The head of Coinbase Institutional, Brett Tejpole, believes that the bankrupt crypto companies themselves are to blame for their problems, because they neglected the basic fundamentals of financial risk management.
According to Brett Tejpaul, the events of the past few weeks were quite predictable. Professional members of the crypto community drew the attention of investors in advance to the problems of insufficient risk control in Celsius, Three Arrows Capital, Voyager and the like, which led to a drop in the solvency of companies.
For example, many of these firms were overleveraged because short-term liabilities did not match longer-term illiquid assets. It is for this reason that reports of additional asset protection measures in struggling firms quickly became stories of bankruptcy and restructuring.
“We believe that these market participants have been caught up in the bullish frenzy and have forgotten the basics of risk management. The uninsured stakes, the huge investment in the Terra ecosystem, and the massive leverage provided and deployed by Three Arrows Capital meant the risk was too high and concentrated,” Tejpole said.
The other day, the Coinbase exchange announced that it was “temporarily closing” the program to attract new users in the United States in order to reduce operating costs amid the ongoing crypto winter.
Source: Bits
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