You are here: Home » International » News » Companies
Business Standard

Coinbase new disclosure does not mean crypto firm risks bankruptcy: CEO

Coinbase would take further steps to ensure it offered protection for its retail customers, says Brian Armstrong.

crypto trading | cryptocurrency | Bankruptcy laws


Coinbase CEO
Coinbase CEO (Photo: Bloomberg)

Coinbase chief executive said a disclosure in its latest quarterly filing did not indicate the largest U.S. exchange faced a bankruptcy risk, and it had been made to meet a regulatory requirement.

Brian Armstrong's comments on late Tuesday came after the company said 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.

An unsecured creditor would be one of the last to be paid in any bankruptcy and last in line for claims. Coinbase said its disclosure might lead customers to believe that keeping their coins on the platform would be considered "more risky", which would in turn materially impact its financial position.

"We have no risk of bankruptcy," Armstrong said on Twitter after the disclosure. He said it was unlikely that "a court would decide to consider customer assets as part of the company in bankruptcy proceedings" although it was still possible.

Coinbase would take further steps to ensure it offered protection for its retail customers, Armstrong said. "We should have updated our retail terms sooner, and we didn't communicate proactively when this risk disclosure was added," he said.

"My deepest apologies." Coinbase shares plunged 17.4% before the bell on Wednesday after sliding 15% in extended trading when the company's quarterly revenue missed market expectations and it swung to a loss as turmoil in global markets curbed investor appetite for digital currencies.

Its shares have plummeted 71% so far this year, mirroring the drop in prices of major cryptocurrencies like bitcoin.

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

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, May 11 2022. 16:19 IST