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Old 13 May 2022, 07:34 AM   #1
Madman37
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Coinbase

Hi all how are you. What is your view of Coinbase maybe going bankrupt and Bitcoin going down badly.
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Old 13 May 2022, 07:42 AM   #2
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Very unlikely Coinbase will go bankrupt. The question is how permanent will the overall crypto devaluation hit them. They have some of the highest fees of trading platforms in exchange for the beginner-friendly experience, which is going to dry up with all the media hype around Bitcoin's drop. I don't personally use them but know many people that work there, and it's a tough stretch given how much of compensation is in RSUs.

Bitcoin seems to cycle this way though, and in my opinion will jump up to $100k in the next couple of years depending on how the overall global economy stabilizes post-pandemic.
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Old 13 May 2022, 02:43 PM   #3
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I like Coinbase I actually made 44k in the last 24 hours off Sh—- coins. They are not going anywhere
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Old 13 May 2022, 04:00 PM   #4
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I think both will probably be fine in the long run.

With respect to Bitcoin and Coinbase, I don't think it is all that unusual for people very new to crypto to invest in it (often through Coinbase, as it is very user-friendly and it's non-pro app seems to advertise towards to newer users), at some point Bitcoin/Ether/altcoins goes through a wild phase of price fluctuations (like yesterday), and people panic and sell for a loss. That said, I moved from Coinbase to Binance due to the fees.

I'm sure a lot of lesser known altcoins will die over the next coming months, but that seems to happen (to a lesser extent) even when economic conditions are great.
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Old 13 May 2022, 11:20 PM   #5
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Hi all how are you.
Fine, how are you?
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Old 13 May 2022, 11:28 PM   #6
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coinbase makes money off transactions not the value of crypto or bitcoin. they'll make less in a bear market but bank in a bull market. they'll be fine
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Old 14 May 2022, 03:03 AM   #7
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Hi all how are you. What is your view of Coinbase maybe going bankrupt and Bitcoin going down badly.
LOL... WAT

where do these guys/posts come from...
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Old 14 May 2022, 03:08 AM   #8
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LOL... WAT

where do these guys/posts come from...
This place is Boomer central if you haven't noticed from the other crypto thread. Better to ask about golf and Corvettes.
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Old 14 May 2022, 03:13 AM   #9
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LOL... WAT

where do these guys/posts come from...
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This place is Boomer central if you haven't noticed from the other crypto thread. Better to ask about golf and Corvettes.
yeah lol this is like the similar to asking if a brokerage will go bankrupt if stocks drop

crypto is a funny topic. i generally stay away from it in real life because people will be really quick to come out the minute it goes down and when it's up it's a scam. its a lose/lose situation
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Old 14 May 2022, 03:17 AM   #10
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Kind of depends how good you think the CEO is versus Pelotons ousted CEO/Founder?
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Old 14 May 2022, 03:36 AM   #11
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Hi all how are you. What is your view of Coinbase maybe going bankrupt and Bitcoin going down badly.
Perhaps you are just not aware of how the mechanics of exchanges work. Coinbase is the largest exchange in this sandbox. This is like asking if the NYSE or NASDAQ are going bankrupt (also operating as companies) because there is a correction or bear market in equities that trade on their exchanges.

There are counterparties to every trade, which means for every seller there is a buyer and vice versa. Exchanges make their money on both sides of the trade. It is completely irrelevant to them which direction the markets are going. They simply need transactions.

They are and will be just fine.
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Old 14 May 2022, 03:50 AM   #12
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Perhaps you are just not aware of how the mechanics of exchanges work. Coinbase is the largest exchange in this sandbox. This is like asking if the NYSE or NASDAQ are going bankrupt (also operating as companies) because there is a correction or bear market in equities that trade on their exchanges.

There are counterparties to every trade, which means for every seller there is a buyer and vice versa. Exchanges make their money on both sides of the trade. It is completely irrelevant to them which direction the markets are going. They simply need transactions.

They are and will be just fine.
Exactly and well put. The only way Coinbase goes bankrupt is if crypto transactions stop. Their profits and stock price will suffer if crypto keeps going down, but they won't go belly up.
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Old 14 May 2022, 05:11 AM   #13
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Very unlikely Coinbase will go bankrupt. The question is how permanent will the overall crypto devaluation hit them. They have some of the highest fees of trading platforms in exchange for the beginner-friendly experience, which is going to dry up with all the media hype around Bitcoin's drop. I don't personally use them but know many people that work there, and it's a tough stretch given how much of compensation is in RSUs.

