Coinbase says solvency concerns reflect’s inadequate risk controls

© Reuters Coinbase (COIN) says solvency concerns reflect inadequate risk controls

By Sam Boughedda

In a blog post Wednesday, cryptocurrency exchange Coinbase (NASDAQ:) said solvency concerns surrounding crypto companies are a reflection of inadequate risk control. .

The exchange named Celsius, Three Arrows Capital (3AC), Voyager and “other similar partners” as companies failed to implement adequate risk management, adding that reports of companies encountering Other difficulties “quickly become a story of bankruptcy, restructuring and failure.”

“We believe that the participants in this market got caught up in the frenzy of a crypto bull market and forgot the basics of risk management. Bets are worthless, The large investment in the ecosystem and the large leverage provided and implemented by 3AC means too much risk and too much concentration,” Coinbase wrote.

They added that the problems here are “foreseeable and indeed credit-specific, not crypto-specific in nature. Many of these companies are already overstretched with liabilities. short-term does not match long-term illiquid assets.”

After stating that it has no financial exposure to the groups in question and outlining their attitude towards risk control, Coinbase said a healthy and well-functioning financial market is “necessary.” essential to the expansion and sustainability of any economy.”

However, they acknowledge that it may take time for the broader industry to learn from systemic deficiencies.

Shares of Coinbase were up 11.5% in Wednesday trading.

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