On the 6th of December 2022, Ryan Selkis, the founder of Messari, mentioned Coinbase’s debt and how the establishment could be the target of a “hostile” takeover in 2023.
I wouldn't be surprised to see Coinbase as a hostile takeover target by a big bank in 2023.
I hope that doesn't happen, but with the debt at 15% yield and the decline below $10 billion in market cap, it would cost Jamie Dimon ~5% of JPM stock to buy the market leader outright.
— Ryan Selkis 🪳 (@twobitidiot) December 6, 2022
The FTX crash is no longer news to anybody in the crypto space, but the ripple effect of FTX’s bad management and decisions is affecting companies with little exposure to the crash. With the crash, there has been less faith in the crypto industry. There has been less user involvement with centralized platforms and a drastic reduction in asset prices across the board.
Even BTC and ETH aren’t immune to it.
Coinbase has reported having a 15% yield on debts valued at $3.4 billion in long-term debt, which includes the $2 billion in senior guaranteed notes. Additionally, the establishment has declined below the $10 billion mark, which isn’t currently looking good.
The CEO of Coinbase, Brian Armstrong, has repeatedly shared his belief that SBF should be in prison, and now, the drop in asset prices has led to his company reporting a major loss. This has led to laying 1,000 employees off, and few lenders are ready to put out their necks for a project they are scared would eventually go bankrupt.
This would leave the company prey to large banks looking to get into the crypto space by buying a major brand at a fraction of its worth. Though he acknowledged that the possibility of a hostile takeover is slim as Brian Armstrong has overwhelming voting rights, the future is uncertain.
Fortunately, Coinbase currently has a cash reserve of around $6 billion, which is more than enough to handle its current obligations. Still, in the event of an extended crypto winter, the possibility of selling off shares at low prices to stay afloat is not so farfetched. Another fear for users is a clause in Coinbase’s terms that says user funds are subject to bankruptcy proceedings.
The knowledge of such a clause could cause users to pull out their funds from Coinbase, worsening the situation.
He mentioned Jamie Dimon, the CEO of JPMorgan and a billionaire. JPMorgan, which is one of the largest banks in the united states, has completed its first-ever cross-border transaction using a Polygon blockchain DeFi, in what’s been called “a massive step” for the crypto space.
Hopefully, such speculations will remain so, as another crash by a crypto giant would lead to even more distrust and skepticism.
