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LeoGlossary: Coinbase

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A cryptocurrency exchange based in the United States that was founded by Brian Armstrong with Fred Ehrsam in 2012. The company is now traded on NASDAQ under the symbol COIN. Coinbase is the largest cryptocurrency exchange in the United States by volume. The website claims to have over 98 million users.

Origins & History

Coinbase was founded in June 2012 by Brian Armstrong, a former Airbnb engineer, and Fred Ehrsam, a former Goldman Sachs trader. Armstrong enrolled in the Y Combinator startup incubator program and received a US$150,000 cash infusion. Ehrsam later joined as a co-founder after noticing Armstrong's posts on Reddit.

Coinbase launched its Bitcoin exchange in October 2012, and quickly became one of the most popular cryptocurrency exchanges in the world. In 2013, Coinbase expanded its support to include Litecoin, and in 2014, it added support for Ethereum.

Over the next few years, Coinbase continued to grow and expand its offerings. In 2016, Coinbase launched Coinbase Wallet, a self-custody wallet that gives users complete control of their crypto. In 2018, Coinbase launched Coinbase Pro, a trading platform for experienced cryptocurrency traders.

In 2020, Coinbase announced that it would shut down its San Francisco, California headquarters and change operations to remote-first. This was part of a wave of several major tech companies closing headquarters in San Francisco in the wake of the COVID-19 pandemic.

Initial Public Offering

On April 14, 2021, Coinbase became a public company on the NASDAQ exchange via a direct stock listing. Before the listing, Nasdaq set a reference price of $250 a share, giving the company an estimated value of $47 billion. At the end of its first day of trading, it closed at $328.28 per share

Stock

The company trades under the symbol COIN on NASDAQ. As of September 30, 2022, there are 224 million shares outstanding. Ark Invest, run by Cathie Wood, is one of the largest shareholders of COIN.

Services Offered

Coinbase offers a wide range of features, including:

  • Buying and selling crypto: Coinbase makes it easy to buy and sell over 120 different cryptocurrencies, including Bitcoin, Ethereum, Litecoin, and Dogecoin.

  • Storing crypto: Coinbase offers a secure wallet to store your crypto. You can also use Coinbase Wallet, a self-custody wallet that gives you complete control of your crypto.

  • Earning crypto: Coinbase offers a variety of ways to earn crypto, such as through its Learn & Earn program, which rewards you with crypto for learning about different cryptocurrencies.

  • Sending and receiving crypto: Coinbase makes it easy to send and receive crypto to and from other Coinbase users. You can also send crypto to other wallets and exchanges.

Regulatory Failure

In January 2023, the company reached a settlement with the New York State Department on Financial Services regarding its lack of compliance in background checks. The agreement stipulates a $50 million fine along with a $50 million to ramp up its compliance program. At that time, the company's website claimed to have 108 million users in 100 countries. It also said it had $101 billion in assets and traded $159 billion during the last quarter. With the failure of the likes of FTX, increase regulation is on its way. This is also pushing the regulators to take a stronger stance.

Acquisition of One River Digital Asset Management

On March 3, 2023, Coinbase announced that it agreed to purchase One River Digital Asset Management, a move to expand beyond its retail trading business. The move would allow Coinbase to act as a custodian of digital assets for financial institutions. After the FTX collapse, regulators are looking closely at how corporations handle people's cryptocurrency.

Wall Street firms are interested in the industry but the lack of infrastructure (along with regulation) is keeping them at bay. Coinbase made the move in an attempt to help bring more institutional capital into the space.

Cryptocurrencies Supported

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