Crypto trade Coinbase has confirmed that the corporate “had no financing publicity” to bankrupt companies, together with Celsius Community, Voyager Digital, and Three Arrows Capital (3AC). “The problems right here have been foreseeable and truly credit-specific, not crypto-specific in nature,” Coinbase burdened.
Coinbase: ‘We Have Not Engaged in These Kinds of Dangerous Lending Practices’
The Nasdaq-listed cryptocurrency trade Coinbase clarified its method to cryptocurrency financing in a weblog submit on Wednesday. The submit is authored by Brett Tejpaul, head of Coinbase Institutional, Matt Boyd, head of Prime Finance, and Caroline Tarnok, head of Credit score and Market Threat.
“Solvency issues surrounding entities like Celsius, Three Arrows Capital (3AC), Voyager, and different related counterparties have been a mirrored image of inadequate threat controls, and studies of extra struggling companies are quick turning into tales of chapter, restructuring, and failure,” the Coinbase executives detailed, including:
Notably, the problems right here have been foreseeable and truly credit-specific, not crypto-specific in nature.
“Many of those companies have been overleveraged with brief time period liabilities mismatched towards longer period illiquid property,” they famous.
“We consider these market contributors have been caught up within the frenzy of a crypto bull market and forgot the fundamentals of threat administration. Unhedged bets, big investments within the Terra ecosystem, and large leverage supplied to and deployed by 3AC meant that threat was too excessive and too concentrated,” the executives defined, emphasizing:
Coinbase had no financing publicity to the teams above. We’ve not engaged in some of these dangerous lending practices.
In September final 12 months, Coinbase abandoned the launch of its Lend program after the U.S. Securities and Alternate Fee (SEC) threatened to sue the corporate if it proceeded with the launch.
The Coinbase executives additional famous that their firm is “centered on constructing our financing enterprise with prudence and deliberate deal with the shopper.”
Crypto lenders Celsius Network and Voyager Digital filed for Chapter 11 chapter earlier this month after crypto hedge fund Three Arrows Capital filed for Chapter 15 chapter.
Coinbase additionally disclosed within the weblog submit:
Whereas Coinbase doesn’t have counterparty publicity to the businesses listed above, Coinbase’s enterprise program did make non-material investments in Terraform Labs.
The Singapore-based Terraform Labs is the corporate behind the collapsed cryptocurrency terra (LUNA) and stablecoin terrausd (UST). The agency is now being investigated by South Korean authorities and the U.S. Securities and Alternate Fee (SEC).
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