On July 20, cryptocurrency exchange platform Coinbase confirmed that there was no risk of exposure to bankrupt cryptocurrency firms like Three Arrows Capital, Voyager Digital, and Celsius. This announcement shot up Coinbase’s stock prices by 14.34%, to a closing stock price of $75.27.
Coinbase opined that they had not engaged in any dangerous lending practices. According to the company, they have always focused on efficiently building financial relationships with their clients.
Coinbase revealed that the firm engaged in an “immaterial investment” through its venture capital sector in Terraform Labs. Terraform Labs was behind the development of the failed stablecoin, Terra. A “crypto winter” was brought on by the circumstances plaguing Terra at the time and wider disturbance in the larger cryptocurrency industry was unavoidable. Numerous firms affiliated with Terraform Labs failed to survive the downfall of UST and LUNA coins. One such company was Three Arrows Capital, also known as 3AC.
The ripple effect of 3AC’s bankruptcy
Genesis Capital, a digital asset exchange firm, said that it would sell its collateral against the risk of bad debts if 3AC failed to meet margins. Blockchain.com may suffer a loss of $270 million if 3AC is unable to repay loans.
Coinbase opined that the three firms mentioned earlier in the article were burdened with short-term liabilities that were not in tune with their assets. The company assured users that they were not about to suffer the same fate.