Ben Strack

While many say FTX founder Sam Bankman-Fried inadvertently ran a master class on how not to run a business, several crypto executives have recently partnered with online education platform MasterClass to teach a course on the space.&nbsp;



But the class does not elaborate on the bankruptcy of FTX and what led up to it. A MasterClass spokesperson told Blockworks that the lessons were in production before the crypto exchange’s crash.



&#8220;Sam Bankman-Fried was filmed for the class prior to the FTX crash,&#8221; the representative said. &#8220;Given recent events, he was removed.&#8221;&nbsp;



The class is taught by Binance CEO and co-founder Changpeng ‘CZ’ Zhao; Emilie Choi, president and COO of Coinbase Exchange; Chris Dixon, founder and managing partner at venture capital firm a16z; and Paul Krugman, an author and New York Times columnist.&nbsp;



The crypto executives join more than 180 instructors on the platform, which launched in 2014.



&#8220;Cryptocurrency and the blockchain have the potential to disrupt the financial system,&#8221; MasterClass CEO David Rogier said in a statement. &#8220;With the landscape rapidly changing every day, we&#8217;re bringing together the industry&#8217;s key voices to help members gain a foundational understanding of the crypto and blockchain ecosystem.”



Topics of the lessons range from the history of crypto, decentralization, Web3, DAOs, NFTs, the segment’s volatility and a debate between Krugman and Zhao on stablecoins — a hot topic following the collapse of <a href="https://blockworks.co/search" target="_blank" rel="noreferrer noopener">Terra</a>’s algorithmic stablecoin earlier this year.



The course comes nearly a month after crypto exchange FTX <a href="https://blockworks.co/news/whats-next-for-ftx-and-its-customers-after-bankruptcy-filing" target="_blank" rel="noreferrer noopener">filed for bankruptcy</a> amid allegations that the company transferred billions of dollars of user funds to sister company Alameda Research, also founded by Bankman-Fried.



The exchange faced a “liquidity crunch” after <a href="https://blockworks.co/news/binance-ceo-goes-full-fud-in-attempt-to-bury-ftx" target="_blank" rel="noreferrer noopener">Zhao tweeted</a> that Binance would liquidate its holdings of FTX token FTT. The price of FTT subsequently tumbled, leading to what Bankman-Fried called a “withdrawal backlog” at FTX.



Veteran restructurer John J. Ray III replaced Bankman-Fried as FTX’s CEO after his resignation. <a href="https://blockworks.co/news/worse-than-enron-sbfs-ftx-has-a-complete-absence-of-trustworthy-information" target="_blank" rel="noreferrer noopener">Ray said</a> the internal management of the company was “a complete failure.”



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Binance’s CZ Among Instructors for New Crypto MasterClass

Casey Wagner

<div id="highlights-block_62a39fd2c7988" class="highlights">
 <ul>
 <li>Coinbase employees express concern over leadership, direction of company in now-deleted petition</li>
 <li>CEO Brian Armstrong said any employees caught signing the petition would be fired</li>
 </ul>
 
</div>



Some Coinbase employees want three top officials at the cryptocurrency exchange removed, according to a now-deleted petition that was first published on Mirror.xyz. Coinbase CEO Brian Armstrong, who was not listed as one of the three, took to <a href="https://twitter.com/brian_armstrong/status/1535304943728414721?s=20&amp;t=v8qG_H9vLEwFw7aj9roOdA" target="_blank" rel="noreferrer noopener">Twitter</a> to call the move “really dumb on multiple levels.”&nbsp;



The petition ​​called for Coinbase Chief Operating Officer Emilie Choi, Chief Product Officer Surojit Chatterjee and Chief People Officer LJ Brock to be ousted. An archived copy of the petition is available from the Internet Archive’s <a href="https://web.archive.org/web/20220609202836/https://mirror.xyz/0x58E3a8Bc8CBFC10AC2972Fb9d0cF359E21eae56b/ZIO--5ywx1z-aKs0KCQ2PeTNutVKune7zhA1D09R0q0" target="_blank" rel="noreferrer noopener">Wayback Machine</a>.&nbsp;



“We the employees at Coinbase believe that the executive team has recently been making decisions that are not in the best interests of the Company, its employees, and its shareholders,” the petition said.&nbsp;



Petition writers cited Coinbase’s “failed” NFT platform, its “toxic” employee review system and the exchange’s aggressive and “unsustainable” hiring practices.



