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Coinbase junk bonds dip amid company’s poor Q1 performance

Coinbase Mizuho
Coinbase Mizuho

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The Coinbase junk bonds have recorded a notable decline following the exchange’s poor performance during the first quarter of 2022. Users on the exchange have also expressed concern over the “leaked” details about what the company plans to do with their crypto holdings in case of bankruptcy.

Coinbase junk bonds dip

Data from Trace Bonds shows that Coinbase’s junk bond offerings have tanked significantly since the company released its Q1 financial results on Tuesday. The company’s junk bonds have tanked by 20% and 19% since the beginning of the month.

Coinbase junk bonds launched at $100 each, but they have been on a gradual decline, and they are now trading at $63 and $62.31 each. However, the largest decline has been recorded this month, showing that Coinbase investors are not confident about the company.

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Coinbase stock has also registered a sharp decline since the release of Q1 financial results. In one month, the stock dropped by around 60%. This decline comes as the crypto market has been bearish even before the company released its Q1.

Coinbase users spooked by bankruptcy proceeding disclosure

Besides the company’s $430M net loss in Q1, investors were also quick to note disclosure in the Q1 report showing how the company would treat user assets if it files for bankruptcy.

The report said that if Coinbase were to file bankruptcy, the digital assets held by the company on behalf of users would “be subject to bankruptcy proceedings.” It added that users could be viewed as “unsecured creditors.”

The disclosure spooked investors that have digital assets on the exchange. They argued that if Coinbase had to go under, they could not get their assets out of the platform. However, the CEO of Coinbase, Brian Armstrong, said that the exchange was not at any risk of bankruptcy.

He also called upon the company’s investors to remain calm, saying that the decline in the company’s stock was “scary” but added that the company could handle the recent bearish sentiment across the market.

“In times like these we need to step back, and zoom out. Nothing about Coinbase changed this week, we are the same company we were yesterday or a year ago. If anything, we are in an even stronger position given our balance sheet,” Armstrong said. He also said that the recent bull cycle had increased the company’s profits and cash.

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