The US Thanksgiving holiday is here, but Coinbase is not happy at all.
On November 26, under the latest guidance from the US Commodity Futures Trading Commission (CFTC), Coinbase closed margin trading.
In addition, this weekend, the New York Times in the United States will publish a negative report on Coinbase.
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Regulatory restrictions on Coinbase
November 25th Coinbase blog post: In response to new CFTC guidance, we are closing down our margin trading products. Margin trading will stop at 6:00 a.m. Beijing time on November 26.
Adam Cochran, partner at Metacartel Ventures, said: This is a huge blow to the U.S. encryption industry and has the potential to affect prices because it will drain a lot of money.
At the same time, the U.S. Treasury Department plans to introduce new regulations that require financial institutions such as Coinbase to collect information on the recipient/owner of non-custodial wallets, verify their identity, and then send withdrawals to non-custodial wallets.
In this regard, Coinbase CEO Brian Armstrong said bluntly: If this cryptocurrency regulation is introduced, it will be a terrible legacy and will have a long-term negative impact on the United States.
Brian Armstrong tweeted a long paragraph explaining the difficulty of operating the regulation.
First, smart contracts are not necessarily held by certifiable individuals or businesses. This is a new type of recipient that does not have any direct object in traditional financial services.
Second, in emerging markets it can be difficult or impossible to collect meaningful know your customer information. Some people in emerging markets are poor and may not have any permanent residential address or government identification documents.
Finally, many recipients (in the US or abroad) who value their financial privacy may not want to upload more identification documents to various companies at all.
If the regulations are actually enforced, Coinbase and its users will be hit. If Coinbase wants to operate its business in the United States smoothly, it must comply with the new regulations of the US Department of the Treasury. However, the consequence of this regulation is that the transactions from encrypted financial institutions to non-custodial wallets may decrease, and users who want to conduct transactions will inevitably turn to those unregulated encrypted service companies outside the United States, which is very important for the US encryption industry ecology extremely unfavorable.
Coinbase is well aware of this, and has joined a number of American encryption companies and investors to write to the U.S. Treasury Department to express their concerns. The specific situation is still unknown, but it is foreseeable that this is another game between the US encryption industry and regulators.
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Fire breaks out in Coinbase courtyard
Just a few hours after Brain Armstrong posted a long article, the Coinbase blog exposed negative news again.
The Coinbase blog post said: The New York Times plans to publish a negative story about Coinbase in the next few days, which is expected to be published on Sunday.
Coinbase stated in the article that it has been concerned about the New York Times report, and New York Times reporter Nathaniel Popper has been contacting current and former employees over the past few weeks.
At the same time, Coinbase pointed out that it has completed the investigation of the allegations in the article. The statement stated: The article may claim that some black employees and contractors filed complaints with the company, but only 3 of them filed complaints while working at Coinbase.
All allegations were thoroughly investigated, one through an internal investigation and two by independent third-party investigators, all of whom found no evidence of wrongdoing. In the end, it was concluded that the allegations had not been substantiated.
It is worth noting that the New York Times reporter has extended the tentacles of the investigation to the current employees of Coinbase. These employees are the insiders of Coinbases current operating conditions. When communicating with reporters, they will provide the latest internal situation of Coinbase, which may contain personal emotions.
In the style of an independent investigation by The New York Times, reporters may already have some undisclosed content about Coinbase in their hands.
In addition, black employees will be mentioned in the article. After the vigorous Black Lives Matter movement, the social sentiment generated by the report on this group is also an unknown factor.
No matter what allegations against Coinbase end up in the New York Times story, its a given that those allegations will be made public. The influence of The New York Times on a global scale is self-evident, and the negative news released will undoubtedly deal a heavy blow to Coinbase.
Although it is not clear who the former employee who provided information to the New York Times reporter was, the former employees accusation has to be reminiscent of Coinbases resignation wave from September to October.
In late September, Coinbase told employees that anyone dissatisfied with the companys stated apolitical mission could leave with a generous exit package.
In a blog post written by Brian Armstrong, it was mentioned that as of October 8, 60 employees had chosen to leave Coinbase, and the number of resigned employees accounted for about 5%.
5% of employees leave in a short period of time, which is not a small percentage for a company. When these employees leave, they may take some negative evidence with Coinbase.
Among the disgruntled employees is Dan Yoo, vice president of business and data at Coinbase, who announced on Oct. 10 that he would be leaving Coinbase.
However, Brian Armstrong was not worried about the adverse impact of employee departures on Coinbase at the time.
He said: I am proud of the number of crypto startups founded by former Coinbase employees. We even funded them through Coinbase Ventures. More and more crypto startups mean that we are getting closer to building a crypto economy, even if these startups are in competition with Coinbase.
It is not known when the sword of Damocles of the US regulators will hang down, nor how the former employee union will evaluate Coinbase in the interview. After the Thanksgiving holiday, Coinbase still has a lot of questions waiting for management to deal with.