Armstrong encouraged dissatisfied employees to “quit and find a company to work at that you believe in,” in his Twitter thread.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Our culture is to praise in public, and criticize in private,” he added.&nbsp;</blockquote>



The rift comes shortly after the <a href="https://cms.blockworks.co/coinbase-latest-crypto-firm-to-cut-costs-amid-market-downturn/" target="_blank" rel="noreferrer noopener">exchange announced</a> it would be pausing hiring efforts and rescinding a number of accepted employment offers, a grievance also listed in the petition. Coinbase has decided to take more “stringent measures” to slow its headcount growth in hopes of navigating uncertain waters, Brock wrote in a blog post about the decision earlier this month.&nbsp;



Coinbase is also facing controversy from many customers, who were alarmed to learn that the exchange reserved the right to seize client assets in the event of bankruptcy.&nbsp;



“The crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings,” the exchange said in its latest <a href="https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/89c60d81-41a2-4a3c-86fb-b4067ab1016c.pdf" target="_blank" rel="noreferrer noopener">earnings report</a>.&nbsp;



Armstrong noted that employees caught signing the petition would be fired, as it harms “fellow co-workers, along with shareholders and customers.”



&#8220;There is probably lots we can be doing better, but if you&#8217;re at a place where you want to leak stuff externally, then it&#8217;s time for you to go,” he said.



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Brian Armstrong Calls Petition To Remove Top Coinbase Execs ‘Really Dumb’

<div id="highlights-block_61d7473325b44" class="highlights">
 <ul>
 <li>Bank of America projects Coinbase’s subscription and services revenue to reach 16% in 2023, compared to 4% of total revenue in 2020</li>
 <li>User-created metaverses will be the future of social networks, Coinbase Chief Product Officer Surojit Chatterjee wrote in a Dec. 30 blog post</li>
 </ul>
 
</div>



Bank of America has changed Coinbase’s rating from neutral to buy due to the company’s increasing signs of revenue diversification beyond retail crypto trading.



Jason Kupferberg, a research analyst at the bank, said in a research note that he expects the company’s revenue diversification trend to accelerate in 2022 and beyond. He maintained its price target at $340.



Coinbase’s subscription and services revenue was 12% of its total net revenue in the third quarter of 2021, which was up from 4% in 2020, Kupferberg wrote. Bank of America expects that number to rise to 16% by next year, he added.&nbsp;&nbsp;



Staking, NFT and decentralized finance (DeFi) products will be among the offerings driving Coinbase’s revenue diversification trend, Kupferberg wrote.



Coinbase <a href="https://cms.blockworks.co/coinbase-plans-to-launch-nft-marketplace/" target="_blank" rel="noreferrer noopener">revealed in October</a> that it would launch an NFT marketplace allowing users to purchase, mint, showcase and discover the crypto assets. Kupferberg said that the offering is expected to launch this year.



NFTs will become the next evolution of users’ digital identity and passport to the metaverse, Coinbase Chief Product Officer Surojit Chatterjee wrote in <a href="https://blog.coinbase.com/10-predictions-for-web3-and-the-cryptoeconomy-for-2022-745a20a60cd0" target="_blank" rel="noreferrer noopener">a Dec. 30 blog post</a>.&nbsp;



“Users will come together in small and diverse communities based on types of NFTs they own,” Chatterjee wrote. “User created metaverses will be the future of social networks and will start threatening the advertising driven centralized versions of social networks of today.”



Coinbase also began allowing customers last month <a href="https://blog.coinbase.com/coinbase-makes-it-easy-to-earn-yield-with-defi-bd38156e2715" target="_blank" rel="noreferrer noopener">to earn DeFi yield</a> on Dai, a stablecoin designed to be pegged to the US Dollar.



