Crypto exchange Coinbase denies rumors of bankruptcy
The team assured customers that there were no changes to the platform’s operation
22.07.2022 - 14:30
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What’s new? Representatives of cryptocurrency exchange Coinbase have denied rumors of its possible bankruptcy. According to a blog post, crypto companies facing a liquidity crisis have been overly burdened with short-term liabilities that do not match long-term illiquid assets. Coinbase stressed that the platform had not engaged in these types of risky lending practices.
What else does the blog say? According to Coinbase representatives, problems with the solvency of the Celsius lending platform, the hedge fund Three Arrows Capital (3AC), the crypto broker Voyager, and other similar companies stemmed from insufficient risk controls. The exchange team stressed that what happened was predictable and that the platforms were actually reliant on credits, not cryptocurrency.
According to the statement, risk management comes first at Coinbase. The exchange team assured that customer assets are held at a 1:1 ratio. In addition, any institutional lending activity at Coinbase is discretionary and backed by collateral.
Coinbase previously dropped out of the top 10 digital asset exchanges by trading volume, moving up to 14th place, it had been ranked 4th since 2021. The exchange reduced its headcount by 18 % in June. According to Coinbase CEO Brian Armstrong, the team has grown rapidly over the past two years, which has negatively affected the company’s operation efficiency. He added that Coinbase would need some time to adapt to the new scale before the next growth.
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