Crypto winter is here Coinbase is in trouble

The cold winter of cryptocurrencies has even forced trading platforms to survive.

Crypto winter is really here. According to a report by the well-known overseas technology website “The Verge”, the world’s first cryptocurrency trading platform, Coinbase, which has landed on Nasdaq, is withdrawing its recruitment position.

In a memo posted on Coinbase’s official website, its chief people officer, LJ Brock, announced a message that has frustrated countless job seekers. Based on ongoing business priorities and current market conditions, the company is suspending new hires and withdrawing several scheduled job offers. Apparently, the big cryptocurrency crash that took place in the past month or so has sent a chill across the cryptocurrency industry in general.

Crypto winter is here Coinbase is in trouble

Coinbase began slowing hiring in mid-May to ensure the company could weather this downturn in the cryptocurrency industry. However, judging from the revelations on social media such as LinkedIn, Coinbase has completely frozen new recruits, and even affected job applicants who were originally used to fill the vacancies of resigned employees. At present, the company did not immediately respond to TheVerge and other outsiders. It was unclear how many jobs Coinbase had eliminated in total, according to a request for comment.

Coinbase standing above the wind

Founded in 2012, Coinbase was co-founded by former Airbnb software engineer Brian Armstrong, former Goldman Sachs trader Fred Ehrsam, and co-founder Ben Reeves. It has only been online for more than three years, and there are only a few exchanges such as Mt.Gox and Bitstamp).

Although Coinbase is indeed unable to keep up with the rising stars Binance, OKEX, and Huobi in terms of profitability.Binance has 1065 trading pairs, OKEX has 721 trading pairs, Huobi has 1047 trading pairs, while Coinbase has only 162 trading pairs; compared with the 24h trading volume on 4.14, Binance is 124.3 billion US dollars, OKEX is 37.4 billion US dollars , Huobi is $47 billion, while Coinbase is $4.3 billion; in this comparison, we can actually see that Coinbase is completely inferior to Binance, OKEX, and Huobi in terms of transaction volume and number of trading pairs.

Crypto winter is here Coinbase is in trouble

But it is the one that will grasp the direction of the wind the most. On March 18, 2013, the U.S. Financial Crimes Enforcement Agency (FinCEN) issued an “interpretative guidance” stating that institutions that offer to manage or trade virtual currencies such as Bitcoin should be considered “money transfer institutions”, subject to state licenses, Federal Registration and Bank Secrecy Act. At the time, there were not many people who paid attention to this, because the crypto exchange was too small, but after Brian Armstrong and Fred Ehrsam had such in-depth communication that night, they always believed that building the Coinbase brand would allow more users to participate. Come in, compliance will be the way out for Coinbase, and Coinbase has also invested millions of dollars in compliance registration.

And this decision directly put Coinbase on the cusp of cryptocurrency compliance. In January 2015, Coinbase became the first token exchange (cryptocurrency exchange) in the United States to hold a formal license. Affected by this, Coinbase also successfully received a Series C financing of US$75 million. Since then, Coinbase has successively obtained the Money Transmitter License in 50 states in the United States, and has become one of the few exchanges that has a BitLicense specially issued by New York State for digital currency exchanges, and has obtained legal tenders in 33 countries. License and open payment channels.

Standing on the air of compliance, even if Coinbase’s profitability is weaker than that of Binance, OKEX, and Huobi, Coinbase has taken advantage of the “compliance” trick to eat food all over the world. Against the backdrop of the growing prosperity of NFT, Web3, Metaverse), Coinbase successfully listed on Nasdaq in 2021, and its first-day valuation reached a historic $85.8 billion.

Coinbase can’t stand the crypto winter

Coinbase’s main business can be divided into three categories: ordinary consumers, professional traders and institutional traders according to user groups. Among them, services for ordinary consumers include Coinbase trading platform, Coinbase Wallet digital asset wallet Coinbase Earn and USD Coin; services for professional traders include Coinbase Pro trading platform; services for institutional traders include Coinbase Prime trading platform, Coinbase Commerce Payment business, Coinbase Custody digital asset custody business and Coinbase Venture venture capital business, so for Coinbase, the level of platform revenue is positively related to the total amount of platform transactions.

Crypto winter is here Coinbase is in trouble

However, driven by the slump of Luna in May this year, after the cryptocurrency leader Bitcoin fell below the key integer of $30,000 twice this week; misfortunes do not come singly, the Federal Reserve recently released the semi-annual Financial Stability Report, warning that the Stablecoins such as hard currency-linked assets that may depreciate under pressure or lose liquidity. And the U.S. Treasury Department recently stated that the Financial Stability Oversight Council (FSOC) is trying to identify which digital assets will pose risks. Affected by this, the cryptocurrency industry has recently seen a terrifying scene of thousands of coins being mines, and the transaction volume of various trading platforms has declined significantly.

Back to Coinbase, its financial report released not long ago showed that revenue in the first quarter was $1.17 billion, down 27% year-on-year. Wall Street had previously expected $1.48 billion, while recording a loss of $420 million. Various operating data fell off a cliff. Among them, Coinbase’s retail transaction revenue of cryptocurrencies in the first quarter was 966 million US dollars, down 56% year-on-year; institutional transaction revenue was 47 million US dollars, down 48% compared with the fourth quarter of last year; and the recently launched new The response of the NFT trading market in China was also flat. According to Dune Analytics data reviewed by The Motley Fool, within 19 days of its launch, only 4,132 people on the platform purchased NFTs, with a total sales of only $875,000, or an average of $46,000 per day. The reason for this is that the NFT market as a whole is in a cold winter. It is reported that the current weekly NFT sales in the industry are about 19,000 times, while the NFT sales in September 2021 will be 225,000 times.

Pigs can fly above the tuyere, but when the wind stops, the higher they fly, the worse they fall. Now Coinbase has just stepped out of the regulated tuyere and has entered the cold winter of the cryptocurrency industry, even if Many honors have also had to suspend recruitment or even layoffs.

Posted by:CoinYuppie,Reprinted with attribution to:
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