If a Crypto Exchange Goes Bankrupt, What Happens?: Explained (1)

Coinbase Global’s public pondering of what-if-bankruptcy scenarios underscored cryptocurrency market volatility and raised questions about what may happen to users’ assets on an exchange if it does go bankrupt.

The largest US crypto exchange said in a Securities and Exchange Commission filing last week that a bankruptcy court could consider customer assets Coinbase is the custodian of a bankruptcy estate’s property.

Coinbase CEO Brian Armstrong clarified that the company faces “no risk of bankruptcy.” The company has also said customer assets are safe and each account is segregated.

But the filing and the crypto market’s topsy-turvy week did little to ...