Cryptocurrency
Coinbase will lay off another 20% of its staff because of the FTX collapse. Will Coinbase fail?
Will Coinbase fail? Cryptocurrency exchange Coinbase will lay off 950 employees (about 18%) to conserve the company’s capital amid worsening market conditions. This was reported by CNBC, citing comments from the exchange’s founder Brian Armstrong.
According to him, the exchange took this step, considering the information received. The head of Coinbase did not elaborate on which insider information was involved. He added that the exchange was pushed to another round of layoffs by various stress tests:
“It became clear that we would have to cut costs to increase our odds in any of the projected scenarios.”
The layoffs are expected to help the exchange reduce operating expenses by 25%. Will Coinbase go up? However, the exchange still expects spending increases of $149 million to $163 million in Q1 2023. Coinbase will also curtail the development of projects whose profitability is projected to be low. Nevertheless, all this does not prevent the growth of USDC capitalization.
The founder of the U.S. cryptocurrency exchange believes that the industry was hit hard by the bankruptcy of FTX, which triggered a cascade of other falls (BlockFi and other companies also went bankrupt). According to Armstrong, the collapse of FTX will lead to increased oversight of the industry, which will result in new regulatory repression. Notably, back in late 2022, the exchange predicted positive changes in 2023, but now Coinbase does not seem to think so.
Earlier Coinbase already fired over a thousand employees, citing the need to “maintain stability during the economic downturn. Armstrong argued then that the company could not afford the high costs of staff in conditions of high volatility. It is noteworthy that in early 2022, high volatility did not stop the head of Coinbase from spending more than $130 million to buy a mansion in Los Angeles.
The cryptocurrency exchange FTX declared bankruptcy in November 2022 due to a large shortage of assets to cover customer liabilities. The bankruptcy decision came days after the head of the cryptocurrency exchange Binance, publicly announced that he would sell his stake in FTX. As the media found out, FTX founder Sam Bankman-Fried arbitrarily used customer assets on the trading floor to cover the debts of his trading firm Alameda Research. The exchange owed over $3 billion to large investors.
We previously reported that Galaxy Digital CEO Mike Novogratz found the mass layoffs to be rational.
Cryptotraders had a tough day: almost 68,000 positions were liquidated on exchanges in the last 24 hours, and the total volume of liquidations exceeded $257,000,000. All this happened against the news of the US Federal Reserve’s rate hike and another Securities and Exchange Commission regulatory action against cryptocurrencies.
Cryptotraders lost $132,000,000 in BTC
Bitcoin, Ethereum, and Ripple were the leaders in the number of forcibly closed positions. BTC liquidations totaled almost $132,000,000; Ethereum traders lost $51,000,000. XRP positions accounted for about $8,000,000 of liquidations. Bitmex exchange executed the largest order of $7.39,000,000.
Cryptocurrency market capitalization has declined 2% in the last 24 hours, but is still above the $1 trillion mark.
The weekly CoinShares report also recorded a massive outflow of funds for six consecutive weeks. During that period, nearly $500,000,000 was withdrawn from cryptocurrency platforms, with $113,000,000 coming from bitcoin. Analysts at the company believe the outflow is due to liquidity needs during the banking crisis rather than a negative outlook. The company mentions that a similar scenario was seen in March 2020 amid a COVID-19-induced panic.
Regulators continue to hunt the cryptobusiness
Another reason for the increased volatility in the market has been harsh action from U.S. regulators. Last night it became known that the U.S. Securities and Exchange Commission sued cryptomagnate Justin Sun, accusing him of fraud and market manipulation.
The SEC also issued a notice of wrongdoing against Coinbase, the largest U.S. cryptocurrency exchange. The securities regulator sued Coinbase Global Inc, for some of the products it offers.
We previously reported that Bitcoin (BTC) tests $28,000, but onchain metrics urge caution.
Employees of the cryptocurrency exchange Binance help clients from China to bypass compliance and verification. CNBC writes about it, citing hundreds of corporate emails from exchange employees on Discord and Telegram. It is reported that Binance has helped over 200,000 users register, bypassing its own security system. One case describes correspondence between a user from China and a Binance employee.
The employee under the pseudonym yaya.z suggested the user from China turn on a VPN, register as a Taiwanese resident and then return the location to China. Binance employees also advise customers not to use VPN services from the U.S., Hong Kong and Singapore, because the exchange does not provide services in those regions, writes CNBC. At the same time, Binance freely processes applications from U.S. email providers like Gmail or Outlook for registration.
The exchange even offers specialized mobile applications for customers from China. A CNBC reporter could download a special mobile application from Binance via email. At the same time, no VPN was needed to download the app, as the download was conducted through the domain of binance[.]com. It is also alleged that the exchange still verifies users with Chinese phone numbers.
An exchange spokesperson denied the existence of a special Chinese version of the mobile application. The exchange also added that it has improved the system to identify users from banned regions. CNBC notes that after providing evidence, Binance removed employee messages from corporate chats to circumvent KYC.
We previously reported that the Ethereum (ETH) price crossed the $1,800 mark, opening the way to $2,000.
The market remains in a bearish trend and bitcoin (BTC) will resume its fall and test $16,000. There are two reasons:
The first statement can be confirmed or disproved by a technical analysis of the cryptocurrency market, but there is not enough additional information for the second.
The market capitalization of altcoins (ALTCAP) does hold nearly $605 billion of resistance. Although ALTCAP has risen above it several times, it didn’t develop above this area.
However, the daily RSI has broken through the bearish divergence trendline (green line). Such a breakout often precedes significant reversals into a bullish trendline. As a result, ALTCAP will move higher towards the $680B resistance area. If not, ALTCAP could fall back to the $518B support area.
There are also those who argue that bitcoin will test the $10000-$11000 area because there is a CME price gap that needs to be filled. The gap refers to the difference between the closing price of bitcoin futures on the Chicago Mercantile Exchange (CME) on Friday and the opening price on the following Monday.
We previously reported that Hong Kong has allocated another $50,000,000 to the crypto industry.
-
Forex8 months agoForex Today: the dollar is gaining strength amid gloomy sentiment at the start of the Fed’s week
-
Forex4 months agoUnbiased review of Pocket Option broker
-
World5 months agoWhy are modern video games an art form?
-
Forex8 months agoHow is the Australian dollar doing today?
-
Cryptocurrency8 months agoWhat happened in the crypto market – current events today
-
Stock Markets3 months agoAmazon layoffs news: company announces record layoffs
-
Forex7 months agoDollar to pound sterling exchange rate today: Pound plummeted to its lowest since 1985
-
Stock Markets8 months agoMorgan Stanley: bear market rally to continue
