Coinbase Global posted losses in its fourth quarter (Q4) reports due to mounting pressure from an industry downturn triggered by cryptocurrency platform collapses, it reported on Tuesday.
Coinbase shares nosedived around 86 percent in value last year, and slumped a further 2 percent following the report.
The news comes as numerous cryptocurrency platforms, including FTX, Three Arrows Capital, and Voyager filed for bankruptcy in 2022, sparking a wave of negative investor sentiment on digital assets.
Further issues surrounding cryptocurrencies led to the fall of crypto lending exchange Genesis in January. This continued a mixed trend of market sentiment and a further tightening of cryptocurrency restrictions.
Sam Bankman Fried, the disgraced former chief executive and founder of FTX, currently faces eight counts of financial malfeasance. Charges include wire fraud, conspiracy to commit wire fraud, and many others.
In a letter to shareholders, Coinbase wrote: “As macroeconomic indicators like inflation remained high and interest rates rose throughout the year, crypto market cap declined along with broader equity markets.”
It explained further:
“These weakening market conditions became exacerbated by two idiosyncratic events. The first was the depegging of $LUNA in Q2’22 which contributed to a ~60% crypto market cap decline in that quarter and exposed poor risk management practices in crypto, which ultimately helped drive the credit related bankruptcies of Three Arrows Capital, Voyager, and Celsius.”
It also cited the collapse of FTX in Q4 2022, resulting from fraud, which “helped drive additional credit related bankruptcies.”
