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Coinbase’s numbers aren’t surprising due to crypto winter, says CoinFlip’s CEO

Cryptocurrency exchange Coinbase recorded huge losses in the last quarter as the bear market continues to affect businesses in the crypto space.

Coinbase, one of the leading crypto exchanges in the world, reported its second-quarter earnings earlier this week. The exchange’s revenue declined by 61% in the last quarter as the prices of most cryptocurrencies slumped. 

The San Francisco-founded company reported an after-tax loss of $1.1bn, compared with the $1.6bn net profit it registered in the middle of the crypto boom last year. The company reported that $446 million of the loss reflected an impairment charge on its crypto and venture investments.

Coinbase’s Chief financial officer Alesia Haas however, commented that the company’s $6.2bn in available capital would enable it to keep investing through the downturn.

Ben Weiss, CEO and Co-founder of CoinFlip, shared his comments with Coinjournal regarding Coinbase’s latest earnings report. CoinFlip is a financial service and crypto platform and is one of the largest Bitcoin ATM operators in the United States.

Weiss said;

“Coinbase’s numbers aren’t surprising given the current economic climate and crypto winter. That being said, Coinbase is responding by imposing financial discipline and refocusing on its core products. Despite volume and revenue declining, Coinbase is still attracting a significant amount of users, which shows its staying power, brand recognition, and likely ability to capitalize when crypto prices recover. The shareholder letter shows management’s confidence in the future of crypto and the company’s commitment to continue building regardless of prices and short-term economic trends.”

Despite the poor performance, Weiss maintains that the decline in Coinbase’s stock is an overreaction, and the cryptocurrency exchange remains a household name in the crypto space. Weiss said;

“The crypto market has seen a lot of volatility, deleveraging, and downward pressure on crypto asset prices. This is obviously going to have a negative impact on the valuation of crypto companies, such as Coinbase. I feel that the market is conflating the performance of crypto assets with the companies in the crypto ecosystem, and therefore the reduction in Coinbase stock price is possibly an overcorrection. Coinbase is a leader in the space with strong brand recognition, and its business model is much more robust than some of the problematic business models we’ve been hearing about – such as centralized crypto lending companies.”

The bear market continues to affect the operations of numerous cryptocurrency businesses, with some of them filing for bankruptcy while others halted withdrawals on their platforms.

The post Coinbase’s numbers aren’t surprising due to crypto winter, says CoinFlip’s CEO appeared first on CoinJournal.

Bitcoin falls below $21K amid reports SEC is probing Coinbase

Bitcoin price fell below $21,000 on Tuesday as the market sentiment turned sour on reports the US Securities and Exchange Commission (SEC) was investigating US-based cryptocurrency exchange Coinbase.

BTC has touched lows of $20,915 and with potential downside likely to push it to the key support line around $20K. Fresh selling could include pain beyond the psychological level.

SEC probing Coinbase spooks investors?

Coinbase had already come out against suggestions that it had listed crypto token securities on its platform when it first emerged following the SEC’s insider trading charges against the crypto platform’s former product manager.

But on Tuesday, it emerged that the SEC was indeed looking into whether Coinbase offered security tokens to US investors – with at least seven of nine alleged security tokens listed on Coinbase.

According to a Bloomberg report, the SEC’s investigation started way before the insider trading case. However, with regulatory scrutiny firmly on the crypto sector following recent events, the investor community is seemingly spooked on the potential impact of the SEC vs. Coinbase case if it comes to that.

Crypto market cap falls below $1 trillion

The downside in the BTC market was also mirrored across the altcoin market, with top altcoin Ethereum (ETH) declining by more than 8% to drop below $1,400.

The sell-off pressure, also seen across the equities market with US indexes opening lower amid investor jitters over recession ahead of the Federal Open Market Committee (FOMC) meeting.

The S&P 500 was down nearly 1% and the Nasdaq over 1.3% lower, while the crypto market total capitalisation has fallen below the $1 trillion mark.

