Key Takeaways

• Coinbase is halting all operations in Japan, citing “market conditions”
• Last week it cut 20% of its workforce, having already cut 18% last June
• Stock price is up nearly 50% on the year amid crypto rally, but is still 85% off its peak
• Problems are aplenty at the company, while CEO Armstrong sold 2% of his stake in October

 

Coinbase has been in a world of pain recently.

Just last week, the exchange announced it was laying off 20% of its workforce, having already cut 18% last June. I wrote a piece analysing what this meant for the company, which was trading at a market cap below $10 billion, 90% down from the price at which it went public in April 2021.

This came after CEO Brian Armstrong unloaded 2% of his stake in the company in October, after which I wrote a deep dive analysing what it all meant for a company that has been viewed as the torch-bearer to carry crypto into mainstream circles once and for all following its high-profile floating on the Nasdaq.

But today, more bad news came. The exchange announced it is halting all operations in Japan, citing “market conditions”.

Coinbase stock price on the up

Despite the onslaught of bad news, Coinbase’s share price has been a big winner in the early weeks of 2023, up 48% in just 18 days.

This comes amid the biggest crypto rally in 9 months, which has seen prices surge across the board. While the bounceback in Coinbase’s share price is great news for investors, it also ironically sums up exactly what the problem is – Coinbase’s correlation to the crypto market.

There are few things more volatile than crypto, so it is not good news to be tied at the hip to its price action. But Coinbase’s performance is dependent on the crypto market because as the price falls, transaction volumes and interest in the industry, and by extension Coinbase, plummets.

During the pandemic, this was a great thing. The money printer was on maximum power, interest rates were low and retail investors were all aboard the FOMO train, armed with a healthy curiosity about crypto and a fat stimulus cheque.

But with the changing macro environment, the crypto industry has freefallen from $3 trillion to $800 billion, before this recent surge popped it back above $1 trillion.

Why are Japanese operations ceasing?

Despite the pleasant pump this past few weeks, zooming out tells you that Coinbase has shed 85% of its value since going public, gone through two rounds of layoffs, seen its CEO sell 2% of his stock in October and now is ceasing operations in Japan.

All Japanese Coinbase customers will have until February 16^th to withdraw their holdings from the platform. If they fail to do so, the remaining assets will be converted to Japanese yen. Coinbase had worked hard during the previous crypto winter to expand into the Japanese market, so the abrupt departure is a shame.

But Coinbase is not the only exchange to make this move, with rival Kraken also announcing it was ceasing Japanese operations last month. Also like Coinbase, Kraken had cut a large chunk of its workforce, laying off 30% of employees after the FTX collapse shook the market. The plight of Coinbase’s extreme correlation with the crypto market is once facing exchanges across the industry.

Coinbase Q3 results revealed that transaction volume fell 44% from Q2. The fall in volume and interest ultimately is what has caused the plummeting share price, layoffs, and now ceasing of Japanese operations, with a glance at Google Trends all you need to see the scale of the dropoff in the public’s attention to the exchange.

For $COIN investors, they will hope that the last few weeks of softer macro data and a crypto bounceback are an omen of things to come, otherwise this share price rally will be short-lived.

 

A major legal battle, involving the crypto community’s preferred social media platform Twitter, and Dogecoin (DOGE) advocate, Tesla‘s Elon Musk, is in the works.

After the serial entrepreneur said he’s terminating his agreement to buy Twitter in a USD 44bn deal, the company vowed to fight back.

“The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery,” Bret Taylor, Chairman of Twitter, said, without elaborating any further. 

Musk accused the social media giant of breaching their agreement and making false statements

In a filing, Musk said he has sought the data and information necessary to “make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform.”

However, per the star entrepreneur, “Twitter has failed or refused to provide this information.”

“Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information,” according to the filing.

Meanwhile, per Reuters, Twitter has a strong legal case against Musk.

Delaware courts have set a high bar for acquirers being allowed to abandon their deals, but target companies often choose the certainty of a renegotiated deal at a lower price or financial compensation rather than a messy court battle that can last for many months, Reuters reported, citing three corporate law professors.

