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Is Coinbase Going Bankrupt?

Is Coinbase Going Bankrupt?

Rumours of Coinbase’s bankruptcy persist even after the company has denied such claims and is actively expanding its business abroad. In July 2022, Coinbase ended its affiliate program. A month before shutting down Coinbase Pro, its advanced trading arm of Coinbase, it announced a similar feature called Advanced Trade. In addition to the merger of their USD order books with USDC, these two announcements sparked a whirlwind of rumours of Coinbase’s bankruptcy. Additionally, Coinbase’s financial performance in 2022 was a significant success for the crypto exchange after a charged bull run in 2021 for most of the crypto market.

In its second-quarter earnings report, the company reported critical losses of approximately $1.1 billion, representing a nearly 60% decline in revenue, mainly due to macroeconomic and systemic factors in the insurance industry—cryptocurrencies, resulting in lower trading volume on Coinbase.

The crypto community seemed divided; On one end of the spectrum, users claimed that Coinbase was on the verge of bankruptcy — claims that Coinbase has repeatedly denied — and on the other end, claimed this was nothing more than FUD. Rumours and controversy were sparked after the collapse of crypto firms like Celsius, Voyager, and Three Arrows Capitals, all of which were directly linked to Terraform Labs and the failed UST/LUNA. Above companies. Instead, Coinbase said in its Q2 earnings report that it had invested heavily in developing products with high-quality features and proper risk management for retail and institutional clients.

“No Risk of Bankruptcy,” Says Brian Armstrong

Brian Armstrong said the company is not at risk of bankruptcy, but they have worked to give retail customers the same legal protections as Prime and Custody customers in a black swan event. This follows Form 10-Q filed with the SEC, which states that retailer funds have filed for bankruptcy. SEC SAB 121 would require disclosure for third parties to manage cryptocurrencies.

What’s Next for Coinbase?

Coinbase is currently struggling with pressure from the SEC. The regulator has sent the exchange multiple subpoenas and requests for documents and all relevant information regarding its staking program, revenue-generating products, and token listing process. The SEC previously confronted the deal by claiming that 9/10 of its cryptocurrency are securities, a claim it has repeatedly denied. Pressure from US regulators prompted Coinbase to fight back and support digital asset manager Grayscale in its lawsuit against the SEC. The latter is suing the SEC for rejecting a Bitcoin ETF, claiming that the SEC “does not apply consistent treatment to similar investment vehicles.”

Besides the political heat in the US, Coinbase has focused on launching new products and services in the US and abroad. One of them is B., a crypto dashboard that updates Coinbase users on the stance of US politicians on cryptocurrencies based on where they live. Coinbase also recently partnered with Google to allow users to pay for cloud services with cryptocurrencies. Both companies said this collaboration would help spread Web3 technology from 2023 onwards. The exchange will move its data-related applications from Amazon Web Services to Google.

The tech giant is also reportedly exploring using Coinbase Prime, a service that securely stores companies’ cryptocurrencies and allows them to conduct business. According to Zavery, Google will experiment and “see how we can participate in cryptocurrency governance.” Coinbase is also expanding its service to retail investors in Australia, making it easier to buy, sell and trade cryptocurrencies. The company will present PayID as a direct deposit form from its bank accounts. This allows deposits and withdrawals in AUD access to over 200 crypto assets. The company also said it would offer its advanced trading interface for professional traders.

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