Generative Data Intelligence

Coinbase Distances Itself from Recent Bankrupt Crypto Firms

Date:

Crypto exchange giant Coinbase said on Wednesday it had no financial exposure to crypto firms Celsius Network, Voyager Digital or Three Arrows Capital—all of which declared bankruptcy this month.

In a blog, the company said, “Coinbase had no financing exposure to the groups above. We have not engaged in these types of risky lending practices and instead have focused on building our financing business with prudence and deliberate focus on the client.”

Search less. Close more.

Grow your revenue with all-in-one prospecting solutions powered by the leader in private-company data.

Last week, embattled lender Celsius Network filed for Chapter 11 protection in an effort to “stabilize its business and consummate a comprehensive restructuring transaction,” the company said in a release.

A week earlier, Voyager Digital also filed for bankruptcy. In that filing, the company specifically noted that crypto hedge fund Three Arrows Capital—or 3AC—had defaulted on a loan. Singapore-based 3AC collapsed after the downturn in digital currencies left it unable to meet obligations. The company filed for Chapter 15 bankruptcy itself on July 1.

“We believe these market participants were caught up in the frenzy of a crypto bull market and forgot the basics of risk management,” said the Coinbase post. “Unhedged bets, huge investments in the Terra ecosystem, and massive leverage provided to and deployed by 3AC meant that risk was too high and too concentrated. These events are, unfortunately, more common in traditional financial markets than we would hope.”

Coinbase did note its venture arm had made a nonmaterial investment in Terraform Labs, the company behind the now collapsed Terra stablecoin that rocked the industry.

The post seemed to be a move to try to alleviate market fears Coinbase may be affected by the recent bankruptcies and liquidity crisis.

Shares of Coinbase responded positively to the post, shooting up nearly 18% Wednesday morning.

The crypto markets have seen a slight rally this week. Bitcoin—the largest cryptocurrency by market cap—moved above $2,400 for the first time since last month.

Further reading:

Illustration: Dom Guzman

image

Stay up to date with recent funding rounds, acquisitions, and more with the
Crunchbase Daily.

At the peak of last year’s startup and IPO bull run, we reported effusively on Snoop Dogg’s portfolio, the sort of mix—kinda crazy and kinda…

After weeks of bad news and falling prices, the total market capitalization for crypto assets climbed to more than $1 trillion for the first time in…

We take a closer look at the most active investors in U.S.-based startups in June and some interesting rounds they took part in.

spot_img

Latest Intelligence

spot_img

Chat with us

Hi there! How can I help you?