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Coinbase’s decision to suspend its affiliate program has led to rumors that the exchange might be facing a liquidity crisis.
The crypto community is divided in its opinion as some believe the affiliate program suspension could be an indication that the firm was insolvent.
CoinGeek media personality Kurt Wuckert Jr tweeted that this could signify a liquidity crisis because the exchange had closed “Coinbase Pro” and “affiliate program.”
In the last month, COINBASE combined their USD and USDC markets, closed Coinbase Pro and turned off their affiliate program.
This is after over a year of insiders selling stock which has absolutely cratered.
I smell a liquidity crisis.
Where’s the money, @coinbasepic.twitter.com/DuoQcwkjsH
— Kurt Wuckert Jr | GorillaPool.com ???? (@kurtwuckertjr) July 16, 2022
Wuckert is not the only crypto influencer with such views, as the likes of Nate O’Brien and BitBoy have shared their views about what could be an incoming liquidity crisis.
Coinbase shut down their affiliate program and are getting rid of CoinBase pro. Recent history would suggest there could be trouble ahead for CB so tread lightly.
If Coinbase were to go insolvent, this would break crypto the crypto space like we have never seen before.
— Ben Armstrong (@Bitboy_Crypto) July 16, 2022
BitBoy tweeted that a Coinbase insolvency “would break crypto the crypto space as we have never seen before.”
Community Defends Coinbase
Meanwhile, there are those who claim the current views are just FUD. A Twitter user pointed out that it is normal for companies to cut costs during a recession.
This is just FUD, plain and simple FUD. First, cutting costs is normal for any company during a typical recession, because purchases fall, hence "recession." 2nd, "crypto-winter" causes this type of activity every time… low deposits/purchases. Look at the market volume. https://t.co/bJnlpJWVwB
— De Flandres (@Pacifica2525) July 16, 2022
Dan Held of Kraken said that shutting down an affiliate program isn’t a sign of a liquidity crisis.
No, Coinbase doesn't have a "liquidity crisis" bc they shut down their affiliate program ??
— Dan Held (@danheld) July 16, 2022
Others also backed him up, with NJ Skoberne tweeting, that “shutting it down has nothing to do with liquidity.”
As the guy that literally set up the affiliate program in 2019, shutting it down has nothing to do with liquidity.
— NJ skoberne (@howdoyousaynejc) July 16, 2022
Crypto YouTuber jungleincxrp also tweeted that Coinbase has about $6 billion in cash and significant crypto reserves. But added that he has moved all his assets from the exchange.
Coinbase has 6 billion in cash + large crypto reserves. They will be fine!
With that being said I just transferred everything off. ??????
— Jungle Inc ??Steady Lads?? #MMG (@jungleincxrp) July 16, 2022
Crypto lawyer John Deaton believes that industry leaders will “NEVER allow a Coinbase bankruptcy” due to the domino effect such an event will have on the crypto industry.
I expect to see a lot of FUD about a potential @coinbase bankruptcy. I even hesitate to write this ?? b/c as @jungleincxrp points out below, Coinbase has plenty of cash and plenty of reserves. I would expect industry leaders to NEVER allow a Coinbase bankruptcy. https://t.co/1scZRlyZVh
— John E Deaton (206K Followers Beware Imposters) (@JohnEDeaton1) July 16, 2022
Coinbase CEO Brian Armstrong has tried to quell the rumors by saying the exchange is well capitalized and still has a lot of growth to absorb after a massive spread in 2021.
1. Well capitalized.
In past downturns we pulled ahead and consolidated share, staying focused while others got distracted. Downturns make the best companies even stronger, and this one will be no exception for us.
— Brian Armstrong – barmstrong.eth (@brian_armstrong) July 15, 2022
The recent liquidity crisis in the crypto industry has already claimed three major firms and has left thousands of consumers with billions in losses.
