Coinbase CEO Brian Armstrong thinks his company’s revenue will drop by at least another 50% as crypto sees massive losses

Coinbase CEO of Global Inc. Brian Armstrong said the crypto exchange’s revenue will be cut in half or more this year as falling prices and the collapse of rival FTX dent investor confidence.

The rapid collapse of FTX capped a brutal year for the crypto industry, with speculators retreating as the prices of some of the most frequently traded tokens tumbled. Coinbase shares are down more than 80% in 2022, and the company’s third-quarter revenue is only about a quarter of what it was in the last three months of 2021, when Bitcoin’s price peaked. Play video

“Last year in 2021, we did about $7 billion in revenue and about $4 billion in positive EBITDA, and this year with things going down, you know, looks like about half of that. or less,” Armstrong said in a wide-ranging report. interviewed on Bloomberg’s “David Rubenstein Show: Peer-to-Peer Conversations” when asked about the company’s revenue. In additional comments provided after the interview, a Coinbase spokesperson further clarified that they expect 2022 revenue to be lower. half revenue in 2021.

Coinbase previously indicated that it could lose no more than $500 million in 2022 based on adjusted EBITDA, a measure of earnings that doesn’t include certain expenses like interest and amortization. Previously, the company did not give a full-year total revenue outlook, but Armstrong’s estimate was in line with the roughly $3.2 billion analysts expected, according to data compiled by Bloomberg.

The turmoil surrounding FTX has deepened the veil over the industry, with confidence already battered by the previous bankruptcy of lender Celsius Network. Another lender, BlockFi Inc., went bankrupt last month, citing problems related to the collapse of FTX.

Armstrong said the collapse of Sam Bankman-Fried’s FTX appeared to be the result of a “major fraud” rather than mismanagement or accounting errors, as Bankman-Fried conveyed in interviews. problems since bankruptcy. Bankman-Fried has not been charged with any wrongdoing.

“It looks like they took client funds from their exchange and actually mixed or moved them into their hedge fund and then ended up in a very tough position,” Armstrong said. “And I believe that goes against their terms of service and against the law.”

Before its collapse, Bankman-Fried advocated crypto-friendly policies during frequent visits to Washington, DC and was a major donors to the race for Congress.

“I think there are some really serious questions that need to be asked now about whether to recover some of that money because it looks like it was stolen from the customer,” Armstrong said.

Despite the fallout from FTX, Armstrong said he plans to continue advocating for the industry on Capitol Hill and predicts that crypto-specific legislation could still be enacted next year. Regulations around stablecoins, centralized exchanges and custodians, as well as clarity on the definition of commodities and securities, should be among the top focuses, he said.

“I can say that there are still 20% of Congress that either oppose or know nothing about it, but that is not the view of the majority at this point,” he said of crypto. “We hope to be able to achieve something in the US and then continue to join the rest of the G20.”

For more details from Coinbase CEO Brian Armstrong, check out “The David Rubenstein Show: Peer-to-Peer Conversations” which will air January 11 at 9 p.m. NY on Bloomberg Television.

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