Why Coinbase Stock Collapsed Today
Shares of Coinbase Global (NASDAQ: COIN) collapsed on Thursday. As of 2:45 p.m. ET, the stock was down more than 7%. To be fair, the market is generally down today, and a 7% drop isn't out of the ordinary. However, the market may be responding negatively to a troubling report today -- a report already refuted by Coinbase.
According to The Wall Street Journal this morning, Coinbase once made a $100 million speculative cryptocurrency trade. The company was looking to generate revenue from actively trading cryptocurrencies instead of simply generating revenue from when its customers trade. The article says this was "proprietary trading."
This is an incredibly problematic statement for two reasons. First, Coinbase told the U.S. Congress in December that it doesn't do proprietary trading. Second, as a cryptocurrency exchange, there's a potential conflict of interest. It could potentially front-run its customers if it was buying and selling for its own benefit.
Source Fool.com