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Robinhood & Coinbase among the biggest political lobbying spenders, before laying off 9%/18% of workforces

Key Takeaways

  • Robinhood spent the most of any crypto company on lobbying expenditure in Q1 this year, donating $610,000 before laying off 9% of its full-time employees
  • Coinbase donated 62% less in Q1 than the previous quarter, as SuperBowl ads increased expenditure before laying off 18% of its workforce
  • Cryptocurrency political spending as a whole rose slightly in Q1 of 2022 despite market downturn from previous quarter
  • There were $1.8 million in donations across top five companies 

The all-important US midterm elections are creeping ever closer, when Democrats and Republicans go head-to-head for control of the houses of the Senate. 

In looking through the political funding this year, something jumped out – cryptocurrency companies are moving more and more into the political space, with a whole host of companies spending increasing amounts of money on political lobbying this year, despite the widespread fall in market prices, mass layoffs and the general downturn in volume across the industry this year. 

Political donations led by Robinhood

Robinhood announced they would be laying off 9% of their full-time employees in April, as the downturn in markets hit the crypto and stockbroker hard. However, this came after a quarter where they donated more money towards lobbying than any other crypto company, at $610,000, an increase of 42% from the $430,000 they spent in Q4 of 2021. 

Blockchain Association, Coinbase, Ripple Labs and Dapper Labs rounded out the top 5 in spending, as the graph below shows. 

Looking at the overall figures, the total amount of donations was relatively even in Q4 of 2021 compared to Q1 of 2022. While markets hit all-time highs in November 2021 when Bitcoin traded at $68,000, sentiment worsened in Q1 of 2022 which is why it is notable that spending remained buoyant. 

With the bear market really kicking up a gear in Q2 of 2022, one would expect there to be a dropoff across the industry once the Q2 figures are revealed. 

On a more granular basis, however, there were certain moves that stood out when compared to the previous quarter, as shown above. Robinhood’s increase we have mentioned, but this was the exact opposite of another company which has also trimmed its workforce recently, Coinbase. 

The prominent publicly listed exchange donated the highest amount in Q4 of 2021 at $740,000, but this figure fell 62% in the first quarter of 2022. This came amid a much-publicised $14 million outlay on a minute-long SuperBowl advert in February. Four months later, Coinbase laid off 18% of its workforce, comprising 1,100 jobs. 

With midterm elections around the corner, lobbying is being thrown into the limelight evermore. While traditionally spending would rise as we near election time, the flip side is that the cryptocurrency market has been in freefall this year, evidenced by the aforementioned layoffs. 

It is unclear, therefore, whether this level of lobbying expenditure will be able to be maintained. Let’s hope the layoffs don’t worsen, however. 

Sources

OpenSecrets.org

The post Robinhood & Coinbase among the biggest political lobbying spenders, before laying off 9%/18% of workforces appeared first on CoinJournal.

The 9 tokens SEC says are securities in Coinbase insider trading case

  • Ishan and his brother are in custody, arrested on Thursday and are facing fraud and conspiracy to commit fraud charges, while Ramini is yet to be arrested.

  • Broadly, the SEC says Ishan violated securities laws, with this the first insider trading case in the crypto sector.

  • The SEC says nine of the 25 tokens for which Ishan provided confidential information were securities.

The US Securities and Exchange Commission (SEC) has highlighted nine tokens it says are securities, the details of which come from a landmark case against a former Coinbase manager.

The SEC’s case is against Ishan Wahi, the former product manager at Coinbase and two others – Nikhil Wahi (Ishan’s brother) and Sameer Ramini, a friend. The former Coinbase manager is alleged to have leaked confidential information about token listings announcement, tipping the other two in a scheme that spanned nearly a year and involved $1.1 million in profits.

Ahead of those announcements, which usually resulted in an increase in the assets’ prices, Nikhil Wahi and Ramani allegedly purchased at least 25 crypto assets, at least nine of which were securities, and then typically sold them shortly after the announcements for a profit,” the SEC said in a press release.

9 tokens deemed securities

The SEC has previously stated that most tokens in the crypto sector are securities, and indeed has an active case against Ripple Labs over the XRP coin.

