Coinbase CEO Brian Armstrong expects revenue to decline by 50% in 2022 due to FTX’s collapse
|- Coinbase is forecasting a $3.5 billion decrease in its revenue from $7 billion in 2021.
- Coinbase head Brian Armstrong stated FTX’s commingling of customer funds was not mismanagement but a “massive fraud”.
- Coinbase CEO still believes that the crypto legislation might get enacted sometime in 2023.
Coinabase has a lot of eyes on it, being the second biggest cryptocurrency exchange in the world. But despite that title, the exchange is losing revenue left and right due to the crypto market crash triggered by FTX’s bankruptcy. But while Coinbase is looking at a loss, in the long run, Binance seems to have gained an advantage from FTX’s downfall in the short term.
Coinbase to face losses
Coinbase is looking at a plunge in its revenues this year due to the barrage of crash-triggering incidents that occurred throughout the year. During an interview, the crypto exchange’s CEO, Brian Armstrong, stated that FTX’s collapse played a critical role in this.
The fall of Sam Bankman Fried’s exchange and its 130 other companies’ bankruptcy shattered investors’ confidence. Consequently, they pulled back until the situation got better, which in actuality still hasn’t, resulting in Armstrong’s forecast. The CEO stated,
“Last year in 2021, we did about $7 billion of revenue and about $4 billion of positive EBITDA, and this year with everything coming down, it’s looking, you know, about roughly half that or less.”
The same was also verified by another Coinbase Spokesperson by Bloomberg, who clarified that 2022’s revenue is expected to be half of 2021. Even before Brian Armstrong’s statement, the company was looking at a possible loss beyond a decline in revenue. As per Chinese, based on the adjusted EBITDA, a loss of more than $500 million was on the table.
FTX’s demise and the subsequent bankruptcy have destroyed many organizations, including BlockFi, which filed for bankruptcy last month. Brian Armstrong commented on the same, saying Sam Bankman Fried’s company’s downfall was not the result of mismanagement or messy accounting but a “massive fraud”. Armstrong added,
“It appears that they took customer funds from their exchange and actually commingled them or moved them into their hedge fund and then ended up in a very underwater position, and that was, I believe, against their terms of service and against the law.”
But while Brian Armstrong is furious regarding Coinbase’s possible losses stemming from FTX, Binance seems to have taken advantage of it.
Binance gains users
As reported by FXStreet this week, Binance ended up noting a 30% increase in trading activity in the month of November. The crypto exchange market’s trading volume spiked by 23% to $705 billion last month and was led by Binance primarily.
Binance’s emergence as a key industry entity enabled the cryptocurrency exchange to note higher interest from users as well. Initiatives, including the Industry Recovery Initiative (IRI) and Proof of Reserves, played a crucial role in the same.
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