You know,there are a lot of CB rumors right now involving liquidity and potential bankruptcy. First, I have seen no credible report that indicates CB is about to go bankrupt. CB going bankrupt would be a huge setback for crypto and I have to imagine that if CB was in such serious trouble that they were about to go bankrupt there would be a significant number of wealthy people or groups that would be highly interested in buying enough shares of CB to take control of the company or to buy them out and take the company private again. Second, writing stories about CB maybe going bankrupt is a good way to get your article clicked online so I imagine bloggers and others are writing about what gets clicked. In the past week or two I've heard:
CB Pro is shutting down because CB is in trouble. As far as I can tell CB Pro style trading will be available as Advanced Trade on Coinbase. The fee schedule to buy/sell looks about the same, but not sure what it will end up being by the end of the year. Of course Coinbase Pro, had it continued, could have altered trading fees at any time itself. My biggest concern here is what happens to existing orders and what glitches might I experience if I have any trades or cash or crypto on CB Pro at the time it changes over. This change doesn't indicate any upcoming bankruptcy. It would be nice to have everything on one platform instead of having to sometimes move stuff between CB and CB Pro. If Advanced Trade sucks or starts charging crazy fees, then that will be a huge deal.
CB layoffs and rescinding job offers. This happens during poor economic times. People get laid off and job offers are rescinded. It isn't a good sign for CB, but this is hardly unique to CB.
Hundreds of Millions of $s are leaving CB. People are pulling coins and cash off of exchanges for their own wallets. I think people are realizing it is better to pay gas and transfer fees and in some cases forego staking or lending awards in order to ensure the safety of your crypto. Obviously Celsius and Voyager and others are spurring this on. How much of an impact the removal of crypto from CB will have on CB remains to be seen. CB, allegedly, doesn't make money lending out crypto so they aren't losing out on interest from lending out coins. They also thus allegedly don't have coins at risk that are being lent out.
CB allegedly temporarily shutting down the US affiliate marketing program. Not sure the reasons for this other than they maybe have decided it isn't paying off. I'm not really familiar with this program.
CB Pro USDC trading pairs recently disappeared. Apparently they are merging USDC with USD.
Despite the fact that I am unaware of any credible report showing Coinbase is about to go bankrupt, I have moved most of my coins off of ALL CEXs, including CB (Obviously I can't move my staked ETH). If CB were to ever go bankrupt, nobody knows for sure if they would ever see their crypto again or how much of a warning there would be (would you have enough time to move your coins?). So, do I trust my coins on CB? No. Is it because I think CB is going bankrupt this month or next? No; it is because I don't trust any CEX and I'd rather keep my own coins in my own wallets.
We hasn't seen any credible report that CB is about to go bankrupt. There are a bunch of bankruptcy rumors that might be based on multiple factors, such as current CB layoffs, CB Pro being phased out, etc. Still, you might want to get your coins off of ALL CEXs to be safe and into your own wallets. OP has moved most of his coins off of all CEXs, including CB.
They're a publicly traded company. No that doesnt mean they're 100% safe. But it does mean every quarter and year their financial records are audited by a 3rd party when they release their 10-Qs and 10-Ks. I can look at their financial records and see that in the quarter ending march 31st that had $20.9 billion in assets, and $14.4 billion in liabilities.
Some may correctly point out that crypto has been through the woodchipper since then and their assets might be much lower today. That's true but their liabilities would also be lower because when a customer deposits crypto on Coinbase the crypto itself is an asset. But what's owed to a depositor goes on the balance sheet as a liability. That means anything having to do with customer deposits and falling crypto prices would shrink BOTH Coinbase' assets and liabilities.
Correct my if I'm wrong but does Coinbase even lend out customer deposits or do any kind of fractional reserve lending? My gut tells me no because I'm sure they would find themselves on the wrong side of financial regulators being a US publicly traded company. If they're involved with lending you gotta tell me with who because as far as I can see, as a customer, there's only over collateralized loans made on Bitcoin via Coinbase. They're a publicly traded company that's trading right now at $12 billion and they have access to the capital markets. What's that mean? If they were in financial trouble they can do secondary stock offerings to raise capital. They could very easily raise a couple billion dollars by diluting common stock holders if they needed to.
