Coinbase CEO and co-founder Brian Armstrong arranged to quell the fear in a Twitter thread
Coinbase posted significant losses for Q1 that spooked investors (photo: AFP/Getty Images)
There have also been major price shocks due to Elon Musk’s recent abrupt decision to stop people from using Bitcoin to pay for Tesla cars, as well as China’s crypto crackdown.
The anxiety only increased after key crypto exchange Coinbase issued a warning about the impact of bankruptcy in its first-quarter (Q1) earnings report.
So what did Coinbase say — and why did it surprise investors?
Here’s what you need to know.
What is Coinbase?
Founded in 2012 by current CEOs Brian Armstrong and Fred Ehrsam, Coinbase is a cryptocurrency exchange platform.
It gives people the opportunity to buy, store and sell most major cryptocurrencies and provides real-time information about their value.
The platform also allows people to trade non-fungible tokens (NFTs) and run debit cards for crypto users.
According to its website, the company has over 98 million verified users in more than 100 countries who trade around $310 billion in cryptocurrencies every quarter.
What did Coinbase say about bankruptcy?
Coinbase added impetus to the anxiety of crypto investors this week after posting significant losses and talking about bankruptcy.
The platform’s shares have halved this week after Coinbase posted a net loss of $430 million (£350 million) in Q1 results, according to the AP news agency.
This loss was caused by a drop in revenue generated by cryptocurrency transaction fees, as well as a total drop in users by almost a fifth (19%).
As of Wednesday (May 11), its share price is $53.72.
When it was listed 13 months ago, the price was at $429 per share.
In a letter to its shareholders, Coinbase said it does not expect its losses to be part of a long-term trend.
Further concern was generated by a statement in its Q1 earnings report, warning customers of what could happen in the event of Coinbase bankruptcy.
It read: “Crypto-assets that we are holding on behalf of our clients may be subject to bankruptcy proceedings.”
In this case, the exchange said its users could lose all the cryptocurrency stored in their accounts as they would become “unsecured creditors”.
This means that they will find a way to dissect the people owed by the company if the company manages itself.
Their funds will also become inaccessible.
What does Coinbase CEO Brian Armstrong say?
This statement was retracted by Coinbase co-founder and CEO Brian Armstrong in a Twitter thread posted on Wednesday (May 11).
He sought to reassure users by stressing that “your money is safe at Coinbase.”
Armstrong said the company was “not at risk of bankruptcy” and that the statement was only included due to new requests from the US Securities and Exchange Commission (SEC), the regulator of Wall Street.
“We have included a new risk factor based on an SEC request called SAB 121, which is a new disclosure requirement required for public companies holding crypto assets,” he said. electronically to third parties.
Armstrong apologized to users and emphasized that Coinbase’s crypto wallet will give users more power over their assets.
https://www.nationalworld.com/lifestyle/money/will-coinbase-go-bankrupt-company-warns-customers-could-lose-crypto-shares-plunge-3692146 Coinbase Losses and Bankruptcy See Stocks Plunge