In this latest installment of its battle to bring deemed securities under the SEC laws, it does identify nine “security” tokens.

What are these tokens? The SEC highlights them here.

LCX (LCX), Amp (AMP), Rally (RLY), Rari Governance (RGT), Power Ledger (POWR), XYO Network (XYO), DFX Finance (DFX), DerivaDAO (DDX) and Kromatika (KROM).

Commenting on these tokens, Gurbir S. Grewal, SEC’s Director of Enforcement, noted that the main concern is not “with labels, but rather the economic realities of an offering.”

In this case, those realities affirm that a number of the crypto assets at issue were securities, and, as alleged, the defendants engaged in typical insider trading ahead of their listing on Coinbase,” he added.

The post The 9 tokens SEC says are securities in Coinbase insider trading case appeared first on CoinJournal.

Southeast Asian crypto exchange Zipmex halts withdrawals

Zipmex, a Thai-based crypto exchange, has halted withdrawals citing a combination of circumstances. The Southeast Asian exchange has halted withdrawals until further notice.

A tweet by the exchange said:

“Due to a combination of circumstances beyond our control including volatile market conditions, and the resulting financial difficulties of our key business partners, to maintain the integrity of our platform, we would be pausing withdrawals until further notice.”

Failed acquisition by Coinbase

Prior to the halting of withdrawals, Cointelegraph had issued reports that Zipmex could be in trouble but the crypto exchange ended up dismissing that as just rumors. This came after a failed acquisition of Zipmex by Coinbase.

Responding to Cointelegraph, the CEO and co-founder of Zipmex, Marcus Lim, said:

“While Coinbase is an interesting partner, an investor makes more sense at this stage.”

Lim went ahead to explain the reason for the failed acquisition saying:

“The acquisition fell through due to market conditions. They’ve pulled out in many countries around the world such as Turkey and in Latin America. Coinbase is a great strategic partner to the business.”

Coinbase had made an offer to acquire Zipmex in the first quarter of 2022 but the acquisition plan fell on June 9. However, Coinbase went ahead to make a strategic investment into the Thai-based crypto exchange.

Other than halting withdrawals, there are reports that Zipmex is planning for a Series B+ that could value it at $400 million.

By August 2021, Zipmex had reached a 200,000 user base with over $1 billion in gross transaction volume since it was launched in 2019.

Zipmex troubles

According to sources some funds, about $100 million from Zipmex were given to Hong Kong-based asset manager Babel Finance with the aim of generating yield. However, there is a risk of default since Babel halted withdrawals in June due to unusual liquidity pressures resulting from the crypto market meltdown and hasn’t resumed the withdrawals.

Though not confirmed, there are fears that Zipmex could go the way of Celsius, which has already filed for bankruptcy seeking financial restructuring.

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Coinbase ‘grew a ton in 2021’, and is still adjusting, CEO says

  • Coinbase added to its headcount by 200% year-over-year as crypto saw massive growth.

  • The risks of that is what informed the decision to thin out the employee numbers in June.

  • Now the focus on “driving efficiency” with scaling in mind to better serve customers.

Coinbase is looking at ways to ensure efficiency at all of its operations during these lean crypto times, Brian Armstrong, the CEO of the top crypto exchange said in a blog post.

Commenting on the company’s massive employee growth over the past eighteen months, Armstrong noted that it was a “ton” of growth. However, even as they adjust to that, it’s time to focus on “driving more efficiency.”

According to the Coinbase boss, unchecked workforce growth may see a company slow down and become less efficient. 

When this happens, most largely to massive scaling, getting off the wrong turn often eats up “more dollars, more people and more time” just to get things going. In the meantime;

Coordination headwinds increase, vetocracies emerge, risk tolerance fades, and teams become inwardly focused instead of staying focused on their customers,” he added, pointing to the risks of unchecked headcount growth.

What great companies do

Armstrong, whose company is among those to lay off employees amid the crypto winter, said that the outcome (layoffs) was what any great company would do.

