Note that FTX is doing worse than ever. According to The Wall Street Journal, the liquidity shortfall on the FTX exchange may be as high as $8 billion, which is the amount needed to provide withdrawals and restore operations. And that’s exactly what the company’s representatives are looking for right now.

Sources also confirm that FTX used $4 billion to bail out Alameda. And that amount also included money from regular users of the exchange.

FTX executive Sam Bankman-Fried

Could Coinbase collapse

The head of cryptocurrency exchange Coinbase Brian Armstrong said in response to the developments that Coinbase has no financial ties to FTX and does not own the FTT token. The latter is the native token of the Bankman-Fried exchange, with its value dropping more than 90 per cent in a matter of days amid all the events.

On Twitter, Armstrong assured followers that Coinbase is independent of FTX, meaning the exchange has no loans received or issued to it. Sharing his deep empathy with Bankman-Fried, Armstrong tentatively laid out his version of the reasons for what happened. Here is his rejoinder, as quoted by Decrypt.

I think it’s important to highlight what sets Coinbase apart at a time like this. This event appears to be the result of risky business practices, including conflicts of interest between deeply intertwined organisations, and the misuse of customer funds, i.e. the crediting of user assets.

Coinbase CEO Brian Armstrong

As we told you earlier, FTX’s problems began with the publication of a problematic financial report by Alameda Research. Binance chief executive Changpen Zhao then announced the decision to get rid of all FTTs due to fears of Bankman-Frieda problems. This news precipitated a fall in the price of FTTs, which only worsened the competitor’s financial situation. As a result, Alameda Research was indeed financially insolvent, well FTX faced a lack of liquidity. In other words, the exchange was unable to provide the right amount of coins to ensure smooth withdrawals on user requests.

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Coinbase became a publicly traded company in April 2021. Armstrong also stated that the trading platform’s aforementioned status emphasises transparency and user trust. This is also one of the reasons why Coinbase still does not have a native token.

Financially, the exchange seems to be doing fine – at least that’s what the management of investment firm Ark Invest is confident about.

According to sources, the firm recently bought 420,949 shares of Coinbase under the COIN ticker for a total of about $21.4 million. Most of the total number of about 330,000 shares acquired went to ARKK. This is the company’s flagship exchange-traded fund (ETF), which invests in startups focused on innovation. Another 54,466 Coinbase shares were added to the Ark Next Generation Internet ETF (ARKW), while an additional 36,022 COINs were reserved for the ARK Fintech Innovation ETF (ARKF).

COIN shares were trading at $50.83 at the close of trading on Tuesday, down 10.78 per cent for the day. Meanwhile, the securities of America’s most popular crypto exchange have fallen in value by almost 80 per cent since the start of the year.

COIN share price since January 1 this year

It is important to note here that Ark Invest had previously held a position in Coinbase shares, but got rid of it at the end of July 2022. At that time, it was talking about selling 1.4 million shares for $75 million, that is, at $53 per share. Most amusingly, a week and a half later Coinbase's share price rose to $80, making the Ark Invest deal a meme within the cryptocurrency community.

In a report to shareholders last week, Coinbase reported net revenue of $576 million for the third quarter, down 28 percent from the second quarter of this year. Transaction volume on the platform fell from $217 billion to $159 billion. At the same time, the company’s subscription and services revenue rose from $147 million to $211 million in the third quarter.

Coinbase chief executive Brian Armstrong

Overall, the crisis surrounding FTX continues – withdrawals from the exchange are already officially closed and its management is actively seeking funding. This situation should be a lesson for every crypto-enthusiast – even the largest and seemingly reliable players can “crumble” in a matter of days.


We believe that many popular exchanges are really not threatened by the situation faced by FTX. Still, the latter's main problem was using users' money in an insecure way. And if it keeps users' coins safe and sound, while earning commissions as usual, it really won't face a liquidity crisis.

Apparently, the trend among cryptocurrency exchanges in the near future will be to confirm the availability of reserves. This way they can regain the trust of users, which was seriously shaken this week.