Crypto Firms Facing Insolvency “Forgot the Basics of Risk Management” — Coinbase
"The issues here were predictable and in fact credit-specific, not crypto-specific," three department heads at Coinbase said .
New
Coinbase department heads have weighed in on the market slowdown amid solvency issues surrounding Three Arrows Capital, Celsius Network and Voyager Digital, saying the crypto exchange has "no financial exposure" to these companies .
In a blog post on Wednesday, Coinbase Institutional Head Brett Tejpaul, Senior Funding Manager Matt Boyd, and Credit and Market Risk Manager Caroline Tarnok said Coinbase has not engaged in the "types of risky lending practices" exhibited by Three Arrows Capital, Celsius and Voyager, claiming the firms used "insufficient risk controls". According to the three co-authors of the paper, crypto companies faced the possibility of insolvency caused by "uncovered bets", large investments in Terra, and over-indebtedness with venture capitalists. /p>
"The issues here were predictable and in fact credit-specific, not crypto-specific," Tejpaul, Boyd, and Tarnok said. “Many of these companies were over-leveraged with short-term liabilities incompatible with longer-lived illiquid assets. We believe these market participants got caught up in the frenzy of a crypto bull market and forgot the basics of management risk."
A court in the British Virgin Islands has reportedly ordered the liquidation of Three Arrows Capital. Voyager Digital filed for bankruptcy in July, later announcing that its plan to restore users' crypto may depend on funds from any proceedings with Three Arrows Capital, which failed to repay 15,250 Bitcoin (BTC...
"The issues here were predictable and in fact credit-specific, not crypto-specific," three department heads at Coinbase said .
New
Coinbase department heads have weighed in on the market slowdown amid solvency issues surrounding Three Arrows Capital, Celsius Network and Voyager Digital, saying the crypto exchange has "no financial exposure" to these companies .
In a blog post on Wednesday, Coinbase Institutional Head Brett Tejpaul, Senior Funding Manager Matt Boyd, and Credit and Market Risk Manager Caroline Tarnok said Coinbase has not engaged in the "types of risky lending practices" exhibited by Three Arrows Capital, Celsius and Voyager, claiming the firms used "insufficient risk controls". According to the three co-authors of the paper, crypto companies faced the possibility of insolvency caused by "uncovered bets", large investments in Terra, and over-indebtedness with venture capitalists. /p>
"The issues here were predictable and in fact credit-specific, not crypto-specific," Tejpaul, Boyd, and Tarnok said. “Many of these companies were over-leveraged with short-term liabilities incompatible with longer-lived illiquid assets. We believe these market participants got caught up in the frenzy of a crypto bull market and forgot the basics of management risk."
A court in the British Virgin Islands has reportedly ordered the liquidation of Three Arrows Capital. Voyager Digital filed for bankruptcy in July, later announcing that its plan to restore users' crypto may depend on funds from any proceedings with Three Arrows Capital, which failed to repay 15,250 Bitcoin (BTC...
What's Your Reaction?