Every great company, from Amazon to Meta to Tesla, found ways to retain their founding energy in conjunction with appropriate controls, even as they scaled to be much larger than Coinbase is today,” he wrote.

He explained that in most cases, the so-called great companies always find ways to “maintain their insurgent mindset,” doing so to avoid careening into complacency and turning into an “irrelevant” at a later date.

That’s why we’re focusing on driving more efficiency at Coinbase. After 18 months of ~200% y/y employee growth, many of our internal tools and organizing principles have started to strain or break. So we’ve been digging in to identify the set of changes we need to make to help us succeed at this new scale,” he added.

One of the steps towards achieving this was to cut their headcount as was done in June. 

The exchange will also continue to find novel ways to add more efficiency to its services, with the objective being to return to that “mindset and approach” by which the company saw much success.

The post Coinbase ‘grew a ton in 2021’, and is still adjusting, CEO says appeared first on CoinJournal.

The RBI’s informal pressure prompted trading halt, says Coinbase CEO

The Indian government has cracked down on cryptocurrency activities in recent years.

Cryptocurrency exchange Coinbase has revealed that it halted its trading activities in India due to the informal pressure from the Reserve Bank of India (RBI). 

The RBI, like many central banks across the world, has been tough against cryptocurrency trading activities. At some point, the RBI banned financial institutions from partaking in crypto-related services.

Coinbase launched its services in India on April 7 but rolled back its decision three days later. The Coinbase app allowed users in India to buy crypto tokens using UPI, a highly popular Indian payments infrastructure built by a coalition of retail banks in the country.

The UPI refused to acknowledge support for the Coinbase app, resulting in the crypto exchange rolling back its earlier decisions.

Coinbase CEO Neil Armstrong confirmed that the informal pressure from the RBI is the reason why the company halted operations in India. He said;

“I guess just to zoom out for a minute, one of our theories here and my theory, is that action produces information. So it’s not always clear as we go to these countries all over the world, everybody is in varying states of kind of education or lack thereof about crypto. And there’s a lot of work to go meet with policymakers around the world and kind of teach them about what the AML capabilities are and what are the positive benefits. The people of these countries generally really want crypto. And so to me, that says that most places in the free world and democracies, crypto is going to eventually be regulated and legal, but it’s going to take time for them to get comfortable with this.”

Despite the challenges, Armstrong said Coinbase will still launch in India. He added that the company is currently considering the best way to move forward but is committed to launching its operations in the country. He concluded that;

“We’re going to launch because it forces the discussion to be had. Now the press is talking about it in India. Now there’s meetings happening that are going to talk about how we get to the next step. So that’s generally our approach with international expansion.”

The post The RBI’s informal pressure prompted trading halt, says Coinbase CEO appeared first on Coin Journal.

Why is BNB up by more than 4% today?

The cryptocurrency market has continued its slow recovery following its poor start to the week.

The broader cryptocurrency market could end the week on a positive note, thanks to its latest performance. The total crypto market cap has increased by less than 1% and currently stands above $1.8 trillion.

Bitcoin is closing in on the $40k psychological level despite adding less than 1% to its value in the last 24 hours. Ether is up by roughly 2% so far today and looks set to reach the $3,000 mark soon.

BNB, the native token of the Binance ecosystem, is the best performer amongst the top 10 cryptocurrencies by market cap in the last 24 hours. The coin has added more than 4% to its value over the past few hours, outperforming the other major coins and tokens in the process.

The rally is fueled by the news that Coinbase has listed Binance USD (BUSD) stablecoin. Coinbase is a major cryptocurrency exchange and one of Binance’s leading competitors.

Hence, the news that Coinbase was listing Binance’s stablecoin served as the catalyst to push BNB higher. 

Key levels to watch

The BNB/USD 4-hour chart is still bearish as BNB has been underperforming in recent days. However, the technical indicators show that BNB is recovering from its recent slump.

At press time, BNB is trading at $404.90 per coin. The MACD line is still below the neutral zone, but the recent trajectory shows it could cross into the positive territory soon. The 14-day RSI of 57 shows that BNB is no longer in the oversold region.

