Coinbase CEO explains “bombshell” customer funds declaration

 Brian Armstrong, Coinbase CEO has clearly stated that the U.S. Securities and Exchange Commission (SEC) wanted a new release of information in the firm’s 10-Q filing, stating that customers might be considered as the company’s general unprotected creditors in the event of bankruptcy. The report triggered mixed reactions as well as attracted heated discussions in the crypto world. This led to the emergence of a quickly circulating tweet cautioning Bitcoiners. The tweet was trying to persuade Bitcoiners to withdraw their assets from exchanges. 

Armstrong took it upon himself to try and convince customers that their assets are and will continue to be safe. This was due to the fear that would have undoubtedly plagued the minds of customers due to the confusing report. Additionally, he neutralized the fear by saying that the firm’s institutional customers are protected by “strong legal safeguards” in their terms of service. Recently, Coinbase took a step ahead to upgrade its terms of service for retail customers to provide the same degree of security.

 The Coinbase CEO however continues to add that if bankruptcy filings are initiated, a court may perceive user assets to be part of the firm. This move could greatly cause consumers to suffer.

Coinbase free from bankruptcy

He, however, says there is no cause for alarm as such a situation is impossible since Coinbase has no risk of bankruptcy. Simultaneously, he realizes that the company ought to have upgraded its Terms of Service for retail customers way earlier. For America’s largest crypto, this was a “good reality check.”

Coinbase’s stock has taken a beating this year, dropping by over 70%. They are set to decline another 15.67 percent to a new low of $61.55 when the market recovers.

The volume of trading slumped by 44% in Q4 compared to the same period in 2021. It earned $1.17 billion, far less than the $1.5 billion projected by forecasters.