“In our view, scaling of these non-trading revenue streams could also catalyze increased interest in the stock among institutional investors,” Kupferberg explained. “While uncertainty around regulation remains an ongoing potential risk, we continue to believe that COIN&#8217;s technology, innovation and brand are positive differentiators as more consumers and institutions engage with various parts of the crypto/digital asset ecosystem.”



Crypto is on pace to hit a billion users in the next five years, Coinbase President and Chief Operations Officer Emilie Choi <a href="https://cms.blockworks.co/coinbase-president-crypto-on-pace-for-1-billion-users-within-5-years/" target="_blank" rel="noreferrer noopener">said last month</a> during a webinar at the Bloomberg Financial Innovation Summit.



Choi added that Coinbase would look to buy “incredible companies” that it sees in the crypto space.



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Bank of America: Coinbase Revenue Diversification to Accelerate in 2022 and Beyond

<div id="highlights-block_61ba5c7195b50" class="highlights">
 <ul>
 <li>Transparency and clarity around crypto regulation will be necessary for crypto ecosystem to thrive, according to Emilie Choi, Coinbase’s president and COO </li>
 <li>Company looks at potential “crypto winter” as an opportunity to double down on the space and seek out opportunities </li>
 </ul>
 
</div>



Crypto is on pace to hit a billion users in the next five years, Coinbase President and Chief Operations Officer Emilie Choi said, though usability and regulatory clarity will be key to continued increased adoption. 



While speaking during a webinar at the Bloomberg Financial Innovation Summit, Choi said that about 12% of Americans use crypto and that users currently total roughly 200 million globally.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We’ve hit mainstream adoption,” Choi said. “If you look and track the adoption of the internet, we’re actually on pace or accelerating what the early internet was on the crypto front.”</blockquote>



But Choi noted that more certainty around crypto regulation in the US will be key to the space’s growth.&nbsp;&nbsp;



“We have more than 50 regulators alone in the US and we can navigate that and we embrace it,” the Coinbase executive said. “We’ve always leaned into [regulation], but for the crypto ecosystem to thrive, we need to have fair rules, we need to have transparency and we need to have more clarity.”



<h3 class="wp-block-heading">Facing regulatory pressure</h3>



Coinbase <a href="https://cms.blockworks.co/coinbase-cancels-plans-to-launch-lending-program/" target="_blank" rel="noreferrer noopener">announced in September</a> that it was pausing its plans to launch a lending program after reportedly facing pressure from US regulators.



Paul Grewal, Coinbase’s chief legal officer, said in a Sept. 7 blog that the US Securities and Exchange Commission (SEC) sent the company a Wells notice, which he noted is the official way a regulator tells a company that it <a href="https://cms.blockworks.co/the-sec-will-sue-coinbase-if-it-launches-lend/" target="_blank" rel="noreferrer noopener">intends to sue.</a>



“What we want to do as Coinbase is make sure that we’re raising our hand when we feel the rules of the road are not clear,” Choi said, noting the company’s intent to have a strong relationship with the SEC. “For us, that particular issue wasn’t an existential one for us. We are genuinely trying to create a world in which crypto companies can thrive and blossom and understand what the rules are.”



Coinbase Chief Financial Officer Alesia Haas was among the speakers that testified <a href="https://cms.blockworks.co/crypto-industry-will-move-offshore-if-congress-doesnt-act-executives-warn/" target="_blank" rel="noreferrer noopener">during a hearing</a> of the House Financial Services Committee last week about digital assets and the future of finance.



