- Immediately after the declaration of the loss, there was a flurry of discussion on Twitter.
- The team is now working on revising their agreements so that retail users are protected.
Social media has been buzzing over a statement that implies Coinbase consumers are not insured in the event of the firm going bankrupt. The CEO of Coinbase, Brian Armstrong has said that money is secure “as they’ve always been.”
CEO Remains Optimistic
Coinbase announced a $430 million loss in the first quarter of the fiscal year 2022 in its quarterly report. In addition, the corporation said that the exchange’s user base shrank from 11.4 million to 9.2 million, indicating a decline in activity.
Immediately after the declaration of the loss, there was a flurry of discussion on Twitter about whether the crypto assets the company held on behalf of its clients should be subject to bankruptcy procedures, citing words from the statement. According to the statement, users will be classified as “unsecured creditors,” as well. This sparked suspicion that if Coinbase went bankrupt, the currencies it held would be the corporation’s property.
Armstrong’s reaction to these worries shows there is “no risk of bankruptcy”, and client monies are secure. In the event of a bankruptcy, a judge would “unlikely” opt to include consumer assets in the proceedings, even though doing so would hurt consumers, according to him.
Strict legal provisions protect customers’ prime and custodial accounts in terms of service. Furthermore, even in bankruptcy, the assets are safeguarded by these provisions. He also said that his team is now working on revising their agreements so that retail users are protected.
However, despite the recent losses, Coinbase’s CEO remains optimistic. Coinbase has weathered several crypto cycles, including some of the most severe drawdowns, making them “well suited to operate” in these stormy conditions, according to Armstrong’s remarks.