I think that they may be, due to running on a fractional reserve system. If everyone withdrew their BTC and fiat at once, I doubt there will be enough equity to cover that on Coinbase's end.
I think it's almost a guarantee that Coinbase is insolvent in terms of their fiat holdings. I can't even blame them for that if this actually turns out to be the reality. The market has increased so much, that no single exchange can actually allow the major part of their customers to withdraw serious amounts of fiat. I would like them to be open about it, but on the other hand, I also understand that they can't openly admit being insolvent. Interesting fact is that Coinbase is backed by very wealthy investors/share holders, where in case they need it, they wouldn't have any problems raising a few hundred million in capital to strengthen their financial position. I hope for the sake of their customers they will do something, because this once again shows that incompetence is still a major factor in this ecosystem.