In a recent filing with the SEC, Coinbase – one of the largest cryptocurrency exchanges in the world – has warned its customers that in the event of bankruptcy, the judge will also deposited funds from users In short, they would be subject to bankruptcy proceedings just like any other company assets.
The reason? Unlike money deposited in the bank, it would not be protected. If a bank goes bankrupt, account holders are guaranteed up to a maximum of EUR 100 thousand. The customers of an exchange do not have such protection, they are regarded as normal unsecured creditors.
Meanwhile, the CEO of Coinbase, Brian Armstrong, ran for cover in an effort to allay the panic of the exchange’s customers. But perhaps the damage is now done: Coinbase has collapsed in the stock market, losing 80% of its value from April 2021.
“There’s been a lot of hype around a statement we made in our 10-Q,” Armstrong said. “Your money is safe with Coinbase, and it always has been. we are not bankruptcy riskThe SEC suggested in some recently presented guidelines that companies holding cryptocurrencies should list them on their balance sheets as: liability
Coinbase also stated that the funds deposited by its customers, including cryptocurrencies and fiat currencies, totaled $256 billion as of March 31. Armstrong also promised that Binance will revise its terms of service in the near future to specify that the company will continue to protect customers’ funds even in the event of a catastrophic and unpredictable event (“a black swan,” as they say in the industry parlance. ).
“Something is wrong,” wrote Alex Johnson, author of the Fintech Takes newsletter. “The decision to announce such a risk, to proclaim with full gusto the part that must be said in a whisper, and to do so in a moment of extreme market turbulence is very strange to say the least.”
Source: Lega Nerd
