CoinDesk’s Consensus 2022, the must-attend crypto and blockchain event of the year, will be held from June 9 to 12 in Austin, Texas.
The founder and CEO of Coinbase, Brian Armstrong, tweeted on Wednesday that the new language in the business’s most recent 10-Q filing is only a new requirement of the Securities and Exchange Commission, and that the company is not in danger of going bankrupt.
“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,” according to Armstrong.
: “Because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors,” Coinbase wrote in its most recent 10-Q filing with the SEC.
According to the business, customers may think that keeping their currencies on the platform is “more hazardous,” which would have a significant impact on Coinbase’s financial state.
A general unsecured creditor stands to lose the most in the case of bankruptcy, since their claims are paid out last.
Armstrong stated in a tweet, “We believe our Prime and Custody customers have robust legal protections in their terms of service that protect their assets in the event of a black swan event like as this.” Since these legal protections for crypto assets have not yet been demonstrated in court, this disclosure seems sense.
Caitlin Long, founder and CEO of digital asset bank Custodia Bank (formerly known as Avanti), said in a tweet that this is not a new problem and is fundamental to the regulatory framework of most custodians.
“Wyoming addressed this by creating a new customer-friendly structure designed to respect segregation of customer assets in bankruptcy: the Wyoming special-purpose depository institution,” she noted.
The share price of Coinbase is at $72, down 70 percent year-to-date.
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