Insolvency rumors regarding Coinbase, the largest US-based crypto exchange, going insolvent are currently circulating in the virtual stratosphere. Are they true?
It’s not clear yet. What is clear though is that rumors like these are not good to the overall health of the broader crypto market.
What the crypto space needs today is news like new companies launching, hiring new employees and crypto price skyrocketing.
Two new victims have been taken by the crypto collapse, and it is probable that more will follow. Last week, venture capital firm Three Arrows Capital and cryptocurrency broker Voyager Digital both declared bankruptcy within a few days of one another.
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Is Coinbase The Next Casualty?
With crypto prices smothered in the red — and the so-called “Domino Effect” remaining high — there’s a good possibility other companies will follow.
Now, the suspension of the company’s affiliate program has sparked suspicions that the exchange may be experiencing a liquidity crunch.
Some members of the crypto community believe that the suspension of the affiliate program indicates the company’s insolvency.
According to a report by Business Insider, Coinbase CEO Brian Armstrong is terminating its affiliate market program in the United States.
Insider uncovered three different creators’ emails that show the exchange will temporarily suspend the program on July 19, based on the emails.
Adverse situations in the cryptocurrency market compelled the lending platform to take this action. In 2023, the company may establish the affiliate platform. However, no specific timeline was disclosed.
Following the email, some individuals took to Twitter to assert that the move was symbolic and indicative of Coinbase’s liquidity issues.
A number of actions, like the recent decision to suspend its affiliate program, have been cited as evidence that a liquidity crisis is imminent.
Those Who Predict Coinbase’s Insolvency
Ben Armstrong, a prominent crypto influencer and the author of Bitboy Crypto, has warned that the company may be in danger of collapse based on recent events.
CoinGeek media personality Kurt Wuckert Jr. commented on Twitter that the exchange’s closure of “Coinbase Pro” and “affiliate program” could signal a liquidity problem.
The co-founder of 6th Man Ventures, Mike Dudas, has also described the NFT platform on the crypto exchange “dead on arrival.”
Those Who Claim Coinbase Will Not Collapse
Kraken’s chief of growth marketing, Dan Held, stated that there is no liquidity problem going on at Coinbase, while renowned crypto YouTuber Jungle Inc tweeted that the biggest U.S. crypto exchange has approximately $6 billion in cash reserves in addition to significant crypto reserves.
The author of the Coinbase affiliate program, NJ Skobene, has clarified that the discontinuation of this program should not be interpreted as red flag.
Armstrong, however, has attempted to dispel the allegations by stating that the exchange is well financed and still has a substantial amount of growth to absorb following a large spread last year.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.