Coinbase SEC document states: Your coins, our coins

Gabriel V. Gabriel V.
17 May 2022
3 min read
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Coinbase SEC document states: Your coins, our coins

In a document release, Coinbase states that will take its client's assets in case of bankrupt

Last Tuesday (10), Coinbase, one of the major exchanges in the world, sent an extensive document to the SEC. The most interesting part of this document, called "10-Q Form" is the changes in the company policies.

According to the report, all of the client's assets will no longer belong to them in the case of an exchange bankruptcy, meaning in short, that it is not your money.

The Coinbase stocks are 80% down since its IPO in 2021 April. It's assumed that this change in the policy could push back potential customers and contribute to a further decline in the company's stock prices.

Your coins, their coins

One of the sentences most known by the crypto enthusiasts is "Not your keys, not your coins" meaning that if you do not hold the keys of your wallet, the tokens do not belong to you, it is one great reminder for every user to be more responsible in the management of their assets. This includes leaving the assets in the exchanges, as when in there, you do not have your keys or the custody of your belongings.

The changes in the exchange policies are alarming, and the timing is not ideal, since we have been in a turbulent time, with a bearish momentum and the collapse of one of the top ten cryptocurrencies, LUNA.

In a filing with the SEC, Coinbase said that: 

In the event of a bankruptcy the crypto assets that the company holds in custody for its customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.

Coinbase CEO announcement

The document has brought a lot of noise on the social media, leading to an announcement from the Coinbase CEO, Brian Armstrong on Twitter:

There is some noise about a disclosure we made in our 10-Q today about how we hold crypto assets. Your funds are safe at Coinbase, just as they’ve always been. … We have no risk of bankruptcy.

However, if we go back in the history of cryptocurrencies, we might see that there is not much to be done in events such as hacks, very common in the industry per say. Very few of them were able to manage the losses related to hacks, leading to bankruptcy. With that said, a good safety measure is to not hold all your coins in the same place, split them between your wallets and exchanges, and be safe. 

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Gabriel V.
Gabriel V.
About the Author

Crypto researcher, investor and trader. Technical and data analyst.

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