Coinbase calms investors worried about credit risk and FTX token exposure – blog
Nov 8 (Reuters) – Cryptocurrency exchange Coinbase Global Inc (COIN.O) has assured investors of minimal exposure to private rival FTX after concerns over the latter’s finances dragged its digital coin FTT to its lowest level since early 2021.
“Coinbase and our customers do not bear any direct liquidity or credit risk,” chief financial officer Alesia Haas wrote in a blog post on Tuesday.
“It doesn’t matter if the Binance/FTX transaction ends, we have very little exposure to FTX and we have no exposure to its token, FTT.”
FTX came under pressure when Changpeng Zhao, head of rival exchange Binance – the world’s largest – said on Sunday that his company would liquidate its holdings of FTX tokens due to unspecified “recent revelations”. FTX CEO Sam Bankman-Fried later clarified that the exchange was “good” and that the concerns were “false rumors”.
Earlier on Tuesday, Binance signed a non-binding deal to buy the non-US unit of FTX to help cover a ‘cash shortage’ on the rival exchange, marking an abrupt change in fortunes for the digital currency billionaire. Bankman-Fried.
FTT is the 30th largest digital coin with a value of $2 billion, according to CoinMarketCap. Amid talk of pressure on FTX’s finances, FTT lost a third of its value and dragged down other major digital assets.
Cryptocurrency firms have been rocked by a major rout this year as rising interest rates and escalating fears of an economic downturn hit speculative assets.
Key players such as Voyager Digital, Three Arrows Capital and Celsius Network collapsed while hundreds were made redundant in the sector. Bankman-Fried had stepped in to shore up these businesses and aggressively acquired assets, technology and customers at cheap valuations.
Reporting by Mehnaz Yasmin in Bangalore; Editing by Krishna Chandra Eluri
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