The Implosion of FTX Is Not Good News for Coinbase
Less competition may seem like a good thing for cryptocurrency exchange Coinbase (NASDAQ: COIN). A major competitor essentially disappearing overnight would be a godsend in nearly every industry. Imagine if Pepsi just packed it in. Or if FedEx decided that packages just weren't its thing.
The cryptocurrency industry, if you can even call it an industry, is not like this. Coinbase makes most of its money by charging fees when its customers trade. For customers to want to trade, they need to believe that they can turn a profit. And for customers to believe they can turn a profit, they must have at least some confidence in the crypto economy.
The collapse of FTX, which turned out to be a toxic stew of fraud and sloppy accounting, is the latest hit to the collective confidence of crypto speculators. It's still not known how many billions of dollars in client funds are missing, or if those funds will ever be recovered. Worse, other crypto companies that custodied assets with FTX are now facing their own crises. Cryptocurrency lender BlockFi, for example, is reportedly preparing a bankruptcy filing of its own, according to The Wall Street Journal.
Source Fool.com
