Coinbase is conjoined to crypto

Coinbase CEO and co-founder Brian Armstrong speaks during the 2022 Milken Institute Global Conference in Beverly Hills, California, U.S., May 2, 2022. REUTERS/David Swanson

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NEW YORK, May 11 (Reuters Breakingviews) – Coinbase Global (COIN.O) took a turn as digital collectibles like Bitcoin soared. The excitement meant more customers, rising trading volumes and skyrocketing fees. Last year’s revenue was 14 times that of 2019. Tuesday’s first-quarter results show that everything has now turned, and hard.

Users fell by about a fifth from the previous quarter and revenues fell by more than half. The once-profitable Coinbase posted a loss of $430 million as the company invests in expansion. A new disclosure, that crypto assets held on behalf of clients could be treated as general unsecured creditors in bankruptcy, will not help. CEO Brian Armstrong’s tweet that “your funds are safe with us” may be true, but it’s not something the bosses of financial institutions want to say.

Bitcoin has lost a third of its value this year. TerraUSD, believed to be stable, lost more lira in a matter of days. Coinbase, whose shares have fallen about 20% on the news and about 80% since their debut about a year ago, is the conjoined twin of crypto.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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