““We have no risk of bankruptcy.””
This is from Brian Armstrong, CEO and co-founder of cryptocurrency exchange Coinbase COIN,
In a series of tweets on Tuesday afternoon, Armstrong addressed a recent Coinbase Document 10-Q Securities and Exchange Commission filing that used language detailing risk factors with retail investors’ crypto assets in the event Coinbase files for bankruptcy – to be clear, Armstrong reiterated that bankruptcy is not likely .
But if such a “black swan event,” as Armstrong called it, occurs, some retail investors on the exchange could lose their crypto if a court deems those assets part of the company in a proceeding. judiciary, he said.
“Because crypto assets held in custody may be considered the property of a bankrupt estate, in the event of bankruptcy, crypto assets held by us in custody on behalf of our clients could be subject to legal proceedings. bankruptcy and these customers could be treated as our general unsecured creditors,” Coinbase wrote in the SEC filing.
See Also: Mark Cuban Says “Crypto Is Going Through The Internet’s Lull”
Unlike crypto, stocks held by a brokerage registered as Charles Schwab
or Robin Hood
are legally separate from the assets of the brokerage, meaning they cannot be seized in bankruptcy proceedings, according to reports from The Wall Street Journal.
The news comes as prices for many cryptocurrencies, including bitcoin BTCUSD,
and ethereum ETHUSD,
are down more than 30% in the last three months, highlighting a downward trend for digital assets.
See also: Why This Financial Advisor Says Crypto Belongs To Your 401(k)
Armstrong’s tweets were posted the day before Coinbase Global Inc. shares crashed on Wednesday after the company’s earnings showed a slowdown in crypto trading.
“We tend to be able to pick up great talent during these times and others pivot, they get distracted, they get discouraged,” Armstrong said on Wednesday’s earnings call. “So we tend to do our best during a slow period.”
Coinbase shares were down 26.8% in Wednesday’s session. Coinbase stock is also down 75.1% in the past three months, compared to a 14% drop in the S&P 500 SPX index,
during the same period