Beautiful Virgin Islands

Tuesday, Jun 24, 2025

Coinbase warns customers they may lose crypto if company goes bankrupt

Coinbase warns customers they may lose crypto if company goes bankrupt

Following an epic share price decline of more than 27% this week, Coinbase issued a stark warning to customers: Your crypto is at risk if the exchange goes bankrupt.

According to Coinbase's official website, the company has more than 98 million verified users. It is the largest cryptocurrency exchange platform in the United States.

Coinbase's CEO Brian Armstrong attempted to calm shareholders in a series of tweets one of which read: 'Your funds are safe at Coinbase, just as they’ve always been.'

Despite Armstrong's claims, in an SEC filing the company referred to customers as 'unsecured creditors' in the event that Coinbase went belly-up.

Coinbase's CEO Brian Armstrong attempted to calm shareholders in a series of tweets one of which read: 'Your funds are safe at Coinbase, just as they’ve always been'

Coinbase shares tumbled 30% on Wall Street after a regulatory filing by the company revealed any crypto it held for customers 'could be subject to bankruptcy proceedings'


This means that customers' crypto assets would be considered the property of Coinbase by bankruptcy administrators.

The SEC filing, Staff Accounting Bulleting 121, requires crypto platforms to include customer's crypto holdings as assets and liabilities on balance sheets.

Armstrong wrote on Twitter that the company is at 'no risk of bankruptcy' despite the filing, which he said was made so that company would be in compliance with SEC regulations.

The new regulation is designed to protect crypto traders by giving them more in-depth knowledge about the company's contingency plan in the event of bankruptcy.

Armstrong began his Twitter speech shortly after his company's earnings report was made public









Armstrong tweeted: 'This disclosure makes sense in that these legal protections have not been tested in court for crypto assets specifically, and it is possible, however unlikely, that a court would decide to consider customer assets as part of the company in bankruptcy proceedings even if it harmed consumers.'

In the first quarter of 2022, Coinbase posted a loss of $430 million amid a 19% drop in monthly users. The company has said that trading is likely to keep going down in the second quarter.

Another contributing factor has been the falling price of bitcoin.

At the time of writing, the price of bitcoin is $28,434.70, down 8% from yesterday. This is the first time bitcoin has fallen below $30,000 since July 2021.

Coinbase's shares, which tend to track the health of the wider crypto sector, have lost around 85 per cent of their value since its debut on Wall Street in April last year.

In their May 2022 earnings report, the company bragged about their first Super Bowl ad which came with the slogan: 'Less talk, more Bitcoin.'

The report says the ad reached 40 million households and generated millions of social media mentions 'resulting in significant improvements in our brand awareness, favorability, and consideration, among our target audience.'

Alesia Haas, chief financial officer of Coinbase Global Inc.


The ad cost the company $14 million and the day after Super Bowl Sunday, the company's share price fell nearly 2%, according to Reuters.

Coinbase Chief Financial Officer Alesia Haas said on a call with analysts on May 11 that the company decided to spent money on 'diversifying product lines' rather than focus on profits, reports CNBC.

In January 2022, Brian Armstrong bought a five acre estate in Bel Air at a cost of $133 million.

According to Coinbase's earnings report, the company said that they hold $256 billion in crypto and fiat money on behalf of their customers.

When a user opens a Coinbase account and buys cryptocurrency, the company holds that crypto on the application's wallet. This 'means the individual is giving away at least part of their control over their own funds,' according to Fortune Magazine.

Following Russia's invasion of Ukraine in February, Coinbase announced in a statement that they had suspended the accounts of 25,000 Russian Coinbase wallets.

The statement accused those account holders of 'engaging in illicit activity, many of which we have identified through our own proactive investigations.'

Crypto exchanges do not have a federal protection such as the Federal Deposit Insurance Corporation that protects customers of traditional banks in the US.

In the first quarter of 2022, Coinbase posted a loss of $430 million amid a 19% drop in monthly users. The company has said that trading is likely to keep going down in the second quarter


The money that customers deposit at traditional banks is protected to the tune of $250,000, in the event that the bank in question goes bankrupt.

There is the option of personal cryptocurrency insurance for traders.

On Twitter, Armstrong issued an apology to shareholders for not being more open about the company's new SEC filing saying they 'didn't communicate proactively when the risk disclosure was added.'

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Airlines Evaluate Flight Cancellations Amid Escalating US-Iran Tensions
Starmer Invites Innovators to Join Government Talent Scheme
UK Economy’s Strong Opening Quarter Shows Signs of Cooling
Harrods Seeks Court Order to Secure Al Fayed Estate for Victims
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
WATCH: Israeli forces show the aftermath of a massive airstrike at Iran's Isfahan nuclear site
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
We have new information and breaking details to share about what is shaping up to be a historic air campaign tonight
Six Massive Bombs Dropped on Fordow; Trump: 'A Historic Moment for the U.S., Israel, and the World'
Fordow: Deeply Buried Iranian Enrichment Site in U.S.–Israel Crosshairs
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Pakistan to nominate Trump for Nobel Peace Prize.
BBC Demands Perplexity AI Immediately Stop Using Its Content
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
Political Turmoil Resurfaces in Belgium Amid Economic Concerns
Fed policymakers divided on timing of interest rate cuts
Trump signals imminent agreement with Harvard University
Inheritance tax referendum alarms Swiss billionaire community
Japan cancels bilateral security meeting amid US defence demands
AI skeptic Emily Bender warns that ‘the emperor has no clothes’
Israel Confirms Assassination of Quds Force Commander in Tehran
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
×