Coinbase channels inner Buffett to inspire SEA domination

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When a company dives head first into an expensive expansion in the middle of what could possibly be the biggest market downturn in years, it will likely send shivers down the spines of countless investors.

And yet that’s exactly what Coinbase Global (COIN, NDAQ), the largest cryptocurrency exchange in the US, has been up to.

In search of growth amid intensifying competition on home soil, Coinbase, whose shares fell to an all-time low in May, has set its sights on Southeast Asia. But as today’s Big Story points out, the platform will not enjoy a first-mover advantage in the region.

It is clear that investors are spooked as Coinbase’s shares tumbled over 70% in the last six months, comfortably outpacing the broader market decline.

Short-selling veteran Jim Chanos, who made a name betting successfully against corporate frauds like energy firm Enron, sees more pain ahead for the “tremendously overvalued” company.

“Coinbase was not a call on crypto prices. It was a call on what we thought was a sort of ancillary predatory business model,” Chanos said in a podcast recently.

However, Coinbase CEO Brian Armstrong remains defiant, even channeling his inner Warren Buffett to claim that the firm is “greedy where others are fearful.”

Buffett, the CEO of Berkshire Hathaway (BRK.a, NYSE), is a vocal critic of cryptocurrencies. The legendary investor recently declared that he wouldn’t buy “all of the bitcoin in the world” for US$25.

“Ironically, I’ve never been more bullish on where we are as a company,” the 39-year-old Armstrong said during Coinbase’s earnings call in May.

Coinbase, which has lost roughly US$50 billion since the end of its first day of trading in April 2021, last week extended an already-existing hiring freeze to rein in rising operating costs. The company has 4,948 full-time employees, ballooning from about 1,700 a year ago.

In this week’s feature piece, Tech in Asia weighs the dangers and rewards of Coinbase’s mission to gain a foothold in Asia amid an ailing crypto market.

— Shravanth

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