Coinbase CEO Brian Armstrong has responded after Zcash founder Zooko Wilcox criticized the exchange over alleged betting prompts inside the Coinbase app.
Summary
- Coinbase CEO backs user choice but warns high-risk products need careful in-app promotion rules.
- Zooko’s complaint turned Coinbase prediction markets into a debate over vulnerable users and app design.
- Coinbase’s broader product push adds betting-style markets while regulators argue over sports event contracts nationwide.
The exchange chief defended user choice, but said platforms should treat high-risk products with care when serving less experienced users.
Zooko criticizes betting prompts
Zooko said on X that he had spoken with a young and financially vulnerable Coinbase user. He claimed the app had started prompting that user to bet on sports and the price of Bitcoin.
He said the situation made him “ashamed” to be part of the crypto industry. His post quickly turned into a wider debate about how large crypto apps should promote prediction markets and similar products.
The criticism comes as Coinbase expands beyond spot crypto trading. Recent coverage of Coinbase’s pre-IPO perpetual futures described the firm’s push to combine crypto, stocks, prediction markets and futures inside one account.
That wider product strategy gives users more ways to trade. It also raises questions about how trading apps present risk, especially when products look simple inside a mobile interface.
Armstrong says adults should choose
Armstrong replied that he is “pro-freedom” and believes adults should be able to use their money as they choose, as long as they do not harm others. He also said there is no perfect line between investing and gambling.
The Coinbase CEO added that buying early Bitcoin, Zcash or stocks could also be described as gambling by some people. His point was that risk depends on the product, the user and the context.
Still, Armstrong agreed with part of Zooko’s concern. He said it does not feel right to “aggressively promote high-risk products to unsophisticated users.”
He also said there is a difference between making a product available and making it the main focus of an app. That distinction now sits at the center of the debate.
Prediction markets face regulatory pressure
Coinbase’s sports prediction markets page says the products are offered through Coinbase Financial Markets, a registered futures commission merchant. The page also warns that prediction contracts involve high risk and may lead to the loss of the full investment.
Sports event contracts remain a disputed area in the U.S. In related coverage, Kentucky sued Kalshi, Polymarket and partners tied to Coinbase, Robinhood and Webull, saying the products looked like sports wagering under state law.
The CFTC took the opposite view and argued that Kalshi and Polymarket fall under federal oversight as designated contract markets. The dispute now centers on whether sports contracts belong under federal derivatives rules or state gambling laws.
Former CFTC Chair Gary Gensler also weighed in through a court filing, saying sports prediction contracts do not qualify as swaps under U.S. derivatives law. That filing added another layer to the legal debate.
Coinbase weighs access and safety
Armstrong suggested that Coinbase could use clearer disclosures, AI-based financial literacy tools and more personal app settings. He said users could choose whether to enable or disable certain product groups during onboarding.
That approach would let users decide what they see without removing access for everyone. It would also give Coinbase a way to answer concerns about younger or less experienced users seeing betting-style prompts.
The debate shows how fast crypto apps are changing. Platforms no longer offer only coins and tokens. Many now offer event contracts, derivatives and other products that behave more like financial bets.
For Coinbase, the issue is not only whether users can access these markets. The next question is how strongly the app should promote them and what safeguards should appear before users place trades.