“If it goes to court, Musk has the burden to prove more likely than not, that the spam account numbers not only were false, but they were so false that it will have significant effect on Twitter’s earnings going forward,” Ann Lipton, associate dean for faculty research at Tulane Law School, was quoted as saying.
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Learn more:
– Elon Musk Eyes Twitter ‘Digital Payments’ Expansion, But Faces DOGE ‘Pyramid’ Legal Wrap
– Elon Musk ‘Looking for Excuse’ to Ditch Agreement to Buy Twitter, Say Legal Experts After Fresh Bot Claims

– Elon Musk Could Renegotiate Twitter Deal as Bot Number ‘Unknowable as the Human Soul’
– Binance Backs Twitter Takeover with USD 500m, Musk Could Serve as Interim CEO

– Elon Musk May Launch Twitter IPO After Takeover – Report
– Elon’s Twitter: bluesky Keeps Independence, Dorsey Praises Musk, Market Awaits Next Step

– Here’s What Elon Musk Gets Wrong About Bitcoin and Dogecoin
– Another Elon Musk-fueled DOGE Rally Ends With a Dump

Binance crypto exchange announced the termination of key crypto derivatives offerings in South Africa earlier today. The world’s leading crypto exchange said the discontinuation of certain products and services in the region to comply with the local regulations. The crypto derivatives services that have been terminated with immediate effect include Futures, Options, Margin trading, and leveraged tokens.

The crypto exchange notified that existing users would have 90 days to close their open positions but won’t be able to put any new positions. The official announcement said,

“Users will have 90 days to reduce and close their positions for these products. Users will be able to top-up margin balances to prevent margin calls and liquidations, but they will not be able to increase or open new positions. Users will no longer be able to manually reduce or close their positions after 6th January 2022 11:59 PM (UTC). Thereafter all remaining open positions will be closed.”

This would be the fourth such announcement made by the crypto exchange related to its crypto derivatives offerings across the world. The exchange first shut its derivatives offerings across Europe, followed by Australia, Hong Kong, and now South Africa.

Binance Eyes Ireland For its New Headquarters

Amid a series of announcements to mend its ways with regulators across the world, the world’s top crypto exchange by trading volume is also looking to establish a centralized headquarters as part of its regulatory overhaul plans. Recently, the exchange CEO Changpeng Zhao revealed that Ireland could also become a destination for Binance. The speculations went rife after Binance registered three firms in the country in recent times.

“Historically, we claim that we don’t have headquarters. We are actually just in the process of establishing a few headquarters in different parts of the world,” CZ said.

Binance had maintained until now that they want to be truly decentralized and thus they have no plans of physical headquarters. However, the recent slew of regulatory warnings issued by nearly a dozen countries against the crypto exchange has forced them to settle for a centralized headquarters.

Huobi Global, the top cryptocurrency exchange for Chinese users became the first crypto platform to announce the termination of services in the country. The announcement comes in the wake of China’s latest call for a crypto crackdown. The popular crypto exchange has closed new registrations using mainland China mobile numbers. However, new registrations are still available for Hing Kong users.

Earlier in June this year, Huobi has banned Chinese users from the riskier crypto derivatives market during the last crackdown cycle in May-June.

People’s Bank of China released a detailed guide on the crypto crackdown and deemed all crypto transactions illegal. The regulatory documents that are considered first of their kind give detailed instructions on the prevention of mining activities and the prevention of crypto trading in the country. Along with that the Chinese Central Bank also warned foreign crypto exchanges from offering any services in mainland China.

Although, China banning cryptocurrencies is nothing new and it has become a norm of sorts during the bull cycles, be it 2017 or the current one. However, Chinese insiders claim the current set of guidelines is something never seen before as it involves 9 other key institutions including Supreme Court. Other popular Chinese crypto exchanges such as OKEx and even Binance are expected to make similar announcements.

Crypto Market Looks More Resilient Against China FUD

China FUD has often resulted in a great crypto market sell-off every bull cycle, the recent May market mayhem that saw nearly $500 billion getting wiped out of the crypto market was also believed to be fueled by the China crypto ban. However, the crypto market seems to be more resilient against the FUD as it saw a minor correction in the price of top crypto assets such as Bitcoin and Ether when compared to previous sell-offs.

Trade data from crypto analyst Santiment shows, despite a sharp correction of near 5% in the wake of the news, the traders have used the opportunity to buy the dip.

With the news of #China (again) banning #crypto trading and mining once again, Friday prices plummeted. As smoke has cleared, many traders have used this as nothing more than another #buythedip opportunity. https://t.co/kE1PpI4jy6 pic.twitter.com/R58CFPSHL3

— Santiment (@santimentfeed) September 24, 2021