I have no idea. It's just this phrase on their website "Coinbase will execute an instant sell in the background." could be false if they never bought any bitcoins to begin with. But I admit this is wild speculation based on nothing other than my opinion that it would be a sound financial decision for them just avoid bitcoin for those money transfers.

Right. The specifics of their participation in each transaction are very interesting to me, but I think it is worth being careful when talking about it. Reading your comment a second time, your phrasing is better than I had taken it to be when I wrote my first comment.

I looked at their support FAQ for a minute, I didn't find any clear statements about who participates in any given transaction.

I think they refer to an "instant sell" on their new Coinbase Exchange

https://exchange.coinbase.com/

i dont think you understand how transmitting money actually occurs if you think that this could occur in the same time span as a bitcoin transaction. Plus it would require coinbase to hold a lot of foreign currency reserves to be able to transfer without bitcoin.