Nasdaq-listed cryptocurrency exchange Coinbase said in an announcement Wednesday that it had no risk-free exposure to bankrupt crypto firms, including Celsius, Three Arrows Capital, and Voyager Digital.
The news triggered Coinbase's stock price has risen 14.34%, and the closing stock price was $75.27.
However, the company's stock price has fallen about 70% since the beginning of the year.
Coinbase denies any credit risk exposure to Celsius, 3AC and Voyager, explaining:
“We have not engaged in these types of risky lending practices and instead have focused on building our financing business with prudence and deliberate focus on the client.”
But the company revealed that it made an "immaterial investment" in Terraform Labs, the developer of the failed stablecoin project Terra, through its venture capital business,
The events that plagued Terra at the time caused the broader disruption in the more comprehensive cryptocurrency world and ushered in a crypto winter, the knock-on effect of which saw mSeveralses pack up.
A number of companies are affiliated with Terraform Labs, including Three Arrows Capital (3AC). The crypto hedge fund failed to survive the collapse of LUNA and UST coins.
The three companies mentioned above have filed for bankruptcy protection due to liquidity issues. Coinbase commented, "Many of these firms were overleveraged with short-term liabilities mismatched against longer duration illiquid assets.”
Coinbase promised investors that it would not suffer the same fate.
Digital asset lending firm, Genesis Capital, said it would sell its collateral to hedge against bad debt risks if Three Arrows Capital fails to meet margin calls.
Cryptocurrency exchange Blockchain.com may suffer a total of $270 million in losses due to Three Arrows Capital's inability to repay loans due to the bankruptcy and liquidation of Three Arrows Capital.
Two days ago, Nasdaq-listed cryptocurrency exchange Coinbase Global Inc announced it had tapped a new license from the Italian market regulator, the Organismo Agenti e Mediatori (OAM).
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