In an effort to allay worries that the exchange would have been vulnerable to a liquidity constraint, Coinbase asserts that it has “no financing exposure” to bankrupt crypto startups Celsius Network, Three Arrows Capital (3AC), or Voyager Digital.
“Many of these firms were overleveraged with short-term liabilities mismatched against longer duration illiquid assets.”
The aforementioned businesses all declared bankruptcy after excessively leveraged positions were liquidated as a result of the collapse in crypto prices.
“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.”
As a result of the information, Coinbase’s shares increased 15% to $75.68. Since the beginning of January, the stock has dropped from $251 by 70%.