Coinbase Chief Executive Brian Armstrong doesn’t mince words.
Nearly two months after rival Sam Bankman-Fried’s empire went bankrupt, he’s just delivered a large blow to what until recently was the institutional face of crypto.
Bankman-Fried’s empire consisted of the FTX cryptocurrency exchange. Before its rout, it was the third largest cryptocurrency exchange based on volume after Binance and Coinbase. FTX last February was valued at around $32 billion.
Besides FTX, Bankman-Fried also founded Alameda Research, a hedge fund that also serves as a cryptocurrency trading platform for institutional investors.
The 2 firms needed to file for Chapter 11 bankruptcy on Nov. 11 after they were unable to fulfill the huge withdrawals of funds requested by their customers and investors.
Armstrong: ‘Dark Times Weed Out Bad Corporations’
The Department of Justice and the Securities and Exchange Commission have filed a series of civil and criminal charges including fraud and conspiracy to defraud FTX clients and investors.
“Bankman-Fried was orchestrating a large, yearslong fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal profit and to assist grow his crypto empire,” the SEC alleges in its civil grievance.
Bankman-Fried, known within the crypto space by his initials, SBF, was extradited to the U.S. on Dec. 21 by the authorities of the Bahamas, where he lived and where FTX is headquartered.
He was released after his parents, each law professors at Stanford University, signed a $250 million recognizance bond pledging their California home as collateral. Two other friends with significant assets also signed, in accordance with news reports.
During a Jan. 3 hearing in U.S. District Court in Recent York, Bankman-Fried pleaded not guilty to the costs against him. Bankman-Fried’s trial is scheduled for Oct. 8.
Like many within the crypto industry, Coinbase’s Armstrong appears persuaded that Bankman-Fried is guilty.
“In 2022, the crypto market trended downwards together with the broader macroeconomy,” he wrote to Coinbase employees on January to announce a brand new wave of layoffs. “We also saw the fallout from unscrupulous actors within the industry, and there could still be further contagion.”
“Dark times also weed out bad firms, as we’re seeing without delay. But those of us who imagine in crypto will keep constructing great products and increasing economic freedom on the planet.”
Armstrong Stays Optimistic About Crypto Future
Unlike FTX, Coinbase (COIN) – Get Free Report is a public company. Which means that it’s more transparent, particularly vis-à-vis investors, and is closely monitored by regulators, including the SEC.
The corporate’s books are also published at the tip of every quarter, which enables everyone to look at them closely and get an excellent idea of the health of the platform.
This was not the case of FTX, which was a non-public company. The fallen crypto exchange didn’t need to open its books to investors or anyone else. In consequence, investors and customers needed to imagine all the pieces its leaders desired to tell them.
After these blows against Bankman-Fried and his empire, Armstrong desires to be optimistic concerning the way forward for the crypto industry, which has been weakened by repeated scandals.
“Despite all the pieces we’ve been through as an organization and an industry, I’m still optimistic about our future and the long run of crypto,” he wrote.
“Progress doesn’t all the time occur in a straight line, and sometimes it may feel like we’re taking two steps forward and one step back.
“But identical to we saw with the web, a very powerful firms not only survive but thrive during down markets by being rigorous with cost management, and continuing to construct progressive products.”
Coinbase has, in lower than a yr, cut 38% of its workforce, or nearly 2,000 people. The corporate saw its stock plummet: When it went public in April 2021, Coinbase stock had risen to $341. It’s currently trading around $43, a fall of 88% in lower than two years.