1/ There is some noise about a disclosure we made in our 10Q today about how we hold crypto assets. Tl;dr: Your funds are safe at Coinbase, just as they’ve always been.
Conversation
2/ We have no risk of bankruptcy, however we included a new risk factor based on an SEC requirement called SAB 121, which is a newly required disclosure for public companies that hold crypto assets for third parties.
sec.gov/oca/staff-acco
3/ We believe our Prime and Custody customers have strong legal protections in their terms of service that protects their assets, even in a black swan event like this.
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4/ For our retail customers, we’re taking further steps to update our user terms such that we offer the same protections to those customers in a black swan event. We should have had these in place previously, so let me apologize for that.
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5/ This disclosure makes sense in that these legal protections have not been tested in court for crypto assets specifically, and it is possible, however unlikely, that a court would decide to consider customer assets as part of the company in bankruptcy proceedings...
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6/ We should have updated our retail terms sooner, and we didn't communicate proactively when this risk disclosure was added. My deepest apologies, and a good learning moment for us as we make future changes.
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7/ Finally, we of course offer a self-custodial wallet solution (Coinbase Wallet) for those who prefer to store their own crypto. Our goal is to make the best custodial and self-custodial solutions in crypto - each carry their own risks and benefits, and it's important...
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8/ ...that customers can choose the best solution for their needs. We'll continue working to improve customer protections in all our products across both categories.
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