If the rally continues, BNB could rally past the first major resistance level at $423 before the end of the day. However, the resistance point at $435 should cap further downward movement in the short term.

On the flip side, if the bears regain control of the market, BNB could be forced to defend its major support level at $394. 

The post Why is BNB up by more than 4% today? appeared first on Coin Journal.

Top 3 Easiest Ways to Buy Crypto

Cryptocurrencies provide an excellent way of making money and growing returns. For example, Bitcoin price has moved from below $5 in 2009 to over $40,000 today. Similarly, Ethereum has jumped from below $10 to over $3,000. In total, cryptocurrencies have moved from nowhere to become an asset class worth over $2 trillion. In this article, we will look at the easiest was to buy cryptocurrencies.

Using digital wallets

Online wallets are popular financial products that enable people to save, send, and receive cash from their loved ones or business partners. These wallets are popular because of how easy they are to use and the fact that they mostly have low fees.

The number of digital wallets has been in a strong uptrend as the fintech revolution continues. Some of the most popular wallets are PayPal, Cash App, Skrill, Neteller, Revolut, and Venmo among others.

As part of their strategies, many online wallets have now made it possible to buy cryptocurrencies inside their ecosystems. The goal is to simplify how people access financial services and to also make money doing that. 

Indeed, cryptocurrencies have become pivotal to Cash App’s business. For example, Cash App generated over $2 billion of revenue from cryptocurrencies in the fourth quarter of 2021.

These wallets offer one of the easiest ways to buy cryptocurrencies. For example, in 2021, PayPal introduced a way to buy, save, and send a select number of cryptocurrencies in its platform. Today, American and Britons can easily use the platform to buy Bitcoin, Bitcoin Cash, Ethereum, and other coins directly using PayPal and Venmo. 

The process of buying Bitcoin with PayPal is easy. First, you need to have an account with PayPal. Second, select the cryptocurrency that you want to buy and the amount you want to spend. Second, you should execute the trade. PayPal will then deduct the cash that you have from your account. Alternatively, it will directly make the purchase using your linked bank account.

The process is similar with other online wallets like Cash App. You just need to select the coin you want to buy and then execute the trade. 

There are several benefits of using these apps to buy cryptocurrency. First, the process is easy and it takes a few seconds. Second, most apps don’t charge a fee to execute the trade. Finally, they are safe options. The only disadvantage is that these apps don’t have a large selection of coins.

Using cryptocurrency exchanges

The other easiest way to buy cryptocurrency is through a centralized exchange. An exchange is a company that provides different cryptocurrencies for people to trade. In most cases, exchanges provide a website and mobile applications that let people buy coins. They also offer other tools that help them to make better and more informed choices.

Cryptocurrency exchanges work in a relatively similar way. They provide a marketplace where one can go and buy coins. After buying the coin, one can easily save them in their online wallets. When needed, a person can then convert their coins into cash and withdraw to their online wallets or bank accounts.

In addition, it is possible for people to move their cryptocurrencies from exchange to their cold wallets in a few steps.

The crypto exchange industry has become significantly saturated. CoinMarketCap tracks 511 exchanges from around the world. In total, these exchanges help to move cryptocurrencies worth over $100 billion every day. Some of the biggest exchanges in terms of volume are Binance, Coinbase, KuCoin, Huobi Global, Gate, and Crypto.com.

It is easy to buy cryptocurrency using an exchange. First, you need to find a credible exchange that guarantees the safety of your funds. In most cases, we recommend that you focus on popular exchanges like Binance and Coinbase instead of the smaller ones that are unknown. You can read our eToro reviewCEX review, and Binance review.  

Second, you should create your account by providing your name and email address. After this, to comply with the law, many exchanges will seek to verify your account by confirming your location.

In the next step, you will need to select a cash deposit option. Many companies allow you to deposit your cash using a number of options like PayPal, credit and debit card, Neteller, and wire transfer. You can now buy your coins after completing your deposit process. Wire transfers take a longer period while card transactions are instant.

