As rumors swirl that Coinbase (NASDAQ: COIN) is facing a liquidity crisis, Bitcoin thought leader Joshua Henslee released a video summarizing a timeline of events and his thoughts on what recent moves mean for the exchange.
A timeline of recent events related to Coinbase
Henslee begins by giving a recent timeline of factual events related to Coinbase before giving his thoughts on what might be going on.
April 14, 2021 – This was the date of the Coinbase IPO. The stock price hit $381 but did not close at that price.
November 2021 – BTC hit its all-time high above $70,000. On November 9, Coinbase closed at an all-time high of $357.
May 4, 2022 – Coinbase took a loan from Goldman Sachs using BTC as collateral.
May 9 -11, 2022 – BTC price dropped $10,000 due to the TerraLUNA collapse. Coinbase stock dropped to $53.
May 12, 2022 – A quarterly disclosure from Coinbase showed that customer funds could be used as property in the event of bankruptcy proceedings. CEO Brian Armstrong blamed customers’ “irrationally pessimistic” viewpoints for the $430 million loss the company endured in Q1, 2022.
June 2, 2022 – Coinbase suspended all hiring and rescinded active accepted offers, leaving many of its would-be employees jobless.
June 12, 2022 – Celsius Network announced the suspension of withdrawals, causing BTC to fall another $10,000.
June 14, 2022 – Coinbase laid off 18% of its staff immediately and locked them out of company systems overnight.
June 29, 2022 – Coinbase extended staking programs to Solana at 3.85% APY. Also, on June 29, a Twitter thread showed Circle has been losing money, hinting that USDC is potentially not backed 1:1.
July 1, 2022 – Coinbase announced that effective July 13, USD/USDC pools will be merged for trading.
July 19, 2022 – Coinbase temporarily paused its U.S. affiliate program.
July 20, 2022 – A company blog post stated that it had no exposure to Three Arrows Capital (3AC) or Voyager and that assets are backed 1:1.
Circle's USDC scheme is on the brink of collapse. If you read their SPAC IPO filings its clear they have been losing money constantly but theres something dirtier happening underneath. They're at major risk on defaulting on USDC reserves. A deep dive 🧵 on USDC. 👇 pic.twitter.com/GgN5oeD7gO
— Geralt Davidson 🐺 (@CryptoInsider23) June 29, 2022
Henslee’s interpretation of this series of events
Giving his opinion on these events, Henslee says that seeing it in a timeline like this leads him to believe “things aren’t looking good for Coinbase.” He believes the firm has money problems. To him, how Coinbase cut staff so quickly and locked them out of its systems without notice indicates financial problems.
Henslee also thinks it’s suspicious how Coinbase got a loan from Goldman Sachs right before the LUNA/UST implosion. He again reiterates his point that nothing new has been created in the industry. It was supposed to be about removing trusted intermediaries, yet here we have one of the largest exchanges consorting with the same banks responsible for the 2008 financial crisis.
Henslee goes on to report that he’s seeing many stories on Reddit and elsewhere claiming that people can’t withdraw. He isn’t sure whether to trust them since rival exchanges have an incentive to post this sort of thing, but combined with the other events here, it’s worrying for Coinbase users.
Henslee then touches on another point about Bitcoin SV. Coinbase recently suspended BSV withdrawals, leading him to wonder why they halted them when they weren’t supposed to have BSV in the first place. He says Coinbase does have BSV and has had it since the split happened. Back then, they held it for a few months before eventually letting people withdraw. Now, users can’t get their BSV out due to unsubstantiated “transaction processing issues.”
Wrapping up, Henslee wonders if these events are in any way linked to legal action taken by Dr. Craig Wright against Coinbase and Kraken recently. He’s suing them for passing off BTC as Bitcoin. Henslee reminds us that the information released during the Coinbase IPO stated that the revelation of Satoshi Nakamoto was an existential risk to their business model.
Key takeaways: Coinbase looks to be in trouble
Henslee believes Coinbase is in financial trouble. He looks objectively at the series of events outlined in this video and concludes that they reek of money issues, but we’ll have to wait and see what happens.
Positing a final theory before bringing the video to a close, Henslee says that if you were against the industry, you could “bomb the exits” and take down fiat exchanges like Coinbase and Kraken, leaving everyone trapped in Tether on rogue exchanges like Binance. He’s not sure if that’s what’s happening, but it is one potential scenario.
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