Brian Armstrong, chief executive of Coinbase Global, the leading U.S. cryptocurrency exchange, said that due to the continued decline in currency prices and the collapse of rival FTX, which has impacted investor confidence, Coinbase’s revenue this year may be cut in half or more.
The collapse of FTX has made an already bloody year for the cryptocurrency industry even worse, as many speculators have already left the market as the price of Bitcoin collapsed. Coinbase shares have fallen more than 80% in 2022, and the company’s third-quarter revenue is only a quarter of what it was in the final quarter of 2021.
Brian Armstrong recently accepted an interview with “Bloomberg” program. When asked about his views on the company’s revenue, he said:
In 2021, we have about $7 billion in revenue and about $4 billion in EBITDA (earnings before interest, taxes, depreciation and amortization), but this year everything is down, and it will be cut in half, or less.
A spokesperson for Coinbase further clarified after the interview that the company expects 2022 revenue to be less than half of 2021.
Coinbase had previously said that its EBITDA-adjusted 2022 loss would be less than $500 million. The company hadn’t previously provided full-year revenue guidance, but Brian Armstrong’s forecast was in line with the roughly $3.2 billion expected by analysts compiled by Bloomberg.
The turbulence related to FTX has cast a lingering shadow on the industry. Previously, the collapse of the cryptocurrency lending platform Celsius had already caused turmoil and panic in the entire industry. Then, another lending platform, BlockFi, went bankrupt last month, which was implicated by the collapse of FTX.
Sam Bankman-Fried’s (SBF) FTX collapse was apparently the result of a “major fraud,” rather than mismanagement or an accounting error, Brian Armstrong said. SBF previously stated in an interview that FTX’s bankruptcy was caused by management errors. SBF has not been accused of any wrongdoing to date.
Brian Armstrong said: “Clearly, FTX took customer funds for themselves, and then mixed those funds with their hedge funds, and ended up with very underfunded levels.” He said: “I think this violates their rules. terms of service, and it’s illegal.”
Long before the collapse of the FTX exchange, SBF also went to Washington to promote cryptocurrency-friendly policies, and was also a major contributor to the congressional elections.
“I think there are some serious questions being asked now about whether the money should be recovered because it was stolen from the client,” Brian Armstrong said.
Despite FTX’s influence, Brian Armstrong said he plans to continue advocating for the cryptocurrency industry in Congress, predicting that cryptocurrency-specific legislation could hit the road next year. He said that the regulation of stablecoins, decentralized exchanges and custodians, as well as clarifying the definitions of commodities and securities, should be the first issues that must be focused.