Coinbase confirms that it has no financial ties to the embattled crypto firms

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Last Updated on July 21, 2022 by Bitfinsider

Coinbase has confirmed that it is not exposed to crypto companies that are currently involved in bankruptcy, restructuring, or other problems.

The company is taking steps to reassure its customers and the larger crypto community that its business and, as a result, client assets are safe amid the crypto market’s contagion.

Nasdaq-listed Coinbase claims it has “no financing exposure to the groups” of platforms that have experienced difficulties, and that it has not engaged in the lending practices associated with many of the platforms.

The reassurance from the exchange comes as Zipmex became the latest platform to halt withdrawals, citing liquidity issues and exposure to troubled counterparties.

According to Coinbase, the current solvency issues involving cryptocurrency firms such as lender Celsius, Voyager Digital, and hedge fund Three Arrows Capital (3AC) reflect a lack of risk controls during the bull market.

The failing companies have a “credit specific” problem, which has nothing to do with the fact that they are only crypto platforms, according to the firm.

“Many of these firms were overleveraged, with short-term liabilities mismatched against longer-term illiquid assets,” Coinbase executives wrote in a blog post.

According to Coinbase, the events surrounding the unhedged bets, with massive exposure to the collapsed Terra ecosystem, and 3AC are highlights of similar events in traditional financial markets, including the 1990s Long Term Capital Management and the 2000s Lehman Brothers.


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