- Coinbase stock rallied 60% in November as its biggest competitors FTX and Binance faced legal troubles and declines in business.
- FTX declared bankruptcy amid founder Sam Bankman-Fried’s fraud charges, while Binance saw its CEO Changpeng Zhao step down to settle money laundering charges.
- Coinbase survived the crypto crash and is positioned to potentially gain market share in 2023, though risks like SEC lawsuits and new Bitcoin ETFs remain.
The Rise and Fall of FTX
In early November, FTX founder Sam Bankman-Fried was convicted on seven counts of fraud related to FTX’s collapse. This led the exchange to declare bankruptcy shortly after. Bankman-Fried faces potential life in prison when sentenced in March.
Binance Founder Steps Down
Later in November, Binance founder Changpeng Zhao pleaded guilty to money laundering and sanctions violations. As part of a settlement with the Department of Justice, Zhao agreed to step down as CEO of Binance. The company saw a significant drop in trading volume and market share this year amid increased regulatory scrutiny.
Why Did Coinbase Stock Rally?
Unlike FTX and Binance, Coinbase survived the recent crypto crash. While the exchange saw declines, it was not forced to file for bankruptcy or change leadership. Coinbase is now positioned to potentially gain market share as users exit FTX and Binance.
Threats on the Horizon
However, Coinbase still faces an ongoing lawsuit from the SEC. The exchange has even threatened to leave the US market entirely if issues with the SEC cannot be resolved.
There is also the prospect of the first Bitcoin ETFs being approved in the US soon. This could divert casual crypto investors away from platforms like Coinbase. But in the short term, custody revenue from Bitcoin ETFs could boost Coinbase.
The Outlook for 2023
With its biggest competitors hamstrung and the crypto industry resetting after the crash of 2022, Coinbase emerges from the rubble in a favorable position. While risks remain, the exchange seems poised for growth in 2023 after its banner month to close out last year.