The second half of 2020 and the first months of 2021 brought a rally in Bitcoin and other cryptocurrencies that we haven’t seen since Christmas 2017. From that moment on, cryptocurrencies remained out of the general conversation and emerged three years later. boom. On November 8, 2021, the deadline maximum was recorded, About $67,500 per bitcoin. Now it’s hard to pass 20,000. It sank.

This story intersects with that of Coinbase, probably the most popular exchange for trading and storing cryptocurrencies. A few days after Bitcoin’s all-time high, Coinbase also recorded its highest per share. $368.90. Now worth $51.58.

The difference between the two accounts is that Coinbase is public and has 6,000 employees. or had, because it laid off 18% of its employees. The 1,100 excluded people learned of being fired when they could no longer access their corporate emails and received a message from HR in their personal emails warning them of the loss of access. CEO Brian Armstrong showed some remorse for the forms in an official statement, but argued that it was a precaution to prevent anyone affected from obtaining confidential customer information.

Winter has come.

Revenue drop due to decline of cryptocurrencies and apparent recession

The current situation in the cryptocurrency market contextualizes such a decision very well: the fall in the value of cryptocurrencies (Bitcoin 71%, Ethereum 79%, Cardano 85% and Solana 90% lost from their maxes), this dynamite most of the interest in them, reducing transactions and therefore commissions that Coinbase receives, and the recent launch of a platform for NFT trading Overcoming was disappointing.

There’s also the fact that a staff of 6,000, and even the roughly 5,000 that will stay thereafter, is too big for Coinbase’s type of business. One competitor, FTX, has around 300 employees According to his own CEO at Twitter.

Again, Nothing has been as dangerous as the fine pressure of Coinbase in the event of bankruptcy, which allowed its creditors to collect their debts by acquiring cryptocurrencies of their users.. Not surprisingly for those with experience in these matters, a phrase often used to describe the best way to store cryptocurrencies is “if you don’t have keys, they don’t really belong to you”. In the case of Coinbase, storing them there (which is different from buying them) could lead to them being depleted if the company goes bankrupt. With an 85% drop in market value, it doesn’t seem like such an option anymore.

“Since crypto assets held in custody can be considered the property of a bankrupt company, in the event of bankruptcy, crypto assets held in custody on behalf of our clients may be subject to bankruptcy proceedings and such clients may be considered our general unsecured creditors. .

Facing hostile reactions after this announcement on May 11, 2022, the CEO had to speak publicly a week later to calm things down. “Coinbase is not at risk of any bankruptcy.” A month later, his reassuring words seem to have had no effect. upside down: the increasingly clear expectation that the economy is entering a new recession (something Armstrong commented on in his dismissal statement) doesn’t help and contributes to the downturn for the cryptocurrency market. Our biggest source of income, our commercial revenues, has dropped significantly,” he said. “We’ve grown very quickly.”

What will happen in the coming years is unknown. After all, Bitcoin has hit year-to-year highs for nearly every year of its life.

If Bitcoin manages to bounce back and break its all-time highs, approaching or exceeding the psychological ceiling of $100,000 per coin – something its staunchest believers inevitably see – Coinbase’s situation may well be reversed, which will happen. It will probably raise its prices again.

yes ok this blow may have eroded his reputation in a way that is hard to forget.: Although it has always stood out as the friendliest platform to carry out these transactions, the fact that its customers’ cryptocurrencies are assets that can be seized by the company’s creditors can make more than one person realize the convenience of using a physical coin. purse. Your keys, your properties.