DIRE

Coinbase Alerts Users That Their Crypto Lacks Bankruptcy Protections

After its shares fell 27 percent, Coinbase acknowledged that customers could lose all their crypto assets if the company goes bankrupt.

Crypto holders may be in for digitized financial trouble, as Coinbase, the United States’ biggest crypto exchange platform, acknowledged that customers could lose their assets if the company goes belly-up. After announcing that it lost hundreds of millions of dollars in the first quarter of this year, Coinbase’s share price fell 27 percent this week, prompting the company to warn its 98 million customers that their “crypto could be subject to bankruptcy proceedings.” Unlike exchanges at traditional banks, crypto exchanges do not have federal protections, and Coinbase said in a statement that customers could be treated as “unsecured creditors” in the event of bankruptcy. CEO Brian Armstrong tried to soothe anxieties over Twitter, saying the company is “at no risk of bankruptcy” and that customers’ “funds are safe at Coinbase.” Unfortunately, though, a few tweets do little to protect the $256 billion customers had at the company as of the end of the quarter.