The sole publicly listed exchange is Coinbase, one of the largest cryptocurrency companies on Wall Street (NASDAQ:COIN). Despite the fact that COIN stock may be trading higher today, there may be problems in the making. The fact that the business is already discontinuing a significant marketing initiative in the US suggests that Coinbase is still in difficulties.
Coinbase and its fellow crypto firms have also suffered as individual cryptocurrency prices have fallen. Others have sought bankruptcy protection while others have missed margin calls.
The crash has caused a balance sheet problem in the instance of Coinbase. The business has had to reduce operational costs as a consequence of the cryptocurrency crisis. Its revocations and layoffs have been the most prominent examples of this. Coinbase just suspended all employment offers to new recruits.
Although it won’t say it, Coinbase is now going through one of its most challenging periods. Analysts believe a liquidity crisis for the exchange may be looming as it takes another swift move to cut the fat.
Is Coinbase’s situation worse than what the company tells investors?
Given the current COIN stock values, you would believe it’s absurd to claim Coinbase isn’t doing well. As a result of Ethereum’s (ETH-USD) significant gain prior to the Merge upgrade, shares are up roughly 8%. However, the organization is subtly reducing business expenses that are seen as unimportant. Some believe it may be as a result of impending danger.
The business issued an email to all of its marketing affiliate creators late last week. The temporary termination of Coinbase’s marketing affiliate program was announced. The email did offer to restart the program in 2023 to the developers. It does not, however, provide an exact date for when this will occur.
One of the various ways Coinbase has persuaded people to buy cryptocurrency was via affiliates. Creators and online influencers sign up as affiliates with the business, which allows them to promote the exchange via niche content and get money.
Given the employee layoffs, it seems natural that Coinbase would terminate the initiative in response to market pressure. However, it seems to many as proof that Coinbase isn’t as successful as it would want to appear. The move is being interpreted negatively by investing influencers, who wonder whether Coinbase is really closer to bankruptcy than it seems if it can’t afford the few dollars in kickbacks it gives to affiliates.
Even if it were just a very remote possibility, the exchange’s size would allow its bankruptcy to have very unexpected effects on the market. Since it is a publicly traded firm, investors will soon get a clearer look at Coinbase’s Q2 balance sheet. Until then, however, these rumors will continue to run wild.