A statement implying Coinbase customers are not covered in the case of the company’s bankruptcy has gone viral on social media. Brian Armstrong, the CEO of Coinbase, stated that money is safe “as it has always been.”
In its quarterly report, Coinbase revealed a $430 million loss in the first quarter of fiscal year 2022. Furthermore, the company stated that the exchange’s user base has decreased from 11.4 million to 9.2 million, indicating a drop in activity.
There was a flurry of discussion on Twitter shortly after the loss was announced, using phrases from the announcement, over whether the crypto assets the company held on behalf of its clients should be subject to bankruptcy procedures. Users will also be classified as “unsecured creditors,” according to the statement. This raised concerns that if Coinbase went bankrupt, the currencies it held would become the property of the company.
Armstrong’s response to these concerns demonstrates that there is “no chance of bankruptcy” and that customer funds are safe. In the event of bankruptcy, a court would “unlikely” incorporate consumer assets in the proceedings, despite the fact that doing so would harm consumers, he claims.
In terms of service, customers’ prime and custodial accounts are protected by strict legal regulations. Furthermore, these rules protect assets even in the event of bankruptcy. He also stated that his team is already amending their agreements to protect retail users.
Despite the recent losses, though, Coinbase’s CEO is upbeat. According to Armstrong, Coinbase has weathered numerous crypto cycles, including some of the most severe drawdowns, making them “ideally adapted to function” in current stormy times.
Read more: Coinbase Q1 earnings disappoints
