“In the event of bankruptcy, the crypto assets we hold in custody owned by our customers could be subject to bankruptcy proceedings and those users could be treated as unsecured creditors.”Coinbase said in a document submitted to the United States Securities and Exchange Commission (SEC).
The platform recognizes that this fact could make its investors consider its custody services more risky and less attractive, which could also impact its business, its operating results and financial conditions.
In the document submitted to the SEC, Coinbase emphasizes the dependence on the price of cryptocurrencies in its operating results, which can fluctuate from one quarter to another given the volatility of this type of asset.
The platform adds in that report that a “significant” part of its income derives from the demand for the two most important cryptocurrencies, Bitcoin and Ethereum. “If the demand for these crypto assets declines and is not replaced by new cryptocurrencies, our business, operating results and financial conditions could be affected.”
Late March, the company had $256 billion in custody in both fiat currency and cryptocurrency. They also ensured that a 10% drop in prices would not have a material impact on their impairment charges.
Some Wall Street analysts have warned that Coinbase’s costs are too high. The company has ballooned to 4,948 full-time employees, from about 1,700 just a year ago. The hiring helped push the company’s total operating costs to $1.7 billion in the first quarter, up 9% from the previous three months.
In the last few hours, Coinbase Global Inc announced that it will extend the hiring freeze for new positions.
Other cases
The first Argentine victim of the crypto crash was a well-known local exchange, Buenbit, which announced the reduction of 45% of its staff. “We decided to reduce the staff and pause our expansion plan to focus exclusively on the operation of the countries where we are present today,” explained its founder through social networks.
This case was followed by Bitso, the Mexican exchange that fired 80 employees from its staff that it owns throughout the region. The crypto unicorn, which has more than 4 million users in the region, he assured that the decision to cut personnel “is made based on our long-term business strategy and to support our clients and our strategy as a company.”
The wave of layoffs also added Gemini, which belongs to the twins and entrepreneurs Timer and Cameron Winklevoss. They recently announced that their company was forced to cut its staff for the first time since it was born, 8 years ago, due to the crisis in the sector, and about 100 employees will be laid off out of a total workforce of 1,000.
Gemini is a platform, valued at $7 billion and the Winklevoss brothers are considered to be the first to amass a billion dollar fortune in bitcoin 5 years ago.
Within the framework of the statement sent to its employees, those responsible for Gemini specified that they will lay off 10% of their staff, and also predicted that the ecosystem entered a phase of contraction, which they defined as “crypto winter”, a concept that is used in the industry to define the moments of sharp declines in prices, which have already occurred in the past after the asset hit a historical high.
“This is where we are now, in the contraction phase settling into a dormant period, what our industry calls a ‘crypto winter’. This has been further exacerbated by the current macroeconomic and geopolitical crisis. We are not alone “, the statement said.
Source: Ambito
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