Bitcoin seems to cycle this way though, and in my opinion will jump up to $100k in the next couple of years depending on how the overall global economy stabilizes post-pandemic.
Not only this, but Coinbase is making higher profits off of Institutional products than retail investors. Custody, large buys for investment funds, and other institutional products are where they are focusing the efforts right now.

They may eventually lower retail fees, but you can always use Coinbase Pro to get that now.

And despite the stupidity of NFT’s over the last year, CB is expanding into the true NFT authentication and logistics tracking markets. That will be lucrative for them in a few years. Nobody wants your stupid NFT artwork, but people will pay for an NFT permanently assigned to a Rolex or other luxury item to prove authenticity. And yes, watchmakers are already heading towards adopting this.

As well as expanding into many more markets while also having input into the regulatory aspects of crypto.

But the current ride is painful. Didn’t buy at the high, waited for a drop. But I’m viewing it as a 10 yr hold, so ignoring price for now.
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Old 14 May 2022, 09:40 AM   #14
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Fine, how are you?
Lol i am ok thank you
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Old 14 May 2022, 09:41 AM   #15
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thanks all for reply’s and explaining. i can’t believe what i am reading about people losing houses etc because of Terra
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Old 15 May 2022, 10:51 PM   #16
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... but people will pay for an NFT permanently assigned to a Rolex or other luxury item to prove authenticity.
Wow. I still don't get this at all. And I work in I/T where you'd think I'd know something...
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Old 16 May 2022, 04:17 AM   #17
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Not only this, but Coinbase is making higher profits off of Institutional products than retail investors. Custody, large buys for investment funds, and other institutional products are where they are focusing the efforts right now.

They may eventually lower retail fees, but you can always use Coinbase Pro to get that now.

And despite the stupidity of NFT’s over the last year, CB is expanding into the true NFT authentication and logistics tracking markets. That will be lucrative for them in a few years. Nobody wants your stupid NFT artwork, but people will pay for an NFT permanently assigned to a Rolex or other luxury item to prove authenticity. And yes, watchmakers are already heading towards adopting this.

As well as expanding into many more markets while also having input into the regulatory aspects of crypto.

But the current ride is painful. Didn’t buy at the high, waited for a drop. But I’m viewing it as a 10 yr hold, so ignoring price for now.

I hope that you guys are right, because I'm the idiot that bought it at the IPO
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Old 16 May 2022, 11:04 AM   #18
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Has anyone seen “trust no one” on Netflix? The question makes me think immediately of QuadrigaCX
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Old 16 May 2022, 11:10 AM   #19
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Has anyone seen “trust no one” on Netflix? The question makes me think immediately of QuadrigaCX
fairly sure quadriga was an exit scam. their ceo was the "only" one with access to the cold storage and went "missing" on a trip to india. too much of a coincidence. also the fact that the cold wallets were found eventually and they were emptied out long before the ceo's death
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Old 16 May 2022, 12:26 PM   #20
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Hi all how are you. What is your view of Coinbase maybe going bankrupt and Bitcoin going down badly.
Coinbase sucks with their ridiculous fees and they dont even sell Monero
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Old 16 May 2022, 09:33 PM   #21
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Wow. I still don't get this at all. And I work in I/T where you'd think I'd know something...
As an IT person I agree with you.

A non-fungible token (NFT) is a financial security consisting of digital data stored in a blockchain, a form of distributed ledger. The ownership of an NFT is recorded in the blockchain, and can be transferred by the owner, allowing NFTs to be sold and traded. NFTs typically contain references to digital files such as photos, videos, and audio. Because NFTs are uniquely identifiable, they differ from cryptocurrencies, which are fungible. The market value of an NFT is associated with the digital file it references.

Basically a file that has been validated for us IT people.
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Old 16 May 2022, 10:18 PM   #22
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Hi all how are you. What is your view of Coinbase maybe going bankrupt and Bitcoin going down badly.

Despite the snarky comments from some, you have asked a pertinent question. Let’s go to the reports - and the publicly acknowledged risks that Coinbase itself stated in its last Annual Report.