Choi said that the hearing made her optimistic that US lawmakers are willing to learn more about crypto and emphasized that innovation and entrepreneurship could move offshore if regulatory uncertainty remains.&nbsp;



Though Coinbase is looking forward to continuing building its US business, she added, the company is also investing heavily in global expansion.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We’re going to want to make sure that we have optionality in other markets given some of the uncertainty in the US right now,” Choi noted.</blockquote>



Bitcoin’s price was about $48,750 at 3 pm ET, according to <a href="https://www.coingecko.com/en/coins/ethereum" target="_blank" rel="noreferrer noopener">CoinGecko</a>, down nearly 26% from 30 days ago. Ethereum’s price was nearly $3,970 at that time, down about 15% in the past month. 



<h3 class="wp-block-heading">A time to acquire</h3>



As some predict an upcoming “crypto winter” — a time between bull cycles where cryptoasset prices drop — Choi said there are benefits to such periods.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“In whatever the next winter is, there will be companies that talked a big game about crypto but then will pull out,” she explained. “That’s great, because it means that the mission-oriented companies and the mission-oriented builders will stick through it and get disproportionate value as crypto grows.”</blockquote>



Coinbase has taken advantage of downturns in the past, Choi noted.&nbsp;



Coinbase Custody <a href="https://blog.coinbase.com/coinbase-custody-acquires-xapos-institutional-business-becoming-the-world-s-largest-crypto-2c1b46fc94c4" target="_blank" rel="noreferrer noopener">acquired Xapo’s institutional business</a> in August 2019, becoming the world’s largest crypto custodian. The exchange <a href="https://blog.coinbase.com/coinbase-to-acquire-leading-institutional-crypto-brokerage-tagomi-50558d41eef2" target="_blank" rel="noreferrer noopener">announced in May</a> that it would acquire crypto prime brokerage platform Tagomi. 



“We tend to double down during those times when everyone else is fearful,” she said. “&#8230;If we see incredible companies in this space, we’re going to try to acquire them.”



<hr class="wp-block-separator"/>



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<hr class="wp-block-separator"/>

Coinbase President: Crypto on Pace for 1 Billion Users Within 5 Years

<div id="highlights-block_618e86fed7e2f" class="highlights">
 <ul>
 <li>Coinbase’s total net revenue dropped 39.3% in the third quarter</li>
 <li>Goldman Sachs maintains a positive outlook for the exchange despite the reported revenue decline</li>
 </ul>
 
</div>



Goldman Sachs maintains its buy rating for Coinbase despite the cryptocurrency exchange’s weaker-than-expected third quarter earnings report. Coinbase’s total net revenue dropped 39.3% from $2.033 billion to $1.234 billion during the third quarter, <a href="https://cms.blockworks.co/coinbase-reports-q3-net-revenue-dropped-39-to-1-234b/" target="_blank" rel="noreferrer noopener">according to Tuesday’s earnings report</a>.



“We think there’s an abundance of innovation in this space, and we want to double down on those opportunities,” <a href="https://cms.blockworks.co/coinbases-choi-we-will-be-rolling-out-a-regulatory-proposal/" target="_blank" rel="noreferrer noopener">Emilie Choi</a>, president and chief operating officer of Coinbase, said during the company’s earnings call Tuesday. Some of those opportunities reside within non-fungible tokens (NFTs) and Web3, Choi mentioned.



The company entered Q3 with “softer crypto market conditions, driven by low volatility and declining crypto asset prices,” Coinbase said. However, market conditions improved toward the end of Q3 and have continued into Q4, the report noted.



Goldman Sachs analysts point to Conbase’s new initiatives as a reason to be optimistic about the stock.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“While shares will likely give back some of their recent strength heading into the quarter, we see a number of reasons to be positive,” Goldman analysts wrote in a Coinbase report released Thursday. </blockquote>



Coinbase’s growing subscription services and the <a href="https://cms.blockworks.co/coinbase-plans-to-launch-nft-marketplace/" target="_blank" rel="noreferrer noopener">upcoming NFT platform</a> are going to advance the company in upcoming quarters, the report noted. 



&#8220;While COIN remains a difficult to predict financial model with broader adoption trends and the development of the crypto ecosystem driving shares on a day-to-day basis, we continue to believe COIN represents one of the best ways to get exposure to the expansion of the crypto ecosystem, and we remain constructive on COIN’s ability to continue to innovate and drive further adoption of crypto assets,” the report said.&nbsp;



Morningstar analysts <a href="https://www.morningstar.com/stocks/xnas/coin/analysis" target="_blank" rel="noreferrer noopener">took a similar view</a> Wednesday. 



