Crypto firms facing insolvency ‘forgot the basics of risk management’ Coinbase

Coinbase’s head has helped the market slump amid concerns about solvency for Three Arrows Capital, crypto lenders Celsius and Voyager Digital, and crypto exchanges have “no funding exposure” for companies. Said.

Caroline Tarnok, Head of Coinbase Institutional Brett Tejpaul, Head of Prime Finance Matt Boyd, and Head of Credit and Market Risk, in a blog post on Wednesday. Said Coinbase has not been involved in the “types of high-risk lending practices” presented by Three Arrows Capital, Celsius, and Voyager, claiming that these companies are examples of “insufficient risk management.” rice field. According to the trio, crypto companies faced the potential for bankruptcy caused by “unhedged bets,” large investments in Terra, and over-utilization of venture capital firms.

“The problem here was foreseeable, in fact credit-specific, not crypto-specific in nature,” said Tejpaul, Boyd, and Tarnok. “Many of these companies were over-leveraged with short-term debt inconsistent with long-term non-current assets. These market participants were caught up in the frenzy of the cryptocurrency market and were the basis of risk management. I believe I forgot. ”

A court in the British Virgin Islands reportedly ordered the liquidation of Three Arrows Capital. Voyager Digital filed for bankruptcy in July and later announced plans to restore the user’s encryption. This could depend on funding from the Three Arrows Capital proceedings, which failed to repay the 15,250 Bitcoin (BTC) and US $ 350 million (USDC) loans. Cryptocurrency lending platform Celsius has also submitted a petition for Chapter 11. Platform lawyers appear to be having unusual legal discussions to avoid the recovery of users’ funds.

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Coinbase said that users “will not be exposed to client or counterparty bankruptcy” and “there will be no change in credit access,” but cryptocurrency exchanges say Grayscale could continue until 2023. It’s still working in the bear market where I expected it to be. More than 42% of Coinbase’s stock has fallen to $ 75.27 at the time of issuance. CEO Brian Armstrong also announced in June that the exchange plans to cut 18% of its staff due to concerns about the winter potential of cryptocurrencies.