The crypto market has been struggling recently. Volatility from the broader market is starting to affect the bottom line of crypto exchange companies. For example, Coinbase shares were down nearly 20% during Thursday's session after a huge miss on estimates in its Q1 earnings report. The crypto exchange also warned users that they could lose all the cryptocurrency stored in their accounts on the platform if the company goes bankrupt. Jeff Roberts, the Executive Editor of Decrypt, joins Cheddar News' Closing Bell to discuss.

Closing Bell

Coinbase Says Customers Could Lose Crypto if Company Goes Bankrupt

crypto has been struggling recently, I just showed you and it's starting to impact the broader market as well as the bottom line of crypto exchange companies for example, coin base is down nearly 20% after a huge miss on estimates in its latest earnings report and hidden in the report, the crypto exchange ward users that if the company goes bankrupt, users could lose all their Cryptocurrency stored in their accounts on the platform. Joining us. Now to discuss is Jeff roberts, executive editor of the crypto news outlet. Decrypt and Jeff, can you explain to us what this warning from coin based means for both the company and the people who hold crypto on the platform? Yeah, this came as sort of like the you know the final straw of mixed my metaphors but there's a perfect storm prescriptive out there, things are getting better prices are down, there's a terror crisis coin based missed earnings badly and then came this. However, the bankruptcy warning was in my opinion. Um I think a bit of sensational and miss reporting fortunate put out a headline saying you know, they're warning, you know bankruptcy could happen, you could lose your money. Um The explanation is a little more boring. The ceo brian armstrong cleared it up today saying, look, we had to put this in our earnings notes because of a new like SCC disclosure requirement saying in a bankruptcy proceeding technically that might be considered part of the company's funds, which is an unlikely legal theory and a very like you know, very, very remote prospect. But because of that, I think the markets are so skittish already that people took this and thought the worst lucky for you and our viewer here at cheddar news, our journalistic integrity is spot on. So we will tell you that the tweeted yesterday the company has no risk of bankruptcy and the warning was included because of the new sec requirement that you mentioned. So is this something that we see in other platforms when they have earnings reports? Possibly. Yeah, I mean I think if companies the new rule is if you own crypto your company with crypto, you have to put this disclosure saying they're not sure what's going to happen in bankruptcy. You know, I mean, I know banksy expert, although I know a bit about it used to be a lawyer and what happens, you know, company's assets are distributed to the creditors. However, in this case this is crypto that coin base, you know, holds on behalf of the customer if you have a coin based account and they hold one of your bitcoins and there's a bankruptcy, you know, I'm pretty sure what bankruptcy court would do is, you know, say, hey, all these people who, it's their stuff, give it back to them, you know, it's untested theory. But the sec has, you know, and Gary Gansler's head is very anti crypto. So I think he's trying to sort of stir the pot and make life difficult for the crypto industry. I mean you know, not saying coin base has done everything right not saying there's reasons not to be concerned but Coinbase the industry. But this bankruptcy thing is overblown now. Although you mentioned this what advice would you give to people with accounts on coin base who may be afraid of losing their crypto currency I've always said and I've always been told if it's not your coin it's not your crypto. But what advice do you have? Um It's up to you I mean you know. Yeah I think you know armstrong the ceo of Coinbase said it himself put it to your own custodial wallet. You know if you're serious crypto people that's what a lot of them do. This is something that's just controlled by you you control the keys to it. It's more of a pain though and there's more of a risk that if you don't know what you're doing you could lose your private key and lose your crypto. So it's just it's the same old trade off between like autonomy security and convenience. A lot of people find you know sites like coin based more convenient convenient to do that for them. If you're one of those people nothing has changed since yesterday. However you want to get deeper into crypto and you want to kind of like do like the O. G. S. Do. Enroll like they do get your own wallet and store it that way but just do some reading before you do that. So looking at coin business a company, do you think it has any potential to go bankrupt. Do you agree with the ceo that it's not gonna happen? I just don't see how it would happen. I mean this is a company that's been made a lot of profits in four out of five quarters. You compare that to companies like Uber and stuff that post losses like you know quarter after quarter after quarter, they had a bad quarter this time but they also spend a lot on growing and hiring and stuff like that. They've got an enormous cash reserve and you know they also hired a bunch of people, they say they're not going to lay them off but they could I mean if Coinbase wanted to be profitable tomorrow it could. So you know a lot of this depends too on your view of the macro crypto markets if you're you know sort of what they call no no coiner and believe all crypto is terrible and it sucks then you know this is probably not the company or the industry for you but if you believe in sort of Blockchain in the future of web three, you know, I think coin base is a good company, I'm not going to buy it but you know it's stock is now very cheap, it's trading for 50 bucks, which is disastrous given it went you know when it debuted last year it was You know, I think it was at like 380 so it's like an 87% drop which is crazy but you know at the same time the fundamentals of the company, you know they're profitable, they've gotta have been profitable mostly they're the industry leader and they've got you know the strategically in a good place, you know I think you know corn mazes pretty solid. So what advice would you give to current or potential crypto traders right now as the market continues to be volatile? Well welcome to the roller coaster. It's it's funny this used to be how it was like almost every month in the old days in crypto you know just dramatic volatility crashes disasters. You know we've just been in such a good period of crypto this year has not been so hot but this is the first major like disaster in a while I think triggered by terra which you're discussing earlier, that's a very bad scene, what's happening over there. But you know you look at the underlying things how how advanced crypto is compared to the last big you know, you know big bubble. Remember 2017, you know huge I. C. O. S run up Bitcoin prices going crazy big crash and then down 70 or 80%. This has happened over and over throughout the history of Bitcoin and crypto but each time it seems like the bottom is a little lower than before. The crash is not quite as bad And so you know my advice would probably hang on, you know? But it depends. I mean if you want security, pick another industry then you know, I don't know pick like you know diapers or pharmaceuticals or something. If you want to park your money somewhere less volatile, if you're into risk and you like Blockchain then put your money in crypto. And right now I would say it's probably not a good time to sell, but you know you do you out there. All right Jeff roberts man, I love the passion, Jeff roberts, Executive editor of the Crypto news alec decrypt. I appreciate your time and sharing your passion with us sir. Thank you so much.