It should be noted that there are enough reasons for concern around Coinbase’s fate. It’s not just the situation in the cryptocurrency market in general or not the best first quarter of 2022, but also the behavior of the company’s shares.

They are now valued at $52, the equivalent of a 79 percent decline since the beginning of 2022. Naturally, such a performance would make investors think twice – which explains the executive’s remarks.

Coinbase share price chart

What’s happening with Coinbase

According to CryptoPotato sources, Coinbase (COIN) shares fell 16 percent in over-the-counter trading on Tuesday after the company released a worse-than-expected first quarter earnings report. The bourse posted a net loss of $430 million between January and March. At the same time, the company’s first-quarter revenue for the year fell 35 per cent to $1.16 billion against expectations of $1.5 billion.


With Coinbase earning more than 85 percent of its revenue from cryptocurrency transactions, the company said its poor first-quarter earnings report was due to a fall in the crypto market and increased volatility since the start of the year.

This explanation seems logical. Still, as the digital asset industry declines, fewer traders are engaging with it. Investors are trivialized by the fear of losing money and, in addition, are in no hurry to get involved with the coin niche after real cases of losses. And since they don't transact and transact with the same intensity as they did a month or two ago, the platform loses revenue in the form of trading fees.

Coinbase CEO Brian Armstrong

The report also mentioned a new 10-Q declaration filed with the US Securities and Exchange Commission. According to this declaration, exchange customers can be considered “general unsecured creditors”. In other words, if Coinbase ever declares bankruptcy, customers could lose all cryptocurrencies held on the exchange, as they would be last in line to file claims. Armstrong noted that the company has no risk of bankruptcy and that the 10-Q was compiled in accordance with Securities and Exchange Commission requirements. Here is a relevant quote from the entrepreneur.

We have no bankruptcy risk, but we have included a new risk factor based on an SEC requirement called SAB 121, which is a new mandatory disclosure for public companies that hold crypto assets for third parties.

Accordingly, the relevant document was not filed because of alleged financial problems, but purely out of necessity. In addition, the day before, Brian Armstrong had already stated that there were more than enough people willing to interact with the trading platform. Therefore, the company is really unlikely to face serious problems - in fact, it has experienced more than one cycle of rise and fall of the coin market.

Speaking of the Securities and Exchange Commission. The day before, the head of the financial regulator Gary Gensler said that very many crypto exchanges fail to fully protect their customers. Moreover, some of them are actively “trading against” their own traders. Here’s his rejoinder.

Crypto has a lot of these problems – platforms trade secretly from their customers. In fact, they often trade against their clients because they engage in marketmaking.

It is most likely a case of platforms using user funds to make trades. We dealt with a similar case the day before in the form of expert comments.

SEC head Gary Gensler


We believe that the negative situation with Coinbase exchange generally reflects the situation in the cryptocurrency market. And since digital assets are the company's main field of business, it is affecting its financial performance. The only consolation here is that the platform has faced large-scale niche collapses before and is aware of the toughness of bear markets. This time is therefore unlikely to be an exception.

Stay tuned to our millionaires’ crypto-chat to see how the situation develops. There we will talk about other topics related to blockchain and decentralisation.