New Coinbase Disclosure Doesn’t Mean Company Faces Bankruptcy Risk, Says CEO

May 11 (Reuters) – The chief executive of Coinbase (COIN.O) said a disclosure in its latest quarterly filing did not indicate that the largest U.S. cryptocurrency exchange was facing bankruptcy risk, and that it was made to meet a regulatory requirement.

Brian Armstrong’s comments on Tuesday evening came after the company said that in the event of bankruptcy, crypto assets held by the exchange could be considered property of the bankruptcy proceedings and customers could be treated as unsecured creditors. guaranteed.

An unsecured creditor would be one of the last to be paid in bankruptcy and last in line for claims.

Coinbase said its disclosure could lead customers to believe that keeping their coins on the platform would be considered “more risky,” which in turn would have a big impact on its financial situation.

“We have no risk of bankruptcy”, Armstrong mentioned on Twitter after the disclosure. He said it was unlikely that “a court would decide to treat customer assets as part of the business in a bankruptcy proceeding”, although it could always.

Coinbase would take additional steps to ensure it provided protection for its retail customers, Armstrong said.

“We should have updated our retail terms earlier, and we did not proactively communicate when this risk disclosure was added,” he said. “My most sincere apologies.”

Coinbase shares plunged 17.4% before the bell on Wednesday after slipping 15% in extended trading when the company’s quarterly earnings beat market expectations and suffered a loss amid turmoil in global markets dampened investor appetite for digital currencies. Read more

Its shares have fallen 71% so far this year, reflecting falling prices for major cryptocurrencies like bitcoin.

Reporting by Akriti Sharma and Niket Nishant in Bengaluru; Editing by Edmund Blair and Arun Koyyur

Our standards: The Thomson Reuters Trust Principles.