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 of economics and cryptography.
Coinbase Confirms ‘No Funding Exposure’ To Bankrupt Crypto Firms Celsius, Voyager, Three Arrows Capital – Exchanges Bitcoin News
Crypto exchange Coinbase has confirmed that the company had “no funding exposure” to bankrupt firms including Celsius Network, Voyager Digital and Three Arrows Capital (3AC). “The issues here were predictable and actually credit-specific, not crypto-specific,” Coinbase stressed.
Coinbase: ‘We have not engaged in these types of risky lending practices’
Nasdaq-listed cryptocurrency exchange Coinbase clarified its approach to cryptocurrency financing in a blog post on Wednesday. The post was written by Brett Tejpaul, Head of Coinbase Institutional, Matt Boyd, Head of Prime Finance, and Caroline Tarnok, Head of Credit and Market Risk.
“Solvency issues around entities like Celsius, Three Arrows Capital (3AC), Voyager and other similar counterparties were a reflection of inadequate risk controls, and reports of multiple companies struggling quickly become stories of bankruptcy, restructuring and failure,” Coinbase executives detailed, adding to:
Notably, the problems here were predictable and actually credit-specific, not crypto-specific.
“Many of these companies were handed short-term liabilities that were not matched by longer-duration illiquid assets,” they noted.
“We believe these market participants got caught up in the frenzy of a crypto bull market and forgot the basics of risk management. Unsecured bets, huge investments in the Terra ecosystem and massive leverage given to and distributed by 3AC meant that the risk was too high and too concentrated, » explained the managers and emphasized:
Coinbase had no funding exposure to the above groups. We have not engaged in this type of risky lending practice.
Last September, Coinbase abandoned the launch of its lending program after the US Securities and Exchange Commission (SEC) threatened to sue the company if it went ahead with the launch.
The Coinbase executives further noted that their company is “focused on building our financing business with care and a deliberate focus on the customer.”
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 revealed in the blog post:
While Coinbase does not have counterparty exposure to the companies listed above, Coinbase’s Venture Program made non-material investments in Terraform Labs.
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 US Securities and Exchange Commission (SEC).
What do you think of Coinbase’s explanation? Let us know in the comments section below.
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