Coinbase says it had no financial exposure to bankrupt crypto firms

Coinbase says it had no exposure to collapsed crypto firms like Celsius, Three Arrows Capital, and Voyager. 

In a blog post today, the crypto exchange said it had no “financing exposure” to these crypto firms, all of which filed for bankruptcy following the recent “crypto winter” that saw cryptocurrency prices plunge and pummelled the industry.

“We believe these market participants were caught up in the frenzy of a crypto bull market and forgot the basics of risk management,” Coinbase said, saying many of the firms that went bankrupt were “overleveraged with short term liabilities mismatched against longer duration illiquid assets.”

Coinbase said it did not engage in “risky lending practices” and instead “focused on building our financing business with prudence and deliberate focus on the client.”

The company said it had no losses from its financing book, no exposure to client or counterparty insolvencies and no changes in access to credit for trading clients. 

“Prudent risk management is key to our long-term strategy,” Coinbase said, stating that solvency concerns surrounding Celsius, Three Arrows Capital (3AC), Voyager, and other firms “were a reflection of insufficient risk controls.”

“The issues here were foreseeable and actually credit specific, not crypto specific in nature,” the exchange said.

The bankrupt crypto firms were all affected by the crypto crash recently which saw prices of major tokens like Bitcoin collapse near 50 per cent for the year and wiped out billions of dollars from the crypto industry. 

Three Arrows Capital, Celsius, and Voyager did not immediately respond to CityAM’s request for comment on the Coinbase statement.