Coinbase Denies Having Exposure to 3AC, Celsius, and Voyager; Admits Investments in Terraform

Nasdaq-listed behemoth cryptocurrency exchange Coinbase has cleared the air on its financing links to some troubled crypto companies via a blog post on Wednesday. The post is by top Coinbase executives, including Brett Tejpaul, head of Coinbase Institutional, Matt Boyd, head of Prime Finance, and Caroline Tarnok, head of Credit and Market Risk.

Coinbase Throws 3AC, Celsius, and Voyager Under the Bus

The blog post detailed: “Solvency concerns surrounding entities like Celsius, Three Arrows Capital (3AC), Voyager, and other similar counterparties were a reflection of insufficient risk controls, and reports of additional struggling firms are fast becoming stories of bankruptcy, restructuring, and failure.” The authors added:

“Notably, the issues here were foreseeable and actually credit-specific, not crypto-specific in nature. Many of these firms were overleveraged with short term liabilities mismatched against longer duration illiquid assets.”

The Coinbase executives further explained: “We believe these market participants were caught up in the frenzy of a crypto bull market and forgot the basics of risk management. Unhedged bets, huge investments in the Terra ecosystem, and massive leverage provided to and deployed by 3AC meant that risk was too high and too concentrated,” emphasizing:

“Coinbase had no financing exposure to the groups above. We have not engaged in these types of risky lending practices.”

Late last year, the cryptocurrency exchange halted plans to launch a Lend program after the US Securities and Exchange Commission (SEC) threatened legal action if the crypto exchange saw the project through.

The Coinbase executives further detailed in the blog post that the company is “focused on building our financing business with prudence and deliberate focus on the client.”

Crypto Lending protocols Celsius Network and Voyager Digital filed for Chapter 11 bankruptcy earlier in July after crypto hedge fund Three Arrows Capital filed for Chapter 15 bankruptcy.

Finally, the Coinbase executives clarified:

“While Coinbase does not have counterparty exposure to the companies listed above, Coinbase’s venture program did make non-material investments in Terraform Labs.”