Coinbase CEO Brian Armstrong Says New Disclosure Doesn’t Mean Company Faces Risk of Bankruptcy

The CEO of Coinbase claimed that a disclosure in its latest quarterly filing did not indicate the cryptocurrency the exchange trader faced a risk of bankruptcy and was done to meet a requirement of the United States Securities and Exchange Commission (SEC).

Brian Armstrong released his comments after Coinbase said Tuesday that, in the event of bankruptcy, cryptocurrencies held by the exchange could be considered bankruptcy property and customers could be treated as general unsecured creditors.

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

Coinbase, whose shares plunged 15% in extended trading on Tuesday, also missed its first quarter revenue estimates and posted a loss as turmoil in global markets curbed investor appetite for higher-risk assets. , including cryptocurrencies.

Coinbase, the largest cryptocurrency exchange in the US, said its disclosure could lead customers to believe that keeping their coins on the platform would be considered “riskier,” which in turn would have a substantial impact on its position. financial.

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“We have no risk of bankruptcy,” Armstrong tweeted after the disclosure, which he believes was made to meet SEC requirements.

He said it was unlikely that “a court would decide to consider clients’ assets as part of the company in a bankruptcy proceeding,” although he said it was still possible.

He said Coinbase will take further steps to ensure it offers protection to its retail clients.

“We should have updated our retail terms sooner and did not proactively communicate when this risk disclosure was added,” Armstrong said. “My deepest apologies.”

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