Coinbase: crypto exchange’s fortunes remain tied to volatile bitcoin

Coinbase: crypto exchange’s fortunes remain tied to volatile bitcoin

Coinbase generated plenty of buzz in February with its Super Bowl TV ad. Dubbed “Less talk, more bitcoin”, the commercial featured a bouncing QR code offering new users $15 in free bitcoin.

The US-listed crypto exchange itself could do with less talking and more bitcoin trading. Rising interest rates have sent investors scrambling out of high-risk assets. A smaller user base and less trading volume resulted in a 27 per cent slide in first-quarter revenue, pushing the company into the red. Coinbase warned that trading volume would decline further in the current quarter.

Bad enough, but then Coinbase got yakking. An attempt by its founder and chief executive Brian Armstrong to clarify a new SEC disclosure requirement only further alarmed the market. Coinbase’s share price collapsed by more than a fifth on Wednesday. Its market valuation — which in November stood at more than $76bn — has shrunk to $12.5bn.

In a filing, Coinbase pointed out that, should it go bankrupt, any crypto assets held in its custody — worth $256bn at the end of March — could be subject to bankruptcy proceedings. As its users may be considered unsecured creditors, in a worst case, they could lose all their crypto assets parked