Coinbase isn't 100% safe but any rumors about bankruptcy makes me smell a giant heaping pile of bullshit.
Edit: some people have asked how Coinbase makes money. According to their latest 10-Q this is where their revenue comes from:
Retail transaction revenue represents transaction fees earned from customers that are primarily individuals, while institutional transaction revenue represents transaction fees earned from institutional customers, such as hedge funds, family offices, principal trading firms, and financial institutions on the institutional platform. Institutional clients can trade via the Company’s trading platform or utilize Coinbase Prime services depending on their needs. High-frequency trading firms, such as market makers and principal traders, benefit from lower latency by connecting through the trading platform, while corporations and family offices can access an integrated suite of investment services through Coinbase Prime.
The Company generates revenues in crypto assets through various blockchain protocols. These blockchain protocols, or the participants that form the protocol networks, reward users for performing various activities on the blockchain, such as participating in proof-of-stake networks and other consensus algorithms. The Company considers itself the principal in transactions with the blockchain networks, and therefore presents such blockchain rewards earned on a gross basis. Blockchain rewards are primarily comprised of Staking revenue in which the Company participates in networks with proof-of-stake consensus algorithms, through creating or validating blocks on the network using the staking validators that it controls. In exchange for participating in the consensus mechanism of these networks, the Company earns rewards in the form of the native token of the network. Each block creation or validation is a performance obligation. Revenue is recognized at the point when the block creation or validation is complete and the rewards are transferred into a digital wallet that the Company controls. Revenue is measured based on the number of tokens received and the fair value of the token at contract inception. Blockchain services offered as part of Coinbase Cloud’s blockchain infrastructure solutions are included in Other subscription and services revenue.
Custodial fee revenue
The Company provides a dedicated secure cold storage solution to customers and earns a fee, which is based on a contractual percentage of the daily value of assets under custody. The fee is collected on a monthly basis. These contracts typically have one performance obligation which is provided and satisfied over the term of the contracts as customers simultaneously receive and consume the benefits of the services. The contract may be terminated by a customer at any time, without incurring a penalty. Customers are billed on the last day of the month during which services were provided, with the amounts being due within thirty days of receipt of the invoice. Accounts receivable from customers for Custodial fee revenue, net of allowance, were $15.8 million and $22.4 million as of March 31, 2022 and December 31, 2021, respectively. The allowance recognized against these fees was not material for any of the periods presented.
Earn campaign revenue
The Company provides a platform for crypto asset issuers, the customer, to engage with the Company’s retail users and teach them about new crypto assets through the use of educational tools, videos, and tutorials. In exchange for completing a task, such as watching the video or downloading an application, retail users may be eligible to receive crypto assets from the crypto asset issuer. The Company is the agent with respect to the delivery of the crypto assets. The Company earns a commission from the crypto asset issuer based on the amount of crypto assets that are distributed to users.
Interest income and corporate interest and other income
The Company holds customer custodial funds and cash and cash equivalents at certain third-party banks which earn interest. The Company also earns interest income under a revenue sharing arrangement and on loans granted to retail and institutional users. Interest income is calculated using the interest method and is not within the scope of Topic 606 – Revenue from Contracts with Customers. Interest earned on customer custodial funds, revenue sharing, and loans is included in Interest income within Subscription and services revenue. Interest earned on cash and cash equivalents is included in Corporate interest and other income, within Other revenue.
Other subscription and services revenue
Other subscription and services revenue primarily includes revenue from Coinbase Cloud, which includes staking application, delegation, and infrastructure services, as well as revenue from subscription licenses. Generally, these contracts with customers contain one performance obligation, may have variable and non-cash consideration, and are satisfied at a point in time or over the period that services are provided.
The rumours about Coinbase is the epitome of FUD. People will say anything these days for clicks and views.
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