“We are raising our fair value estimate for Coinbase to $225 from $201,” Morningstar analysts wrote in a mid-week Coinbase report. “Our fair value estimate benefited from a $20 adjustment for higher near-term transaction fee revenue as cryptocurrency markets set new highs, and a $15 increase from higher projected revenue from Coinbase’s staking and new NFT businesses.” 



COIN shares fell following the release of the earnings report Tuesday before paring losses. The stock was trading flat after the first hour, despite nearly 3% losses for top cryptocurrencies BTC and ETH, and sharper selloffs among smaller cap names.



<hr class="wp-block-separator"/>
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<hr class="wp-block-separator"/>

Goldman Sachs Gives COIN Buy Rating Despite Q3 Earnings Miss

<div id="highlights-block_614b9907adf80" class="highlights">
 <ul>
 <li>Coinbase COO confirmed rumors that the exchange will be rolling out a proposal to help guide lawmakers on crypto regulation </li>
 <li>Choi did not comment on rumors that the exchange would be revisiting plans to launch its lending platform </li>
 </ul>
 
</div>



Mainnet 2021, New York City — Coinbase COO Emilie Choi confirmed speculation sparked by a <a href="https://twitter.com/brian_armstrong/status/1435439291715358721?s=20">Tweet</a> thread from CEO Brian Armstrong that the exchange will be working on a regulatory proposal to submit to United States Lawmakers. 



“The things that we should all care about are — first and foremost — transparency and integrity,” Choi said while speaking at Messari’s Mainnet conference on Wednesday. “And the reason that we went out with that tweetstorm before is because we didn&#8217;t feel like there was transparency and clarity to the way things were being regulated.”



Choi is referring to Armstrong’s series of Tweets and <a href="https://blog.coinbase.com/the-sec-has-told-us-it-wants-to-sue-us-over-lend-we-have-no-idea-why-a3a1b6507009">blog post</a> released earlier this month that revealed that Coinbase had been threatened with legal action by the Securities and Exchange Commission if the exchange went ahead with plans to launch its lending platform.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">1/ Some really sketchy behavior coming out of the SEC recently. Story time…&mdash; Brian Armstrong (@brian_armstrong) <a href="https://twitter.com/brian_armstrong/status/1435439291715358721?ref_src=twsrc%5Etfw">September 8, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In the thread, Armstrong expressed frustration with the seemingly unfair process cryptocurrency companies must endure.&nbsp;



“The second pillar there is going to be about fairness,” Choi said. “We just want to make sure that there&#8217;s an even playing field, and when we talk about that, I&#8217;m talking about traditional financial services and crypto. There should be even playing fields in these different industries.”&nbsp;



The interview comes one day after rumors swirled on Twitter and around the Mainnet conference that Coinbase would not be abandoning plans to launch Lend, countering what the <a href="https://cms.blockworks.co/coinbase-cancels-plans-to-launch-lending-program/">exchange announced</a> last week. Choi did not confirm the speculation.&nbsp;



The creation of Coinbase’s proposal, Choi said, is intended to advance the entire community.&nbsp;



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“We are regulated I think by more than 50 regulators right now, I think it&#8217;s actually much more than that,” she said. “If we&#8217;re struggling with this, then what is your audience going to be able to do? That&#8217;s part of the reason that we felt the need to be a little bit more public about this and figure out what works for everyone.”</blockquote>



The ‘audience’ Choi is referring to is other cryptocurrency companies, many of whom were in attendance.&nbsp;



Messari CEO and founder Ryan Selkis, who interviewed Choi during the discussion, announced that $250,000 of conference proceeds will be going toward crypto-related policy efforts in Washington, D.C., a move keeping in line with the broader theme of the event.



<hr class="wp-block-separator"/>



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