Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Coinbase warns customers they may lose crypto if company goes bankrupt

Coinbase warns customers they may lose crypto if company goes bankrupt

Following an epic share price decline of more than 27% this week, Coinbase issued a stark warning to customers: Your crypto is at risk if the exchange goes bankrupt.

According to Coinbase's official website, the company has more than 98 million verified users. It is the largest cryptocurrency exchange platform in the United States.

Coinbase's CEO Brian Armstrong attempted to calm shareholders in a series of tweets one of which read: 'Your funds are safe at Coinbase, just as they’ve always been.'

Despite Armstrong's claims, in an SEC filing the company referred to customers as 'unsecured creditors' in the event that Coinbase went belly-up.

Coinbase's CEO Brian Armstrong attempted to calm shareholders in a series of tweets one of which read: 'Your funds are safe at Coinbase, just as they’ve always been'

Coinbase shares tumbled 30% on Wall Street after a regulatory filing by the company revealed any crypto it held for customers 'could be subject to bankruptcy proceedings'


This means that customers' crypto assets would be considered the property of Coinbase by bankruptcy administrators.

The SEC filing, Staff Accounting Bulleting 121, requires crypto platforms to include customer's crypto holdings as assets and liabilities on balance sheets.

Armstrong wrote on Twitter that the company is at 'no risk of bankruptcy' despite the filing, which he said was made so that company would be in compliance with SEC regulations.

The new regulation is designed to protect crypto traders by giving them more in-depth knowledge about the company's contingency plan in the event of bankruptcy.

Armstrong began his Twitter speech shortly after his company's earnings report was made public









Armstrong tweeted: 'This disclosure makes sense in that these legal protections have not been tested in court for crypto assets specifically, and it is possible, however unlikely, that a court would decide to consider customer assets as part of the company in bankruptcy proceedings even if it harmed consumers.'

In the first quarter of 2022, Coinbase posted a loss of $430 million amid a 19% drop in monthly users. The company has said that trading is likely to keep going down in the second quarter.

Another contributing factor has been the falling price of bitcoin.

At the time of writing, the price of bitcoin is $28,434.70, down 8% from yesterday. This is the first time bitcoin has fallen below $30,000 since July 2021.

Coinbase's shares, which tend to track the health of the wider crypto sector, have lost around 85 per cent of their value since its debut on Wall Street in April last year.

In their May 2022 earnings report, the company bragged about their first Super Bowl ad which came with the slogan: 'Less talk, more Bitcoin.'

The report says the ad reached 40 million households and generated millions of social media mentions 'resulting in significant improvements in our brand awareness, favorability, and consideration, among our target audience.'

Alesia Haas, chief financial officer of Coinbase Global Inc.


The ad cost the company $14 million and the day after Super Bowl Sunday, the company's share price fell nearly 2%, according to Reuters.

Coinbase Chief Financial Officer Alesia Haas said on a call with analysts on May 11 that the company decided to spent money on 'diversifying product lines' rather than focus on profits, reports CNBC.

In January 2022, Brian Armstrong bought a five acre estate in Bel Air at a cost of $133 million.

According to Coinbase's earnings report, the company said that they hold $256 billion in crypto and fiat money on behalf of their customers.

When a user opens a Coinbase account and buys cryptocurrency, the company holds that crypto on the application's wallet. This 'means the individual is giving away at least part of their control over their own funds,' according to Fortune Magazine.

Following Russia's invasion of Ukraine in February, Coinbase announced in a statement that they had suspended the accounts of 25,000 Russian Coinbase wallets.

The statement accused those account holders of 'engaging in illicit activity, many of which we have identified through our own proactive investigations.'

Crypto exchanges do not have a federal protection such as the Federal Deposit Insurance Corporation that protects customers of traditional banks in the US.

In the first quarter of 2022, Coinbase posted a loss of $430 million amid a 19% drop in monthly users. The company has said that trading is likely to keep going down in the second quarter


The money that customers deposit at traditional banks is protected to the tune of $250,000, in the event that the bank in question goes bankrupt.

There is the option of personal cryptocurrency insurance for traders.

On Twitter, Armstrong issued an apology to shareholders for not being more open about the company's new SEC filing saying they 'didn't communicate proactively when the risk disclosure was added.'

AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
×