Coinbase CEO Brian Armstrong has called out FTX for its “massive fraud” but insists that the debacle is not an accurate representation of the wider crypto space.
In an interview with Stratechary, Armstrong was asked a range of questions including his reserved persona, what makes Coinbase different and of course the FTX scandal.
When asked about why he shies away from media interviews, Armstrong said he was keen to explore alternate medias compared to mainstream outlets.
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“More recently I’ve been getting out there and doing lots more media just because I think in times of crisis for the industry,” he said. “I want to talk with more what I call new media, or go direct to our constituents as opposed to talking as much through mainstream media.” Armstrong also called SBF a “media darling” in comparison.
In today’s current cold crypto climate, with some of the biggest firms collapsing, it’s in everybody’s best interest to separate the sheep from the goats. Armstrong believes the best strategy for Coinbase to achieve this is legitimacy.
“If someone’s going to do this right, they’re going to have to build a company that’s not sketchy,” he said. “They’re going to have to probably base it in a legitimate area, they’re going to have to work with regulators, they’re going to have to go get a bunch of licenses… From the inception of the company, the goal was to be the most legitimate, be the most trusted one, and not try to fly under the radar.”
With legitimacy vs illegitimacy in mind, the interview segued into a conversation about FTX. “It appears that a massive fraud was committed,” he said. “I think that customer funds appear to have been moved over to his hedge fund that he owned 90% of, and that those customer funds were lost. I mean, this is a violation not only of the terms of service as it’s written as far as I understand it, but it’s also probably just against the law and outright fraud.”
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Armstrong also took aim at the media for giving “softball interviews”. Giving the example of a Twitter conversation with Maxine Waters, Armstrong questioned “this guy just committed a $10 billion fraud, and why is he getting treated with kid gloves? Compare her tweets about Mark Zuckerberg for instance, who never stole $10 billion from people, whatever you think about the guy.”
However, Armstrong is still confident that the overwhelming majority of the crypto space consists of good actors. “Well, I do think we have to admit as an industry that crypto has attracted more fraudsters than we’d like,” he said. “I still think 95% of the people who I meet in crypto are legitimate people trying to do really good work. They don’t really get the lion share of the attention, because everybody loves the salacious story. And so it’s kind of like everybody knows Bernie Madoff and not the 10th largest hedge fund manager or something like that.”
Armstrong’s interview follows his recent comments that Coinbase is expecting its revenue to be slashed by 50% next year. Coinbase users may be fearing the worst for the exchange, but as a listed company, the firm’s financials are more transparent than its rivals. Armstrong’s candidness and the company’s disclose at least provide users with its current position, for better or for worse.
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