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Coinbase Confirms ‘No Financing Exposure’ to Bankrupt Crypto Firms Celsius, Voyager, Three Arrows Capital

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Cryptocurrency exchange Coinbase confirmed that the company had “no financial exposure” to failed firms, including Celsius Network, Voyager Digital and Three Arrows Capital (3AC). “The problems here were predictable and were actually related to credit, not cryptocurrency,” Coinbase emphasized.

Coinbase: “We have not been involved in such risky lending activities”

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Nasdaq-listed cryptocurrency exchange Coinbase clarified its approach to cryptocurrency funding in a blog post on Wednesday. The authors of the message are Brett Tapol, head of Coinbase Institutional, Matt Boyd, head of Prime Finance, and Caroline Tarnock, head of credit and market risk.

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“Concerns about the solvency of companies such as Celsius, Three Arrows Capital (3AC), Voyager and other similar counterparties were a reflection of a lack of risk control, and reports of additional firms struggling are quickly becoming stories of bankruptcy, restructuring and failure.” , — Coinbase. executives elaborated, adding:

It is noteworthy that the problems here were predictable and were actually related to the loan, and not to the cryptocurrency.

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“Many of these firms were overleveraged with short-term liabilities that did not match longer-term illiquid assets,” they noted.

“We believe that these market participants have been caught up in the cryptocurrency bull market frenzy and have forgotten the basics of risk management. The uninsured stakes, the huge investment in the Terra ecosystem and the massive leverage provided and deployed by 3AC meant that the risk was too high and too concentrated,” the executives explained, highlighting:

Coinbase had no financial exposure to the above groups. We did not engage in such risky lending practices.

Last September, Coinbase pulled back from launching its lending program after the U.S. Securities and Exchange Commission (SEC) threatened to sue the company if it continued with the launch.

Coinbase executives also noted that their company is “focused on building our financial business with care and a deliberate customer focus.”

Cryptocurrency lenders Celsius Network and Voyager Digital filed for Chapter 11 bankruptcy earlier this month after hedge fund Three Arrows Capital filed for Chapter 15 bankruptcy.

Coinbase also reported on their blog:

While Coinbase does not have a counterparty to the companies listed above, the Coinbase Venture Program has made an intangible investment in Terraform Labs.

Terraform Labs, based in Singapore, is behind the collapse of the terra cryptocurrency (LUNA) and the terrausd (UST) stablecoin. The company is currently under investigation by South Korean authorities and the US Securities and Exchange Commission (SEC).

What do you think of Coinbase’s explanation? Let us know in the comments below.

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