Coinbase: $256 Billion Customer Assets Held in Wallets Can Be Used in Bankruptcy Proceedings
- Customers' crypto assets could be subject to bankruptcy proceedings
- Coinbase holds $256 billion in fiat currencies and cryptocurrencies on behalf of its customers
- Coinbase reported a quarterly loss of $430 million and a 19% drop in monthly users
- Coinbase CEO Brian Armstrong: "Your funds are safe at Coinbase, just as they’ve always been."
Coinbase's SEC filings for the first quarter state in the event of bankruptcy, the exchange can use crypto held in Coinbase's custodial wallets to pay off creditors. Owners of these wallets will also have no access to their funds in such an event.
Its bankruptcy disclosure states, "In the event of bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors." The filings also revealed that it holds $256 billion in fiat currencies and cryptocurrencies on behalf of its customers.
Coinbase Global's stock price has plummeted by about 80% from its all-time high after it reported a quarterly loss of $430 million and a 19% drop in monthly users and warned that total trading volume in the current quarter would be lower than in the first.
We have no risk of bankruptcy, however, we included a new risk factor based on an SEC requirement called SAB 121, which is a newly required disclosure for public companies that hold crypto assets for third parties.Brian Armstrong, Coinbase founder and CEO
Addressing concerns, Coinbase founder and CEO Brian Armstrong tweeted, "Your funds are safe at Coinbase, just as they’ve always been."