CoinBase’s latest filing with SEC states “In the event of a bankruptcy, our customers could be treated as our general unsecured creditors.”
Does it mean that when they eventually go bankrupt, they will use customer’s crypto to bail themselves out?
Brian Armstrong, Coinbase CEO shares the details
1/ There is some noise about a disclosure we made in our 10Q today about how we hold crypto assets. Tl;dr: Your funds are safe at Coinbase, just as they’ve always been.
3/ We believe our Prime and Custody customers have strong legal protections in their terms of service that protects their assets, even in a black swan event like this.
4/ For our retail customers, we’re taking further steps to update our user terms such that we offer the same protections to those customers in a black swan event. We should have had these in place previously, so let me apologize for that.
5/ 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.
6/ We should have updated our retail terms sooner, and we didn’t communicate proactively when this risk disclosure was added. My deepest apologies, and a good learning moment for us as we make future changes.
7/ Finally, we of course offer a self-custodial wallet solution (Coinbase Wallet) for those who prefer to store their own crypto. Our goal is to make the best custodial and self-custodial solutions in crypto – each carry their own risks and benefits, and it’s important…
8/ …that customers can choose the best solution for their needs. We’ll continue working to improve customer protections in all our products across both categories.