The panic in the cryptocurrency market is growing, and after a sharp decline in bitcoin and other virtual currencies, one of the largest cryptocurrencies, Coinbase, is also facing a serious problem. Its CEO, Brian Armstrong, talks about the bankruptcy scenario for the first time since the company was founded. Investors will not enjoy the prospects.
The stock market, which has raised more than $ 250 billion in the recent past, according to Business Insider she also mentioned the risk factor in the financial report for the first time. He specifically mentions that if a company is to go bankrupt in the future, investors may not have access to money.
“As crypto assets held in custody can be considered bankrupt assets, in the event of bankruptcy, crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be considered our general unsecured creditors,” he said. in the management of the company. “
This means that if a company ever becomes financially insolvent, investors’ assets can be considered the company’s assets and creditors can also reach for these funds.
There is no reason to panic
The mention of the company’s bankruptcy caused a stir among customers, which led to mass withdrawals of deposited assets. Armstrong apologized on the social media for the wrong way of communicating and assured investors that their assets were safe and that the company was not in danger of going bankrupt. According to Armstrong, the US Securities and Exchange Commission (SEC) imposed an obligation to report risks.
1/ There is some noise about a disclosure we made in our 10Q today about how we hold crypto assets. Tl;dr: Your funds are safe at Coinbase, just as they’ve always been.
— Brian Armstrong – barmstrong.eth (@brian_armstrong) May 11, 2022
However, the resulting panic among Coinbase customers is not surprising. The company has never talked about the risk factor so far, moreover, the warning comes at a time of a sharp decline in cryptocurrencies, when some assets have lost up to 90% of their value.
The company’s shares, which are at historical lows, also react negatively to the uncertainty in the crypto sector. They have fallen by more than 75% since the beginning of the year, compared to November 2021, when they recorded their peak, the decline is up to 85%, informs CNN.
YouTube / USA Today – Screenshot / Coinbase (editorial edit)
In addition, pressure on financial markets continues – Coinbase shares have fallen by more than half in the past week alone, and the current market bleeding does not suggest that the situation should improve. The well-known cryptobourse on the financial markets entered in April last year and the value of the company at that time it skyrocketed to $ 100 billion later. Currently, the markets value it at 15 billion.
The cryptobours also made itself known through a viral advertisement on the Super Bowle and a QR code that hovered on the black screen for 60 seconds. The commercial received a strong response and, according to the company itself, it was their own idea, which led to a significant improvement in brand awareness.
Later, however, Coinbase faced accusations that they had copied the idea from another agency, which after the subsequent media coverage the company partially acknowledged.