Coinbase says it had no exposure to bankrupt crypto firms

Yahoo Finance's David Hollerith discusses news that Coinbase didn't have exposure to Voyager, Celsius, and other crypto firms that went bankrupt, sending shares of the exchange higher.

Video Transcript

AKIKO FUJITA: No financial exposure to the three crypto firms filing for bankruptcy. That post sent shares higher. Joining us with more on these developments, we've got Yahoo Finance's senior reporter, David Hollerith. David, there's a lot to follow in the crypto space. Obviously, a lot of people saying, well, have we seen the bottom already?

DAVID HOLLERITH: Yeah, Akiko, I don't have a crystal ball. But I can sort of speak to Coinbase's announcement sort of as a great example of what's going on right now. In the blog post, they sort of summed up some of the financial collapse we've seen, specifically to crypto. And they have also acknowledged that while they had no exposure to three areas, capital or the other bankrupt firms, they did make a small minority investment in Terraform Labs to create a creator of Terra back in 20-- early 2021.

Now, this seemed like a non-material amount of money, but it does add to the point that crypto firms right now are desperate for-- to sort of shore up investor confidence in their products. And one way to do this, which was touched on extensively yesterday at a crypto-focused conference that Bloomberg put on, was to sort of show more transparency. And that's exactly what they're doing. And that's exactly what's needed for any of these firms if they want to outlast the bear market.

BRIAN CHEUNG: David, now, you mentioned Mike Novogratz. Again, he was deep on the Terraform Labs project, which was, of course, that Luna token. That's something that we've heard him talk about before, on a bullish stance. He got that tattoo on his arm. But what are you hearing in terms of what he said yesterday? Does he bring any humility to what we've seen in the crypto markets year to date?

DAVID HOLLERITH: Yeah, now, Brian, yeah, he did. He acknowledged very indefinitely the amount of leverage in the system in the crypto markets, which has been a major focus for why these firms have gone so far over their skis, was something he was not aware of. And just the level of investment in between these firms is still staggering. And we're not seeing the end of that of how interconnected these companies were.

And the bankrupt firms are even facing a number of financial issues that could be related to fraud upon further investigation. But Novogratz was very clear in stating that if the cryptocurrency industry wants to move forward, it essentially needs more investor disclosures, things that look a lot more like the traditional financial system, which is interesting. And something that was sort of echoed by all of the speakers I heard was the need for regulation.

AKIKO FUJITA: Yeah, I mean, that echo, I should say, growing louder and louder in light of what has played out over the last few months. David Hollerith, thanks so much for bringing that to us. Brian, I should say, you know, David was just talking about the comments coming from Mike Novogratz. He says he's going to keep the Luna tattoo as a constant reminder that venture investing requires humility. I mean, that was a big tattoo.

BRIAN CHEUNG: Yeah, well, for what it's worth, it's a cool--

AKIKO FUJITA: Is he gonna stick to it?

BRIAN CHEUNG: It's a cool tattoo, like a wolf howling. You just have to change the name Luna, you know? Or you could tell people, this is my pet wolf, and her name is Luna.

AKIKO FUJITA: People are going to remember that one.

BRIAN CHEUNG: That's how I would pass it off, at least.

AKIKO FUJITA: Yeah, we'd love to have you back on. Maybe we'll ask you about the tattoo.