Jim Chanos Says Crypto Is A 'Predatory Junkyard': Here's Why The Famed Short Seller Continues To Target Coinbase

Kynikos Associates founder and legendary short seller Jim Chanos is still betting against Coinbase Global Inc COIN.

What To Know: Chanos announced a short position in Coinbase in March, with the stock trading around $180 per share. Despite being up big on his short position, Chanos isn't taking anything off the table. 

"We're still short. Coinbase to us is really symptomatic of the sort of broader, what I call, predatory junkyard that is crypto," Chanos said Wednesday at CNBC's Delivering Alpha Investor Summit.

He highlighted that Coinbase is losing money rapidly under its current business model, which charges "really excessive" trading fees. Chanos initially shorted Coinbase on the basis that the company would eventually face fee compression. Now he sees more troubles ahead. 

"What's really interesting to us is that Coinbase has about 10% of the crypto universe under its umbrella and its overhead is running about $1.5 billion a quarter, so that's $6 billion annually," he said.

"If they are representative of sort of the broad crypto infrastructure, that means that the crypto universe is probably running expenses of fifty to sixty billion dollars a year on a one trillion notional ... that's really, really high."

Chanos' point is that crypto is a very high-cost industry that requires high volumes and fees to generate profits.

"If you are losing money now doing that, charging retail customers 2.5% a round trip, it's not a good business model," Chanos said.

See Also: Looking At Coinbase Global's Recent Whale Trades

COIN Price Action: Coinbase has a 52-week high of $258.80 and a 52-week low of $40.83.

The stock was up 4.23% at $65.69 Wednesday afternoon, according to Benzinga Pro

Photo: Tumisu from Pixabay.