Coinbase Warns Customers They Could Lose Their Crypto if the Company Goes Bankrupt

Coinbase has warned users that their cryptocurrency could be at risk if the exchange ever went bankrupt. The cryptocurrency exchange included a new disclosure to its customers in its first-quarter earnings report. “Because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors,” the warning states. This is a statement Coinbase needed to make because of a requirement made by the U.S. Securities and Exchange Commission, which said these disclosures are necessary so that customers are informed about their investments. Founder and chief executive of Coinbase Brian Armstrong took to Twitter to reassure customers that the company was not at risk of bankruptcy. “Your funds are safe at Coinbase, just as they’ve always been,” he wrote. “We have no risk of bankruptcy, however we included a new risk factor based on an SEC requirement called SAB 121, which is a newly required disclosure for public companies that hold crypto assets for third parties.”

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