Chief among them to an investor in Coinbase itself is:
“Our management team has limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company…”

So you have asked a good question. Analysts noted over $800 million NOL and a potential need to raise more capital. But beyond that, existential risks are real and a growing concern. Their Z-score has dropped precipitously so much that it’s 1/100th above bankruptcy alert level (1.81 now and had been as high as 3.29)

For those who believe an exchange can’t go under - such short memories…Mt. Gox?

For those who believe financial risk can’t bring down a broker…Lehman?

More risks are enumerated by Coinbase below, but the TLDR for fans is this:
Crypto may be good/bad - same is true for gold, real estate, oil…do not let your valuation of the underlying commodity blind you to a broker/exchange’s actual future health.

Coinbase Risk Factors Summary
“Consistent with the foregoing, our business is subject to a number of risks and uncertainties, including those risks discussed at length below. These risks include, among others, the following, which we consider our most material risks:
• our operating results have and will significantly fluctuate due to the highly volatile nature of crypto;
• our total revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our business, operating results, and financial condition would be adversely affected;
• a majority of our net revenue is from transactions in Bitcoin and Ethereum. If demand for either of these crypto assets declines and is not replaced by new demand for other supported crypto assets, our business, operating results, and financial condition could be adversely affected;
• the future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect, our business, operating results, and financial condition could be adversely affected;
• cyberattacks and security breaches of our platform, or those impacting our customers or third parties, could adversely impact our brand and reputation and our business, operating results, and financial condition;
• we are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition;
• we operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively;
• we compete against a growing number of decentralized and noncustodial platforms and our business may be adversely affected if we fail to compete effectively against them;
• as we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will increase and we may be subject to inquiries, investigations and enforcement actions by U.S. and non-U.S. regulators and governmental authorities, including those related to sanctions, export control, and anti-money laundering;
• we are, and may continue to be, subject to material litigation, including individual and class action lawsuits, as well as inquiries, investigations and enforcement actions by regulators and governmental authorities;
• if we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our net revenue, could decline, which could adversely impact our business, operating results, and financial condition;
• a particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, inquiries, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition;
• we currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our ability to support our customers;
• loss of a critical banking or insurance relationship could adversely impact our business, operating results, and financial condition;
• any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in a loss of customers or funds and adversely impact our brand and reputation and our business, operating results, and financial condition;
• our failure to safeguard and manage our customers’ fiat currencies and crypto assets could adversely impact our business, operating results, and financial condition; and
• the theft, loss, or destruction of private keys required to access any crypto assets held in custody for our own account or for our customers may be irreversible. If we are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any crypto assets, it could cause regulatory scrutiny, reputational harm, and other losses.”


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Old 16 May 2022, 11:26 PM   #23
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As an IT person I agree with you.

[I]A non-fungible token (NFT) is a financial security consisting of digital data stored in a blockchain, a form of distributed ledger...
Thanks Brian, that actually makes sense.

What does not make sense, to me, is why there is any value associated with (for example) an NFT of an image of a cow. So that means that the person who owns the image of the cow has digital proof of that ownership. However, since that image is often available on the Internet, and I (a non-owner of the NFT) can go look at that cow any time I want, then where's the value? Now, natch, I don't own the image, but if I can look at it, what does it really matter?

As an analogy, you have an NFT for your car, but I have a spare set of keys.

At least, that's how my little brain thinks of it. By the way, your car is nearly out of gas and needs a wash.
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Old 16 May 2022, 11:39 PM   #24
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Thanks Brian, that actually makes sense.

What does not make sense, to me, is why there is any value associated with (for example) an NFT of an image of a cow.
Now we are back to the basic human emotions of greed and envy.

When anything is desired, people will chase after it. If that image has been created by an artist (think Warhol) that is wildly popular, people notice. Now take the expanding influence of the internet on people who get their satisfaction from pretending they are popular and influencing others . . .

Hece the reason so many people chase high end luxury jewelry without knowing anything about it.
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Old 16 May 2022, 11:45 PM   #25
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Originally Posted by 77T View Post
Despite the snarky comments from some, you have asked a pertinent question. Let’s go to the reports - and the publicly acknowledged risks that Coinbase itself stated in its last Annual Report.

