Under the influence of the Federal Reserve raising interest rates and shrinking its balance sheet , global cryptocurrencies have plummeted recently, causing the market to fall into a "panic".
html On May 11, Bitcoin fell below $28,000 per coin. html During the North American trading session on May 11, Bitcoin plummeted again. The intraday drop once exceeded 10%, and it once fell below the $28,000 mark during the session. As of now, the price of Bitcoin has fallen by more than 50% from its high in November last year. Affected by Bitcoin's decline, other cryptocurrencies were almost universally lower. As of 8 a.m. Beijing time on the 12th, US$449 million (approximately 2.854 billion yuan) of cryptocurrency funds had been wiped out in the past 24 hours. In the past 24 hours, 162,565 people liquidated their positions. Just as the cryptocurrency market is spiraling out of control, the largest cryptocurrency trading platform in the United States, Coinbase, has been exposed to the news that “all cryptocurrencies from users will be confiscated in the event of bankruptcy,” causing an uproar among investors.
According to foreign media reports on the 11th, the latest earnings report released by Coinbase on the 10th local time showed that the first quarter loss was as high as 430 million US dollars, and the number of monthly users dropped by 19%. However, the most eye-catching thing about this report is not these "horrible" data, but an updated message "about the risks of using Coinbase services."
Coinbase said in a report filed with the U.S. Securities and Exchange Commission (SEC) that it currently holds $256 billion in fiat and cryptocurrencies on behalf of clients. According to its official website, the company has more than 98 million certified users. However, once the company declares bankruptcy, "the crypto assets we hold on behalf of our clients may become subject to bankruptcy proceedings," the report reads. The report shows that after the company goes bankrupt, Coinbase users will become "general unsecured creditors ", which means that all their cryptocurrencies and funds on the platform will be regarded by the bankruptcy administrator as Coinbase's property during the litigation process. China also has no right to claim any specific property of Coinbase. Brian Armstrong, founder and CEO of
Coinbase, stepped in to put out the fire. He said on social media that the trading platform was not at risk of bankruptcy. "Your funds are safe, as always." He also explained that the purpose of disclosing this news was to Follow new U.S. Securities and Exchange Commission (SEC) rules for public companies that hold cryptocurrency assets on behalf of others.
This new regulation, known as the U.S. Securities and Exchange Commission’s (SEC) Staff Accounting bullet 121, requires cryptocurrency platforms to include customers’ cryptocurrency assets and liabilities on their balance sheets. However, he also admitted that "it is possible (although unlikely) that the court will decide to treat customer assets as part of the company in bankruptcy proceedings, even if this harms consumers."
Armstrong also publicly apologized to shareholders for this matter, saying that in the There was no proactive communication when increasing risk disclosure information. However, he also admitted that crypto assets are not safe in the event of bankruptcy, which also highlights the important difference between storing funds on blockchain exchanges and storing cash in traditional banks. Regulators have long warned that these platforms lack the oversight and investor protection mechanisms built into traditional financial services.
Foreign media reported that in previous publicity about blockchain and cryptocurrency, it has been emphasized that investors’ personal ownership of cryptocurrency is “immutable and absolute”, which is also one of the most critical “selling points” of cryptocurrency. . However, when users open an account with Coinbase and purchase cryptocurrency, they typically store the cryptocurrency in Coinbase’s digital wallet, which means that the individual user “gives up at least some control over their funds.” Access to the
crypto wallet is controlled by a key, which is usually a long string of characters that is "very difficult to remember." If the key is forgotten or lost, no one can access the cryptocurrencies in the wallet. On third-party trading platforms like Coinbase, the key to the digital wallet is held by the company, and users can use traditional simple passwords to enter their wallets. This means that at a critical moment, users’ rights to use these assets are ultimately in the hands of Coinbase.The
report pointed out that this incident once again highlighted the major difference between storing funds on a blockchain trading platform and storing cash in a traditional bank. Coinbase's shares plunged 30% in trading on Wednesday following the release of this latest report. To date, the company's stock price has fallen 80% from its listing on Nasdaq in April 2021.
Red Star News reporter Xu Xu
editor Guo Yu
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