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Following a social media firestorm about customers’ funds due to impending bankruptcy, Coinbase CEO Brian Armstrong has cleared the air.
Coinbase CEO and co-founder Brian Armstrong has moved to assuage investors that their funds are safe amid bankruptcy protection fears. Armstrong’s gesture comes after its recent Q1 2022 report. In the quarterly report, Coinbase reported its first loss of $430 million, sparking suggestions that user funds were at risk in the case of bankruptcy. This suggestion set off alarm bells and gained traction on social media, prompting Armstrong to step in and quell the assumptions.
The concerns over bankruptcy protection were drawn directly from lines in Coinbase’s disclosure which hinted at impending doom. Furthermore, the disclosure also seemed to suggest that if Coinbase collapses, all user coins held would become company property.
Coinbase CEO Offers Detailed Explanation on Safety of User Funds
Taking to Twitter, the Coinbase chief executive issued a thread of statements saying funds are safe “as they’ve always been.” In addition, Armstrong also directly addressed the bankruptcy assumptions saying:
“We have no risk of bankruptcy, however we included a new risk factor based on an SEC requirement called SAB 121, which is a newly required disclosure for public companies that hold crypto assets for third parties”
Furthermore, the Coinbase co-founder and CEO followed this statement with another tweet.
“We believe our Prime and Custody customers have strong legal protections in their terms of service that protect their assets, even in a black swan event like this,” wrote he.
Expounding on the legal provisions available to the aforementioned class of customers for the protection of their assets, Armstrong stated:
“For our retail customers, we’re taking further steps to update our user terms such that we offer the same protections to those customers in a black swan event. We should have had these in place previously, so let me apologize for that.”
The rest of the CEO’s thread breaks down company services available to customers, which enhance asset protection.
In its report for the first quarter, Coinbase also reported a drop in the number of transacting users from 11.4 million to 9.2 million.
Coinbase Looks Ahead with Optimism
In spite of the unsavory sentiments brought about as a result of Coinbase’s loss report, the crypto exchange remains bullish. According to Armstrong, Coinbase can draw on a wealth of experience to cope with unpleasant phases. The CEO suggested that the crypto exchange has already survived several crypto cycles and can weather most storms.
Coinbase is currently looking toward other opportunities in the crypto space, such as product development. Some other new areas of focus for the crypto exchange include the beta launch of Coinbase NFT. In addition, it also extends to the adoption of Coinbase Wallet.
For the quarter ended March 31st, Coinbase also added new assets for custody (47 in number) and trading (27 in number). This brought the total number of assets for custody and trading to 212 and 166 respectively at the end of the quarter.