To confirm, what makes Coinbase different is that it's not a lender?

As far as I know only interest you can earn on Coinbase is from staking coins - and Coinbase actually takes a portion of that profit for themselves.

I remember looking at all of these now defunct businesses wondering just how they could have such high interest rates on your coins. In what should be a surprise to no one it was too good to be true.

If someone offers a risk-free return way above the prevailing risk-free interest rate… there are some risks that aren’t being disclosed. Everybody forgot that for a little while.

"This Time It's Different"

Yes, Coinbase is an exchange

> Coinbase is an exchange

Not in the conventional sense. It’s a broker with a prop desk.

Coinbase has a prop desk?

> Coinbase has a prop desk?

Maybe [1], possibly not anymore [2].

[1] https://www.wsj.com/articles/coinbase-tested-group-to-specul...

[2] https://news.yahoo.com/coinbase-never-trades-against-custome...

It's not domiciled in North America. In fact, they refuse to tell anyone where their HQ is.

Coinbase is probably the most American of all the "American" cryptocurrency exchanges. It's also a publicly traded company on NASDAQ. Not sure where you get the picture that they refuse to tell anyone where the HQ is, it's famously a remote-first company but used to have their HQ in SF.

blockfi was based in jersey city also, it just wasnt public.

They're not "refusing to tell", they simply don't have one. It used to be in San Francisco but in May 2020 they switched to remote-first.

And they're incorporated in Delaware. Last I checked, Delaware was part of North America.

I have to ask out of curiosity... where on earth are you getting your information?

Are you thinking of Binance?

It looks like everyone in crypto has been doing wild and shady stuff, whilst Coinbase has built a respectable business in an industry that doesn't exist. Coinbase was being looked at as a shrinking fish in a growing pond, moving slowly whilst places like FTX ran rings around them, now it turns out FTX was just a straight up scam and loads of the money was actually wash trading, so Coinbase now looks like an expensive and slow business in an industry that doesn't actually exist.

It's kind of absurd the level of failure in crypto lending. Putting aside anyone with criticisms of all things crypto these should all be based on the very basic and long established business model of taking deposits, making loans, and paying interest. There shouldn't be anything inherently difficult or "scammy" in that and it should be a successful business pillar in the crypto space. Besides the basic business your two other main priorities should be risk mitigation and dealing with liquidity issues. Surely long term some well run company ought to be able to sort this out.

Perhaps it was competition with decentralized stable-coin lending protocols offering decent APR for the risk that drove and legitimized such reckless behavior. At least the decentralized protocols were auditable from day 0.

Huh? It looks like it was saying the three are Celsius, Voyager, and BlockFi, but it’s missing a much larger one, Genesis. Although that maybe be going bankrupt to if it can’t get support from its parent company DCG.

Definitely about to go bankrupt. Coffeezilla has a great summary here: https://www.youtube.com/watch?v=TNXYHNdGYfc

I haven’t ever seen a crypto lender stay solvent.

Unless:

A) The money never leaves the platform such as with collateralized margin lending for shorting / leveraging.

B) The money is collateralized such as on DeFi with AAVE.

BTCJam gave small, well-diversified loans based on credit scores, reputations, business ideas, and identity verifications. They iterated and tried almost everything but they couldn’t get enough money that left the platform to ever return to the platform.

Scamming the banks seemed to be way more profitable and lucrative than using borrowed money for economic activities more productive than the borrowed interest costs.