Using exchanges like Coinbase, Binance, and eToro is recommended because they are safe and they provide more coins. They also provide more solutions like staking, leverage tokens trading, and perpetual futures trading.

Using a peer-to-peer exchange

Another easy option for buying cryptocurrency is to use a peer-to-peer exchange platform. These are companies that provide a platform where people can buy and sell cryptocurrency among themselves in an easier manner. A P2P exchange provides a platform that ensures safety.

They work in an easier way. After creating and verifying your account, you will select whether you want to buy or sell a coin. When buying, you will see numerous people who are selling coins and their prices. Select your preferred one and then make a payment to them directly. After they receive their funds, the coins deposited in the Escrow will be transferred to you.

There are several reasons for using a P2P exchange. First, they are easy to use. Second, you can use arbitrage by buying a coin at cheap prices and then selling it instantly at a higher price. Third, you can use your preferred option to complete the transaction. Examples of P2P payment platforms are Paxful, Local Bitcoins, and Binance P2P

The post Top 3 Easiest Ways to Buy Crypto appeared first on Coin Journal.

Coinbase CEO says Russian oligarchs won’t use crypto to evade sanctions

Russia, sanctions, crypto– yes, three words that have this week informed one of the most discussed topics in the crypto space. 

We know Russia attacked Ukraine and a war is going on. This has in turn attracted tough sanctions from across European nations and the United States.

And in the middle of all these, there’s a simple hypothesis that crypto could provide Russian oligarchs a way to circumvent sanctions. Of course crypto should be able to do this, given characteristics inherent to the burgeoning technology.

But it won’t be won’t be easy and Coinbase CEO Brian Armstrong has shared his views on why not.

Why Coinbase thinks crypto will not be ideal Russian oligarchs

According to Coinbase CEO Brian Armstrong, it’s possible a wealthy Russian close to President Vladimir Putin might try to evade US sanctions by using crypto. 

Yet, looking at the prevailing circumstances around Russia, crypto may not be what an oligarch trying to remain anonymous or discrete would look to use in “sneaking” huge amounts of money around.

And it even gets tougher given that the liquidity one might need to facilitate this on the biggest exchanges- most of them available in the US and other major countries looking to enforce sanctions.  As such, crypto businesses in these countries will likely follow the law and make it difficult for Russia or the sanctioned individuals.

Sharing his thoughts on this very topic, the Coinbase chief noted:

Every US company has to follow the law – it doesn’t matter if your company handles dollars, crypto, gold, real estate or even non financial assets. Sanctions laws apply to all US people and businesses. So it would be a mistake to think crypto businesses like Coinbase won’t follow the law. Of course we will.”

He added that screening of customers is part of the law and that global watchlists provide useful information that helps the exchange block flagged individuals, IP addresses, accounts or transactions.

Armstrong then explains why he doesn’t think “there’s a high risk of Russian oligarchs using crypto to avoid sanctions.”

Why?

Because it is an open ledger, trying to sneak lots of money through crypto would be more traceable than using U.S. dollars cash, art, gold, or other assets,” he said.

Blockchain traceability and following the law won’t make it easy for anyone looking to use cryptocurrencies to avoid sanctions.

Coinbase won’t block all Russians

Calls to ban all Russians from accessing services on crypto exchanges have also been made, including from officials in Ukraine. But Armstrong says Coinbase won’t take that step.

We are not preemptively banning all Russians from using Coinbase. We believe everyone deserves access to basic financial services unless the law says otherwise,” he noted.

According to him, doing so will impact people for whom crypto is a buffer in these times when the ruble has deflated massively.

“Many of them [ordinary Russians] likely oppose what their country is doing, and a ban would hurt them, too,” he opined.

But like other regulated companies and businesses, Coinbase follows the law and if the US government asks it to block or ban certain users, the firm will follow the said laws.

Armstrong summarised his view of the whole issue by saying that Coinbase will also work towards helping Ukrainians access the crypto services they need.

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