Coinbase Crypto Exchange Threatened With Bankruptcy, What About User Money?

Coinbase is in danger of going bankrupt. (photo: doc. Cryptonomist)

JAKARTA – One of the giant crypto trading companies from the United States, Coinbase, is reportedly experiencing difficulties amid the decline in the crypto market in recent weeks.

Coinbase has laid off 18 percent of its total staff. Furthermore, the company said that its platform customer funds may be lost if the company goes bankrupt.

Previously, on June 14, 2022, Coinbase CEO Brin Armstrong apologized for the employee “downsizing” decision. He also stated that the company had growth "too fast." The company sent a layoff notification via email, Coinbase stopped their access.

"I realize that removing access can feel sudden and unexpected, and this is not the experience I want for you," said Armstrong.

Reporting from DailyCoin, Armstrong has bought a luxury home worth US $ 133 million (Rp 1.97 trillion) in Bel-Air to celebrate the New Year. He admits "employee costs are too high to manage effectively." As a result, 1,100 employees lost their jobs in the blink of an eye.

The Coinbase issue has become a hot topic of conversation on Twitter and TikTok social media. One of the former TikTok employees mentioned that Coinbase has a lot of debt, and is preparing to file for “Chapter 11”.

This effectively means that management will be able to continue to run the company, but any major business decisions must first be approved by the bankruptcy court. Additionally, the Chapter 11 filing is likely to result in the termination of all customer recalls as Celsius did last week.

Coinbase platform users are starting to worry and question whether their funds are safe on the platform. According to the earnings report Coinbase announced last Tuesday, the company holds 256 billion US dollars in fiat and crypto on behalf of its clients.

Coinbase also warns that “crypto assets we hold on behalf of our customers may be subject to bankruptcy proceedings.” That means user funds are potentially inaccessible to their owners.