Source: Adobe Stock / Thomas DutourNassim Taleb, author of the best-selling book The Black Swan, believes that Coinbase, the largest cryptocurrency exchange in the United States, is "worthless."
In a recent tweet, Taleb said Coinbase is cash flow negative, meaning more money is going out than coming in, a "grim" future, even as the cryptocurrency industry somehow manages to recover and its owners are out. .
“My view is that they are cash flow negative, with a bleak future (even if crypto comes back) and the OWNERS are out. The business is worthless,” he said.
Taleb noted that he does not think Coinbase faces the same problems that FTX, once the world's third-largest cryptocurrency exchange, faced and ultimately failed. "I didn't say anything about his possessions and the explosion hazards, no analogy with that," he said.
As noted, speculation about the health of FTX and Alameda increased in early November, with reports revealing that the investment firm's balance sheet was loaded with FTT tokens, FTX's native token. On November 11, FTX announced that it had filed for Chapter 11 bankruptcy in Delaware, ending the desperate attempt to raise funds.
The FTX crash also sent cryptocurrency prices into a tailspin. Bitcoin has been trading around the €16,000 mark for two weeks, its lowest level in two years. The broader crypto market has also fallen by around 20% in the past month.
Is Coinbase in trouble?
Last week, famed short seller Jim Chanos, who caused a sensation with his initial bet against Enron, criticized Coinbase's business model, saying the costs were too high for the current environment.
In fact, Coinbase charges one of the highest fees in the industry. The exchange charges a spread of around 0,5% for cryptocurrency sales and purchases. Of course, this is in addition to transfer fees that can be as high as 5%.
Chanos believes that a company like Fidelity or Vanguard could offer basic crypto trading with fees that significantly reduce Coinbase. To remain relevant, Coinbase may need to lower fees, which will then make a difference.
In the third quarter of the year, Coinbase posted a net loss of €545 million on revenue of €576 million. It has also had a negative impact on the company's shares, which have already fallen more than 80% this year.
In particular, Coinbase's institutional business has not been very profitable either. Institutions did around €133 billion in transactions in Q19.8, but that only translated to €XNUMX million in revenue for Coinbase.