Coinbase new disclosure does not mean firm faces bankruptcy risk, says CEO

Coinbase new disclosure does not mean firm faces bankruptcy risk, says CEO

The largest U.S. bitcoin exchange’s chief executive said disclosure in its most recent quarterly filing did not indicate the company was facing bankruptcy and was made to meet a regulatory need.

Brian Armstrong’s remarks come after the business indicated that in the event of bankruptcy, the exchange’s crypto assets might be considered bankruptcy property, and consumers could be classified as unsecured creditors.

READ:  Here’s everything the Federal Reserve is expected to do at its meeting this week

In any bankruptcy, an unsecured creditor would be the last to be paid and the last in line for claims.

Coinbase stated that this disclosure could induce users to assume that keeping their currencies on the platform is “more hazardous,” thus impacting the company’s financial condition.

After the news broke, Armstrong remarked on Twitter, “We have no risk of bankruptcy.” Although it was doubtful, he suggested that “a judge might decide to include consumer assets as part of the corporation in bankruptcy proceedings.”

READ:  Binance CEO praises 'pro-crypto' France as it pursues base there

Armstrong stated that Coinbase would take additional steps to ensure that its retail clients were protected.

“We could have updated our retail terms sooner, and when this risk disclosure was included, we didn’t communicate proactively,” he said. “I really apologize.”

Coinbase shares fell 17.4% before the bell on Wednesday, after falling 15% in extended trading, as the company’s quarterly revenue fell short of estimates and it swung to a loss as global market turbulence dampened investor appetite for digital currencies.

READ:  Samsung Elec sees component shortages persisting in H2, solid server chip demand

Its stock has dropped 71% this year, tracking the decline in the price of major cryptocurrencies like bitcoin.


Your email address will not be published.