Chief among them to an investor in Coinbase itself is:
“Our management team has limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition to being a public company…”

So you have asked a good question. Analysts noted over $800 million NOL and a potential need to raise more capital. But beyond that, existential risks are real and a growing concern. Their Z-score has dropped precipitously so much that it’s 1/100th above bankruptcy alert level (1.81 now and had been as high as 3.29)

For those who believe an exchange can’t go under - such short memories…Mt. Gox?

For those who believe financial risk can’t bring down a broker…Lehman?

More risks are enumerated by Coinbase below, but the TLDR for fans is this:
Crypto may be good/bad - same is true for gold, real estate, oil…do not let your valuation of the underlying commodity blind you to a broker/exchange’s actual future health.

Coinbase Risk Factors Summary
“Consistent with the foregoing, our business is subject to a number of risks and uncertainties, including those risks discussed at length below. These risks include, among others, the following, which we consider our most material risks:
• our operating results have and will significantly fluctuate due to the highly volatile nature of crypto;
• our total revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our business, operating results, and financial condition would be adversely affected;
• a majority of our net revenue is from transactions in Bitcoin and Ethereum. If demand for either of these crypto assets declines and is not replaced by new demand for other supported crypto assets, our business, operating results, and financial condition could be adversely affected;
• the future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect, our business, operating results, and financial condition could be adversely affected;
• cyberattacks and security breaches of our platform, or those impacting our customers or third parties, could adversely impact our brand and reputation and our business, operating results, and financial condition;
• we are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition;
• we operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively;
• we compete against a growing number of decentralized and noncustodial platforms and our business may be adversely affected if we fail to compete effectively against them;
• as we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will increase and we may be subject to inquiries, investigations and enforcement actions by U.S. and non-U.S. regulators and governmental authorities, including those related to sanctions, export control, and anti-money laundering;
• we are, and may continue to be, subject to material litigation, including individual and class action lawsuits, as well as inquiries, investigations and enforcement actions by regulators and governmental authorities;
• if we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our net revenue, could decline, which could adversely impact our business, operating results, and financial condition;
• a particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, inquiries, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition;
• we currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our ability to support our customers;
• loss of a critical banking or insurance relationship could adversely impact our business, operating results, and financial condition;
• any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in a loss of customers or funds and adversely impact our brand and reputation and our business, operating results, and financial condition;
• our failure to safeguard and manage our customers’ fiat currencies and crypto assets could adversely impact our business, operating results, and financial condition; and
• the theft, loss, or destruction of private keys required to access any crypto assets held in custody for our own account or for our customers may be irreversible. If we are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any crypto assets, it could cause regulatory scrutiny, reputational harm, and other losses.”


Sent from my iPhone using Tapatalk Pro
Thanks Paul. I always wait for your insightful commentary on these financially related threads. Always the facts without "I'm know what's going to happen" speculation.
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Old 17 May 2022, 12:30 AM   #26
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For those who believe an exchange can’t go under - such short memories…Mt. Gox?

For those who believe financial risk can’t bring down a broker…Lehman?
Gox was hacked and went under due to lax security, so I guess Coinbase could go down if they have security issues. I'd like to think the industry has learned a lot about security since 2014.

Lehman example isn't really applicable. They went down due to investing and underwriting high risk assets. Coinbase mostly processes transactions and stores crypto, they don't invest that crypto and they don't underwrite or issue any types of securities. Two very different business models with different fiduciary obligations and responsibilities. Coinbase is investing it's own cash into crypto and other types of crypto related areas, so maybe that is a risk.
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Old 17 May 2022, 02:30 AM   #27
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Coinbase

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Gox was hacked and went under due to lax security, so I guess Coinbase could go down if they have security issues. I'd like to think the industry has learned a lot about security since 2014.

Lehman example isn't really applicable. They went down due to investing and underwriting high risk assets. Coinbase mostly processes transactions and stores crypto, they don't invest that crypto and they don't underwrite or issue any types of securities. Two very different business models with different fiduciary obligations and responsibilities. Coinbase is investing it's own cash into crypto and other types of crypto related areas, so maybe that is a risk.

