Coinbase Confirms "No Financing Exposure" to Bankrupt Crypto Firms Celsius, Voyager, Three Arrows Capital
Crypto exchange Coinbase has confirmed that the company “had no financing exposure” to bankrupt firms, including Celsius Network, Voyager Digital, and Three Arrows Capital (3AC). “The issues here were foreseeable and actually credit-specific, not crypto-specific in nature,” Coinbase stressed. Coinbase: ‘We Have Not Engaged in These Types of Risky Lending Practices’
The Nasdaq-listed cryptocurrency exchange Coinbase clarified its approach to cryptocurrency financing in a blog post on Wednesday. The post is authored by Brett Tejpaul, head of Coinbase Institutional, Matt Boyd, head of Prime Finance, and Caroline Tarnok, head of Credit and Market Risk.
“Solvency concerns surrounding entities like Celsius, Three Arrows Capital (3AC), Voyager, and other similar counterparties were a reflection of insufficient risk controls, and reports of additional struggling firms are fast becoming stories of bankruptcy, restructuring, and failure,” the Coinbase executives detailed, adding: Notably, the issues here were foreseeable and actually credit-specific, not crypto-specific in nature.
“Many of these firms were overleveraged with short term liabilities mismatched against longer duration illiquid assets,” they noted.
“We believe these market participants were caught up in the frenzy of a crypto bull market and forgot the basics of risk management. Unhedged bets, huge investments in the Terra ecosystem, and massive leverage provided to and deployed by 3AC meant that risk was too high and too concentrated,” the executives explained, emphasizing: Coinbase had no financing exposure to the groups above. We have not engaged in these types of risky lending practices.
In September last year, Coinbase abandoned the launch of its Lend program after the U.S. Securities and Exchange Commission (SEC) threatened to sue the company if it proceeded with the launch.
The Coinbase executives further noted that their company is “focused on building our financing business with prudence and deliberate focus on the client.”
Crypto lenders Celsius Network and Voyager Digital filed for Chapter 11 bankruptcy earlier this month after crypto hedge fund Three Arrows Capital filed for Chapter 15 bankruptcy.
Coinbase also disclosed in the blog post: While Coinbase does not have counterparty exposure to the companies listed above, Coinbase’s venture program did make non-material investments in Terraform Labs.
The Singapore-based Terraform Labs is the company behind the collapsed cryptocurrency terra (LUNA) and stablecoin terrausd (UST). The firm is now being investigated by South Korean authorities and the U.S. Securities and Exchange Commission (SEC). Tags in this story 3AC, bankrupt crypto firms, bankrupt crypto hedge fund, bankrupt crypto lenders, Celsius Network, Coinbase, coinbase crypto exchange, no financial exposure, Three Arrows Capital, Voyager Digital
What do you think about Coinbase’s explanation? Let us know in the comments section below. Kevin Helms
A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography. Thailand’s Oldest Lender Delays Bitkub Exchange Acquisition Amid Tighter Crypto Rules EXCHANGES | 4 hours ago Crypto Exchange Zipmex Halts Withdrawals Citing Market Conditions, Financial Difficulties of Business Partners EXCHANGES | 2 days ago
Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleRich Dad Poor Dad’s Robert Kiyosaki Warns Inflation May Lead to Greater Depression Next articleThailand’s Oldest Lender Delays Bitkub Exchange Acquisition Amid Tighter Crypto Rules Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItRipple CEO: SEC Lawsuit Over XRP "Has Gone Exceedingly Well"
The CEO of Ripple Labs says that the lawsuit brought by the U.S. Securities and Exchange Commission (SEC) against him and his company over XRP "has gone exceedingly well." He stressed: "This case is important, not just for Ripple, it’s ... read more.SEC Risks Violating Admin Procedure Act by Rejecting Spot Bitcoin ETFs, Says Grayscale UAE Airliner Emirates to Launch NFTs and Experiences in the Metaverse Interest in Real Estate Investments in Spain Grew 400%, With Some Using Crypto and Stocks as Payment Method Microbt Reveals Latest Bitcoin Mining Rigs — Machines Produce up to 126 TH/s With Custom 5nm Chip Design