| From: Glenn Petersen | 8/10/2021 11:58:18 AM | | | | | | Coinbase Q2 earnings preview: Trading volumes in focus after bitcoin's slide from highs
Emily McCormick
·Reporter
Tue, August 10, 2021, 9:05 AM·4 min read
Coinbase Global ( COIN) is set to report second-quarter results after market close on Tuesday, offering a look at the performance of the largest cryptocurrency exchange in the U.S. following a volatile stretch of trading for digital currencies.
Here are the main results Coinbase is expected to report, compared to consensus data compiled by Bloomberg:
Revenue: $1.85 billion expected
Adjusted earnings per share: $2.48 expected
Coinbase shares have traded choppily since the stock's direct listing in April, and have largely languished below their opening price of $381 apiece amid a broader drop in cryptocurrency prices.
Bitcoin prices ( BTC-USD) hit an all-time high of more than $64,000 around the time of Coinbase's public debut, but have since slid to a year-to-date low of less than $30,000 as of mid-July. Bitcoin, the largest cryptocurrency by market capitalization, was trading around $46,000 as of Tuesday morning.
The drop in the prices of bitcoin and other major tokens like ethereum ( ETH-USD) coincided with a regulatory crackdown against cryptocurrencies and mining in China, as well as increasing concern over digital currencies' mainstream adoption. Tesla CEO Elon Musk said in May the electric carmaker would no longer accept bitcoin as payment for vehicles. However, Tesla ( TSLA), along with a number of other companies including Square ( SQ) and PayPal ( PYPL), still hold bitcoin on their balance sheets.
Weakening cryptocurrency-related results in these other companies' businesses during the second quarter presaged a potential slowdown for Coinbase. Bitcoin comprised $2.7 billion of overall revenues for Square in the second quarter, down from $3.5 billion in the first quarter of 2021. And Tesla, for its part, booked an impairment of $23 million related to bitcoin in its second quarter, after posting a positive impact of $101 million from selling some of its bitcoin holdings in the first quarter of the year.
Given these trends in other companies with exposure to cryptocurrencies, quarterly trading volumes for Coinbase are set to be closely watched. In the first quarter, Coinbase said bitcoin and ethereum comprised 39% and 21% of its overall trading volumes, respectively — leaving the company vulnerable to a drop in trading fee-related revenues if these volumes declined significantly alongside the drop in prices. Still, Wall Street expects to see Coinbase's trading volumes increase sequentially to $377.4 billion for the second quarter, compared to $335 billion during the first quarter.
Going forward, regulatory risks also remain a concern for Coinbase and other crypto platforms that rely heavily on trading-related fees. Last week, Securities and Exchange Commission Chair Gary Gensler likened the crypto trading environment to "the Wild West," and suggested a number of trading platforms were offering illicit, unregistered securities. And on Monday, the Wall Street Journal reported that former SEC director Brett Redfearn had resigned from serving as head of Coinbase's capital markets group after just four months, reportedly due to a strategic shift at the crypto platform.
And elsewhere in the U.S. regulatory landscape, legislative risks also remain. On Monday, a proposal by a bipartisan group of senators that would limit the scope of oversight in the cryptocurrency industry ultimately failed.
The new proposal, which would have been an update to a provision in the Biden administration's $550 billion infrastructure bill, would clarify the rules over who was considered a broker of cryptocurrencies and who would need to report transactions to the Internal Revenue Service, making sure not to include other players in the crypto space like software developers or those that validate transactions into the new reporting requirements. The language for this provision in the bill now excludes these clarifications, drawing the ire of those in the cryptocurrency and adjacent industries, including from Square CEO Jack Dorsey.
"Regulation is probably more of a short-term speed bump," Hugo McDonaugh, co-founder of Cryptograph, told Yahoo Finance on Monday. "Long-term, regulation for the space is sensible."
"I do think that they should spend a lot of time thinking about how to apply frameworks to this industry and not just try to hit a one size fits all into it and put something last minute into a must-pass bill and try to increase some oversight or regulatory system in that way," he added.
