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Coinbase CEO Brian Armstrong describes crypto bankruptcy risks if the Black Swan event rocks crypto markets

Coinbase CEO Brian Armstrong reassures investors that the crypto exchange does not face bankruptcy risks amid concerns over the company’s recent 10-Q filing.
The 10-Q form Coinbase filed with the Securities Exchange Commission (SEC) on Tuesday includes a bankruptcy risk factor disclosure, stating that in the event of a business failure, the crypto assets the exchange holds for its users will be subject to change of insolvency proceedings.

“Because crypto-assets in custody may be considered property of an insolvency estate, in the event of bankruptcy, the crypto-assets we hold in custody on behalf of our clients could be the subject of insolvency proceedings and such clients could be treated as our general unsecured creditors.

This may result in clients finding our custodial services more risky and less attractive, and any failure to grow our client base, discontinue or reduce the use of our platform and products by existing clients could, as a result, adversely affect our business, results of operations and our finances are affecting state.”

In response to concerns raised by the contents of the 10-Q form, Armstrong tells his Twitter followers that Coinbase is not on the brink of financial collapse and the disclosure has been added in accordance with a new SEC requirement.

our recommendation Coinbase CEO Brian Armstrong describes crypto bankruptcy risks if the Black Swan event rocks crypto markets, Crypto Trading News

“There is some noise about a disclosure we made in our 10Q today about how we hold crypto assets. Tl; dr [too long; didn’t read]: Your funds are safe with Coinbase, just as they always have been.

We do not have bankruptcy risk, but we have included a new risk factor based on an SEC requirement called SAB 121, which is a newly mandated disclosure for public companies that hold crypto assets for third parties.”

Armstrong also explains the importance of disclosure of the bankruptcy risk factor.

“This disclosure makes sense in that these legal protections have not been tested in court specifically for crypto assets and it is possible, but unlikely, that a court would decide to consider client assets to be part of the business in a bankruptcy proceeding, even if it would harm consumers .”
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Source: Crypto News Deutsch

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