millions of new users on-chain within just 1.5 years and intends to continue this effort.
Kabir’s comment came after Santisa, the pseudonymous CIO of investment firm Lucidity Cap, claimed that Base had been sending all its sequencer fees to Coinbase since launch. He added that while it was unclear whether Coinbase sold the funds, the fact that they were not used on Base or kept on-chain raised concerns. According to Santisa, the lack of transparency made it reasonable to assume the funds were sold.
This narrative just isn’t true — here are the facts:
Base is and will continue growing Ethereum. We’re investing all of our earnings and resources into doing this and we have gone from zero to millions of new people onchain in 1.5 years.
Base and Coinbase have and continue to… pic.twitter.com/VR3BAAUhIc
— Kabir | kabir.base.eth (@kabir_base) February 9, 2025
An analysis by Sonic Assistant on X suggested that Base operates with a 90% profit margin on its L2 sequencer, generating over $100 million in ETH. On-chain data shows that all sequencer-earned ETH was moved from Base to Ethereum and then to Coinbase’s exchange. However, Coinbase’s financial reports indicate that only 772 ETH, worth around $2 million, has been added to its balance sheet since Base’s launch in August 2023.
There is a ~90% profit ($100m+) margin on @base L2 sequencer and 100% of that $ETH was sent from Base > Ethereum > Coinbase exchange.
That is a fact.
See for yourself here:https://t.co/P7X5p9zvx7
Base was launched August 9th 2023.
The quarterly report filed prior ( Q2 2023… pic.twitter.com/DamcgX03aB
— The Assistant (@SonicAssistant) February 10, 2025
Additionally, a recent transaction of 240.35 ETH to Coinbase has further fueled speculation about undisclosed fund movements. Meanwhile, Andre Cronje, co-founder of Sonic Labs, had previously criticized the Layer 2 model, arguing that networks with centralized sequencers generate significant fees while contributing only a small fraction to Ethereum’s security and data availability.
Kabir responded by stating that Base and Coinbase collectively hold over 100,000 ETH, valued at more than $300 million, making it the largest Ethereum reserve among publicly traded companies and Layer 2 organizations. He explained that Base relies on off-chain custody for security and auditing purposes, which is why assets are transferred to Coinbase. He said:
“Base and Coinbase have and continue to hold ETH and publicly disclose our long term holdings (100K ETH+, $300M+). AFAIK this is the largest ETH holding of any public company and way bigger than any other L2 DAO or Labs company today. Base currently uses offchain custody for security and audit reasons (that’s why funds move to Coinbase).”
He further clarified that Base prioritizes earning and spending in Ethereum, covering Layer 1 expenses and issuing grants in ETH. While some off-chain expenses, such as salaries, are paid in USD, he noted that the ETH converted for this purpose is minimal compared to their total holdings and the broader Ethereum market. Kabir reaffirmed Base’s commitment to long-term expansion, dismissing speculation as unproductive.
Temitope is a writer with more than four years of experience writing across various niches. He has a special interest in the fintech and blockchain spaces and enjoy writing articles in those areas. He holds bachelor's and master's degrees in linguistics. When not writing, he trades forex and plays video games.
