Coinbase Launches $5 Million Loans With No Repayment Schedule

In what appears to be legitimate financial innovation, cryptocurrency exchange Coinbase has rolled out a lending service in the United Kingdom that allows users to borrow up to $5 million in USDC (a stablecoin pegged to the US dollar) against their cryptocurrency holdings.

The Terms That Should Raise Eyebrows:

• No fixed repayment schedule — Borrowers can repay partially or in full "at any time"
• Variable interest rates — Rates adjust continuously based on market activity
• "Within seconds" approval — No credit check, no income verification
• Collateral: Bitcoin, Ethereum, and cbETH only

The Catch That Could Swallow You Whole:

This is not a loan in the traditional sense—it's a smart contract liquidation trap. Here's how it works:

1. You deposit $100,000 worth of Bitcoin as collateral
2. You borrow $50,000 in USDC
3. If Bitcoin's price drops by 30%, your collateral is now worth $70,000
4. Your loan-to-value ratio triggers a liquidation event
5. The smart contract automatically sells your Bitcoin—often at the worst possible market price
6. You lose your crypto AND still owe fees

Coinbase claims users are notified "ahead of such events through email and text alerts," but in volatile crypto markets, a 30% drop can happen in minutes

Total loan originations through Coinbase's US product have surpassed $2.17 billion as of April 2026. That's $2.17 billion in loans where borrowers put up more collateral than they received, with no fixed terms, no interest rate caps, and the constant threat of automatic liquidation.