Is the Coinbase bankruptcy imminent?

7/17/2022, 12:29 PM
Is the Coinbase bankruptcy imminent?
The recent news that Coinbase is shutting down its affiliate marketing program in the US has caused some concern among investors. This is because the move comes after the company warned that customer assets could be at risk if the company were to go bankrupt. With Coinbase shares falling by more than 27% after the filing, the company has released a statement to clarify its position.

CEO Brian Armstrong has denied that Coinbase is at risk of insolvency, but the company has faced a stiff challenge from other centralized exchanges like FTX and Robinhood, especially Binance. Binance CEO Changpeng "CZ" Zhao has highlighted the disparity in the fee structure of the two companies, and as of March 2022, Coinbase was the custodian of $256 billion in customer assets.

Those investing in cryptocurrencies don't have the same insurance or protection as those putting money in the bank. If Coinbase were to file for bankruptcy, all of the company's assets as well as the customer assets it holds would first be divided up to cover money owed to creditors. This means that if Coinbase's debt exceeds the value of the company's assets, investors could lose their money.

Whether you think exchanges like Coinbase will go bankrupt or not, it always makes sense to do everything you can to keep your investment safe. This includes sending your money to a hardwallet instead of keeping it on an exchange. Hardwallets are offline storage devices that give you full control over your private keys, meaning that you are the only one who can access your cryptocurrencies.

In case Coinbase does go bankrupt, the bitcoin price is likely to take a sharp drop. This could be the final capitulation that everyone is waiting for, and a price target of $10,000 might be realistic. However, it is important to remember that anything can happen in the world of cryptocurrency, and even if Coinbase does get into financial trouble, other companies might buy or rescue the exchange to keep the market stable.

Also visit the Coinbase Website.
Or check the Latest interview with the coinbase CEO stating no risk of bankruptcy.