Coinbase stated in a blog that it isn’t financially vulnerable to restructuring and bankrupting crypto companies like Voyager Digital, Celsius, Three Arrows Capital and Celsius.
Coinbase is not currently exposed to crypto companies in restructuring, bankruptcy or other problems. The crypto exchange has reaffirmed.
The company is attempting to reassure customers and the wider crypto community that their business and client assets are safe amidst all the contagion in the crypto market.
Coinbase, a Nasdaq-listed company, claims it has ” no funding exposure to the groups of platforms that have experienced turbulence” and that it did not engage in lending malpractices that are associated with many platforms.
This is because Zipmex, the latest platform to suspend withdrawals due to liquidity issues or exposure to beleaguered counterparties, has provided reassurance.
Problem with credit specificity
In a post, Coinbase executives Brett Tejpaul, Matt Boyd, and Caroline Tarnok (Heads of Credit and Market Risk), noted that “t the shocks to crypto credit environment in the last few weeks have been likely to be an inflection point” for the industry.
Coinbase claims that the current solvency problems surrounding crypto firms Voyager Digital and lender Celsius and the hedge fund Three Arrows Capital (3AC) reflect the absence of risk control during the bull market.
The firm sees the failing companies as having a “credit-specific” problem. This has nothing to do w/ them being only crypto platforms.
” Many firms were overleveraged with short-term liabilities mismatched against long-term illiquid assets,” Coinbase executives stated in a blog post.
Coinbase points out that the events surrounding the unhedged Bets, which exposed Terra to a massive amount, and 3AC are examples of similar events in traditional financial markets – the 2000s Lehman Brothers and 1990s Long Term Capital Management being two notable episodes.