[deleted]
Coinbase warns that bankruptcy could wipe out user funds
71–80 of 473 posts
Re: Coinbase warns that bankruptcy could wipe out user funds
#72Wait, can someone explain to me why they would explicitly announce it like this? This almost sounds like they're expecting to go bankrupt, or have plans to close the platform. In the last 7 days they have lost over 50% value, and dropping a news bomb like this is only going to make it worse, isn't it?
Read any company annual report and you'll see all sorts of risks listed. Amazon lists war and other geopolitical events for example. This isn't to minimize that bankruptcy is a risk, just that it doesn't mean it is imminent.
Re: Coinbase warns that bankruptcy could wipe out user funds
#73mtgox redux
I'm still unhappy with this. I had ~5 BTC with them, but have never been able to give sufficient evidence for settlement, and they keep taunting me with monthly settlement emails.
Re: Coinbase warns that bankruptcy could wipe out user funds
#74When you buy BTC using coinbase do you really have a wallet somewhere, do you really buy BTC? Or does coinbase allocate BTC to you from its own BTC holdings?
Re: Coinbase warns that bankruptcy could wipe out user funds
#75https://nitter.net/brian_armstrong/status/152423348004071014... In other words: We only disclosed these risk factors because we were legally required to. Please ignore our SEC disclosure and half-billion dollar quarterly loss, and instead trust my unregulated statements posted on Twitter. There are no risk factors, your money is safe, the music will never stop.
I get the point, but please don’t use a block quote when it’s not a quote. Two problems: 1. People don’t read the source. 2. People can’t detect subtle or not-so-subtle cues. Case in point: there’s already a sibling discussing “There are no risk factors” as if it’s actually a quote from Brian Armstrong.
I would argue that's the people's problem. How important is what they have to say anyway if they won't read the source and can't detect sarcasm?
edit: also, even if it's not a direct quote.. c'mon, it is what he's saying. The SEC made a rule that applies _specifically for crypto companies_, saying they have to disclose that crypto assets under their custody could potentially be taken in a bankruptcy.. and this guy goes on to say what he was just forced to disclose is not true. It doesn't get more obvious.
Re: Coinbase warns that bankruptcy could wipe out user funds
#76Earlier quoted context omitted.
> I'd be shocked if creditors could search through the user data for things of value. dropbox don't own any copyright to the content from the user's uploads. So even if the creditors find any valuable IP or content, there's no way they can claim ownership over it. Coinbase, on the other hand, is given custody of actual assets (the cryptos).
Check your cloud storage user agreements. A lot of them involve handing a perpetual irrevocable right to the data to the company storing it.
For purposes of operating the service. Not for commercializing IP.
If I on Titanic and upload it to Dropbox. A creditor during bankruptcy couldn’t use those rights to sell streams of Titanic.
For coinbase, a creditor could sell the crypto stored.
Re: Coinbase warns that bankruptcy could wipe out user funds
#77Wait, can someone explain to me why they would explicitly announce it like this? This almost sounds like they're expecting to go bankrupt, or have plans to close the platform. In the last 7 days they have lost over 50% value, and dropping a news bomb like this is only going to make it worse, isn't it?
Is something amiss with USDC? If it's even partially backed by other cryptos, it could implode pretty soon.
It's fully backed by cash held at US banks and by US Treasuries, per my understanding. And this disclosure did not pertain to those reserves, which are held in trust on behalf of customers as per state money-transmitter laws, which customers would presumably not be treated as unsecured creditors, but only to cryptocurrencies held in Coinbase-controlled wallets.
Re: Coinbase warns that bankruptcy could wipe out user funds
#78I wonder if this will cause them to go bankrupt because users get scared and leave. Just like Bear Stearns in 2008
Re: Coinbase warns that bankruptcy could wipe out user funds
#79Earlier quoted context omitted.
I do wonder why he's allowed to say on Twitter there is no risk of bankruptcy [0]. While the risk could be minimal and maybe negligible saying "no risk" means zero chance. That can't be true of any company. For a public company ceo to say that, isn't that securities fraud? I guess even if it is fraud and they do get prosecuted by the SEC they'd just get fined for it. And maybe the fine here would be much less than th…
>> For a public company ceo to say that, isn't that securities fraud? Cryptocurrencies are not regulated securities. What laws protect cryptocurrency "investors"?
Their product isn't regulated, but the company is still subject to securities law as it's public.
Re: Coinbase warns that bankruptcy could wipe out user funds
#80Since coinbase isn’t FDIC insured, it makes sense that if coinbase goes bankrupt, the customer currencies will go away as well. And they aren’t SPIC insured in the situations where crypto is a security. It’s funny to see people shocked (SHOCKED!) when crypto doesn’t have the protections of regular banking and investments. That’s why you don’t invest with stuff that isn’t insured. Those aren’t real rates, they are ris…
If this was a brokerage with stocks, the customers own those stocks. There is no reason crypto shouldn't be the same. There is no reason crypto shouldn't have top priority to their owners. It isn't okay for a company to put other creditors above the owners of that crypto
You don't seem to understand how bankruptcy works. Creditor seniority is set by the court, following the bankruptcy code. The insolvent company has very little control over that process.