Coinbase warns its users that it may keep their digital assets in the event of bankruptcy

Coinbase warns its users that it may keep their digital assets in the event of bankruptcy

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Answer Coinbase warns its users that it may keep their digital assets in the event of bankruptcy

The sharp and sudden drop in “Coinbase Global” stock, worth $72.99, has become a major concern for existing users of the platform; This is because cryptocurrency exchange Coinbase has warned its users that in the event of bankruptcy, the company may keep their digital assets.

Typically the most important piece of news that trades for investors is the company’s quarterly earnings report, with analysts, media, and investors interested in seeing how the company’s sales, earnings, and other performance metrics have built up.

But the Coinbase report, released last Tuesday, ignored important findings for its users, as public companies must regularly disclose information about their business to help investors understand the full risks involved in their investments.

Read:Coinbase announces $1.25 billion bond offering

According to kiplinger, a new SEC requirement called SAB 121 required Coinbase to detail responsibilities to protect crypto assets held by users on its trading platform.

The company explained in the 10Q disclosure that if it declares bankruptcy, the crypto assets it holds on behalf of its clients can be subject to bankruptcy proceedings and users of the platform will become unsecured creditors.

Coinbase CEO Brian Armstrong insists the platform is not in danger of bankruptcy.

“There are some rumors about the disclosure we made at 10Q today about how we are holding crypto assets,” he said.

But it is natural for Coinbase users to wonder what bankruptcy proceedings mean, amid a weak quarterly performance and a recent crash in cryptocurrency prices, not to mention Coinbase shares, which have fallen by 25% in the past days, down more than 85% from the previous year. The company’s initial public offering of $381.

In this context, users of any platform that facilitates cryptocurrency trading may want to know more about this situation of bankruptcy.

what happened?

Coinbase last Tuesday reported a disappointing quarter for its annual revenue, as first-quarter revenue fell 27% year-on-year to $1.17 billion, broadly missing analyst expectations of $1.50 billion, at a time when monthly users fell 19% on the year. annual basis.

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But investors were more willing for crypto exchange Coinbase to disclose what would happen to a user’s crypto assets in the event of future bankruptcy.

Queen Base said:

“Since crypto assets held can be considered ownership of a bankrupt property, in the event of bankruptcy, the crypto assets we hold on behalf of our clients can be subject to bankruptcy proceedings.”

Read:Bitcoin drops after 7 days of successful growth

This means that Coinbase users’ ownership of their cryptocurrency is not absolute, and in the event of the exchange going bankrupt, any cryptocurrency held in the exchange becomes subject to bankruptcy proceedings, which may lead to users’ assets being withdrawn from the cryptocurrency.

This means that Coinbase users will not have the right to claim any specific property from the exchange during the bankruptcy proceedings, and will also be prevented from accessing their funds on the platform when the companies begin to liquidate during the bankruptcy proceedings.

Read also:

Why has bitcoin fallen 55% over the past six months?

What determines the price of Bitcoin?

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