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D. New JerseyCourt
On May 10, 2022, Coinbase disclosed that: “Because custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.”
In the following tweet commenting on the disclosure, Coinbase’s CEO, Brian Armstrong stated: “We should have updated our retail terms sooner, and we didn’t communicate proactively when this risk disclosure was added. My deepest apologies, and a good learning moment for us as we make future changes.”
By this statement, Armstrong confirmed failure to disclose materially important information for all stakeholders of the Company and as a result breach of fiduciary duties to them.
Following this disclosure, the price of Coinbase’s stock fell by 26.4%, to close at $53.72 per share on May 11, 2022.
Failure to Disclose,
Breach of Fiduciary duty
Shock Event Date
10 May 2022