Coinbase clarifies: no exposure to 3AC

Last Updated: 22 July 2022

The Crypto exchange, Coinbase, is responding to rumours that the company is in financial trouble. There were stories that the American exchange was insolvent due to its exposure to Three Arrows Capital. This hedge fund, also known as 3AC, has gone bankrupt, which has left its mark everywhere.

Coinbase unscathed

3AC has defaulted on repaying over $3 billion in debt to its creditors. As a result, many crypto companies are making losses. But Coinbase is not, the exchange writes. They have had no exposure to 3AC, Celsius, Voyager, or similar parties.

“We believe that these market participants were caught up in the frenzy of a crypto bull market and forgot the basic principles of risk management.”

“Unhedged positions and huge investments in the Terra ecosystem and huge leverage positions by 3AC made the risk too high and too concentrated.”

Coinbase says it applies “risk management” as its “first principle in the business.” Therefore, they claim to be protected against “a potential default contagion.”

Coinbase is ‘safe’

So there are always winners and losers. Coinbase seems to be quite safe, while competitors like FTX seem to be on the up. They are spreading money around and do not hesitate to support or take over failing companies. Whether it is BlockFi, or loans via Alameda Research to Voyager.

Despite the fact that they are not affected by the 3AC fiasco, Coinbase is having a hard time these past months. Yesterday, they discontinued their affiliate program and laid off a significant part of their staff too. The cryptowinter is not affecting the altcoin exchange.

At the same time, Blockchain.com and Genesis Trading are clearly victims of the loans to 3AC, which have gone wrong. It is not yet clear what the exact consequences will be.

Author

  • I first came into contact with Bitcoin in 2017 - and since then, the topic of cryptocurrencies has never left me. For this reason, I have also made BTC & Co. part of my profession and write as a freelance author for crypto publications.

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