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Coinbase Insolvency Rumors Grow Following Recent Suspension of Affiliate Program

2 mins
Updated by Ryan James
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In Brief

  • Liquidity crisis rumors are circulating in the crypto space over Coinbase decision to suspend its affiliate program.
  • Some have argued that its decision is because the firm is currently insolvent.
  • CEO Brian Armstrong says the firm is well capitalized to ride through the crypto winter.
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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.”

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.

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.

Dan Held of Kraken said that shutting down an affiliate program isn’t a sign of a liquidity crisis.

Others also backed him up, with NJ Skoberne tweeting, that “shutting it down has nothing to do with liquidity.”

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.

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.

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.

The recent liquidity crisis in the crypto industry has already claimed three major firms and has left thousands of consumers with billions in losses.

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Oluwapelumi Adejumo
Oluwapelumi believes Bitcoin and blockchain technology have the potential to change the world for the better. He is an avid reader and began writing about crypto in 2020.