Coinbase CEO Says New Disclosure Doesn’t Mean Company Is at Risk of Bankruptcy

May 11 (Reuters) – Coinbase’s chief executive said a disclosure in its latest quarterly filing did not indicate the cryptocurrency exchange operator was at risk of bankruptcy and had been required to meet a requirement of the United States Securities and Exchange Commission (SEC).

Brian Armstrong made his comments after Coinbase said on Tuesday 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 general unsecured creditors.

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

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Coinbase, whose shares plunged 15% in extended trading on Tuesday, also missed first-quarter earnings estimates and posted a loss as turmoil in global markets dampened investor appetite for hot assets. highest risk, including cryptocurrencies. Read more

Coinbase, the largest US cryptocurrency exchange, 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 significant impact on its financial situation.

“We have no risk of bankruptcy,” Armstrong wrote on Twitter after the disclosure, which he said was made to meet SEC requirements.

He said it was unlikely that “a court would decide to treat customer assets as part of the business in bankruptcy proceedings”, although he said it was always possible.

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

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

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Reporting by Akriti Sharma in Bengaluru; Editing by Edmund Blair

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