Tech

Coinbase: Customers Could Lose Their Cryptos In Bankruptcy, Panic Sets In

Coinbase, the American platform specializing in cryptocurrencies, has just unveiled declining financial results. However, this is not what caused the panic of his customers. Indeed, in a quarterly report provided to the American stock market policeman, Coinbase made it clear that users’ cryptos could be seized in the event of bankruptcy.

active risk coinbase
Credits: Flickr

While the price of Bitcoin has just fallen below the 30,000 dollar mark, a first for almost a year, Coinbase also finds itself in turmoil. The American platform specializing in cryptocurrencies has just published its financial results for the 1st quarter of 2022.

It’s not time to party, with net income fell to $1.17 billion from $1.6 billion last year at the same time. Same observation for the total volume of transactions, which fell to 309 billion against 335 billion. Unsurprisingly, the number of monthly active users also fell, from 11.4 million to 9.2 million.

As expected, the company justifies these poor figures by the fall in the price of many cryptocurrencies since the beginning of the year, Bitcoin and Ethereum in the lead. “These market conditions had a direct impact on our first quarter results. But we have approached these market conditions with foresight and preparation, and we remain more excited than ever about the future of cryptocurrencies.” she explained.

Also Read: NFT Market Crashes Due To Bitcoin But It’s Temporary

User cryptos seized in case of bankruptcy

She also specifies that it is only a bad pass, inherent in the cryptocurrency market and price fluctuation. However, it was not Coinbase’s sluggish performance that caused customer panic. Indeed, the platform recently filed a quarterly report with the SEC, the American stock market policeman. We learn in this document that the cryptocurrencies of users held by Coinbase “could be treated as assets subject to bankruptcy proceedings and customers could be treated as general unsecured creditors”.

In other words, creditors may view customer assets stored by Coinbase as company property. In the event of bankruptcy, these cryptocurrencies could therefore be seized for repay business debts. In an attempt to put out the nascent fire, Coinbase CEO Brian Armstrong assured that the platform was not at risk of bankruptcy. Nevertheless, he did not deny it, quite the contrary: “It is possible, though unlikely, that a court may decide to treat customer assets as part of the business in a bankruptcy proceeding”. That is what is said.

Source : BFM

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