Coinbase Faces No Risks of Bankruptcy Despite Market Crash and Disappointing Q1 Results, Says CEO

Coinbase CEO Brian Armstrong has reassured customers that there is no imminent bankruptcy risk following recent events in crypto markets.

Coinbase Reports Lower Q1 Earnings Than Expected

Coinbase shares (COIN), as reported earlier, fell 16% in after-hours trades on Tuesday following a poorer-than-expected Q1 earnings reports.

Between January and March, the exchange saw a 44% decline which resulted in a $430 million net loss. Q1 saw revenue drop by 35% from $1.5 billion to $1.16billion.

Coinbase derived more than 85% its revenue from cryptocurrency transactions. The company stated that the weak Q1 earnings report was due to the fall in crypto markets and increased volatility since the beginning of the year.

Coinbase Files New Disclosure

The leading US crypto exchange, Bitcoin.com, mentioned in its Q1 report a new 10-Q disclosure filing with Securities and Exchange Commission (SEC).

Customers could be considered “general unsecured creditors” according to the disclosure. This means that if Coinbase goes bankrupt, they might lose all cryptocurrencies on the exchange.

Coinbase customers were not happy about the new filing. Their funds would be inaccessible if there was bankruptcy. Users were also panicked by the black swap in the market and Q1 losses of the company.

rmstrong We Are Not at Risk of Bankruptcy

Armstrong explained the new filing to customers via Twitter on Wednesday, while also reassuring them their funds were safe with the exchange, despite uncertain market conditions.

1/ We made a disclosure in our 10Q today regarding how we hold crypto assets. Tl;dr – Your funds are safe at Coinbase just like they have always been.

— Brian Armstrong – barmstrong.eth (@brian_armstrong) May 11, 2022

According to Coinbase’s boss, there was no chance of the company going bankrupt and the 10-Q filing was made in accordance with SEC requirements.

Armstrong stated that while there is no risk of bankruptcy, he added that a new risk factor was based on an SEC requirement, SAB 121. This disclosure is required for public companies holding crypto assets for third-parties.

He also noted that disclosure makes sense because legal protections for cryptocurrency are still being tested in court.

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Marla Brooks

Marla Brooks – Financial Analysis My name is Marla Brooks, and I am the mainstream behind the”observednews.com”  for the powerful and most delicate insights into the latest activities in the financial analysis category. I started my journey as an independent financial consultant. I had approximately nine years of experience in this field. I am free soul so; my passion for exploring the world has taken me to the nations across the globe and given me the chance to report for a portion of the best news associations. Currently, I am a full-time editor as experienced in finance and started to use my abilities.

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