I agree nothing is exactly the same as the Coinbase case. BTW, see the 10Q
https://d18rn0p25nwr6d.cloudfront.ne...067ab1016c.pdf

Page 83 is a hoot - “Moreover, 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. This may result in customers finding our custodial services more risky and less attractive and any failure to increase our customer base, discontinuation or reduction in use of our platform and products by existing customers as a result could adversely impact our business, operating results, and financial condition.”

I think some parallels with Mt. Gox are no regulation, ability for bad actors to rob value, uninsured accounts, no effective risk management to protect depositors, plus a few others.

IMHO, there are also some signals we saw in Lehman. Some parallels are regulators lagging the creative marketeers, uninsured accounts, future derivatives risks*, unbacked deposits**, plus undisclosed holdings.

* Coinbase is acquiring FairX, a CFTC-regulated derivatives exchange.
The acquisition is a key stepping stone (per Coinbase) on the path to offer crypto derivatives to retail and institutional customers in the US.
This is an important step toward Coinbase ultimately making the derivatives market accessible to our millions of customers through an industry-leading, simplified user experience. https://blog.coinbase.com/coinbases-...t-a1dc71577337

** See the Annual Report, and the March 10th 10Q I cited.
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Old 17 May 2022, 03:23 AM   #28
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Originally Posted by 77T View Post
I agree nothing is exactly the same as the Coinbase case. BTW, see the 10Q
https://d18rn0p25nwr6d.cloudfront.ne...067ab1016c.pdf

Page 83 is a hoot - “Moreover, 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. This may result in customers finding our custodial services more risky and less attractive and any failure to increase our customer base, discontinuation or reduction in use of our platform and products by existing customers as a result could adversely impact our business, operating results, and financial condition.”

I think some parallels with Mt. Gox are no regulation, ability for bad actors to rob value, uninsured accounts, no effective risk management to protect depositors, plus a few others.

IMHO, there are also some signals we saw in Lehman. Some parallels are regulators lagging the creative marketeers, uninsured accounts, future derivatives risks*, unbacked deposits**, plus undisclosed holdings.

* Coinbase is acquiring FairX, a CFTC-regulated derivatives exchange.
The acquisition is a key stepping stone (per Coinbase) on the path to offer crypto derivatives to retail and institutional customers in the US.
This is an important step toward Coinbase ultimately making the derivatives market accessible to our millions of customers through an industry-leading, simplified user experience. https://blog.coinbase.com/coinbases-...t-a1dc71577337

** See the Annual Report, and the March 10th 10Q I cited.

I should probably clarify that I am not a BTC or any other crypto fan and would never advise anyone to buy it under any circumstances nor would I ever suggest COIN is a good investment. I've never touched any of it, other than COIN puts. I am arguably the most anti-crypto person I know.

The big parallel with Gox exists if one believes there is a security risk involved. If Gox had good security, they would be Coinbase.

Coinbase can't use the coins that it stores for customers as leverage or collateral. They aren't insured like banks because banks can invest customer deposits in other securities/etc, to an extent. All Coinbase can do is store them like gold in Fort Knox. It really isn't like Lehman all that much but I can see some of your comparison in terms of the environment and risks if they go too deep into the derivatives area and the wrong type of derivatives. That's definitely not a good sign at all. When they IPO'd, they had no interest or investments in derivatives.

All this being said, the OP asked if it was going to go down (bankrupt). COIN has very strong income/cash flow and a share of the market that is arguably impenetrable barring some security breach, extreme management blunder or other huge catastrophe. Highly unlikely it will go down, but it is possible.

And yes, if COIN went bankrupt, the customers could theoretically lose their crypto if they were liquidated. But no one is going to let them liquidate, they are too big. They'll get bought out first. Absolute worst case, chapter 11. Not to mention customers will pull their crypto out long before a liquidation would happen.

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Old 17 May 2022, 03:35 AM   #29
whiterabbit66
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Dumb question maybe : aren't more and more people personally storing their cypto for privacy? Won't this hurt Coinbase?
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Old 17 May 2022, 03:48 AM   #30
HHIslander
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Quote:
Originally Posted by whiterabbit66 View Post
Dumb question maybe : aren't more and more people personally storing their cypto for privacy? Won't this hurt Coinbase?
It's not good but it won't hurt them all that much, the vast majority of their revenue comes from transactions.
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