This post will be updated with the results of Coinbase's Q2 earnings results Tuesday after market close. Check back for updates.
Coinbase Q2 earnings preview: Trading volumes in focus after Bitcoin's slide from highs (yahoo.com) |
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| To: Glenn Petersen who wrote (51) | 8/10/2021 5:34:35 PM | | From: Glenn Petersen | | | | Coinbase profits surge following volatile stretch of cryptocurrency trading
PUBLISHED TUE, AUG 10 20214:08 PM EDT
UPDATED 12 MIN AGO
MacKenzie Sigalos @KENZIESIGALOS
CNBC.com
KEY POINTS
-- In Q2, Coinbase brought in $2.23 billion of revenue vs. $1.78 billion expected by Refinitiv.
-- It also reported adjusted earnings per share of $3.45.
Coinbase shares rose as much as 2.1% in extended trading Tuesday after reporting second-quarter revenues that were stronger than analysts had expected.
Here’s how the largest cryptocurrency exchange in the U.S. did versus expectations per Refinitiv estimates:
Revenue: $2.23 billion vs. $1.78 billion expected
Earnings: $3.45 per share, adjusted, which excludes stock-based compensation benefits vs. $2.33 expected
The company’s net profit for the quarter was $1.6 billion, up nearly 4,900% from a year earlier, following a volatile stretch of trading for cryptocurrencies.
Coinbase’s fate is tethered to the performance of digital assets like bitcoin. The company generated $2.0 billion in net revenue, including $1.9 billion in transaction revenue and over $100 million in subscription and services revenue. Bitcoin prices fell about 41% during the quarter.
Monthly transacting users grew to 8.8 million, up 44% from the previous quarter, while trading volume rose 38% to $462 billion from the previous quarter.
The company reported that total trading volume diversified beyond bitcoin into ethereum and other crypto assets. Approximately 24% of the company’s total trading volume for the quarter was concentrated in bitcoin, down from 39% in Q1.
While the company offered no formal guidance, it did say trading volume will be lower in the third quarter compared to Q2. For the full year, analysts surveyed by Refinitiv expect $7.76 per share on revenue of $6.29 billion.
During April’s direct listing, Coinbase opened at $381 per share and was briefly valued at as much as $100 billion, a landmark event for the cryptocurrency industry.
Excluding the after-hours move, Coinbase stock has fallen about 29% since the company’s direct listing on April 14, while the Nasdaq has risen nearly 20% over the same period.
Coinbase (COIN) earnings Q2 2021 (cnbc.com) |
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| From: Glenn Petersen | 8/17/2021 7:40:40 PM | | | | | | How Coinbase Ventures Became One Of Crypto’s Busiest VCs — Without Any Full-time Staff
Alex Konrad
Forbes Staff
Venture Capital
August 16, 2021
Look at the busiest U.S. investors in cryptocurrency startups this year, and in between investment firms like Digital Currency Group, Pantera Capital, Blockchain Capital and Andreessen Horowitz you’ll find Coinbase Ventures. The big difference between Coinbase Ventures and those firms? Coinbase Ventures isn’t a firm at all: it has no fixed fund size and zero full-time employees.
According to Coinbase president and COO Emilie Choi, that’s by design – and a testament to the decentralized future of finance that Coinbase is hoping to help realize.
Coinbase Ventures has backed more than 150 companies in its three years in existence, with notable companies in its portfolio from all over the crypto ecosystem like the well-funded but regulation-challenged BlockFi, non-fungible token (NFT) marketplace OpenSea, digital collectibles maker Dapper Labs, blockchain startup StarkWare and TaxBit, which recently raised funding for its crypto tax software at a $1.3 billion valuation.
Unlike some other corporate investors, Coinbase’s venture capital investments don’t come from a dedicated fund, but off its balance sheet. The company writes checks of $50,000 to $250,000 in seed rounds, and larger if necessary later on. And with its volume of deals and lack of dedicated staff, Coinbase Ventures prefers to join rounds led by other VC firms and not take board seats.
“I’ve got to imagine we’re the only ones doing it this way. It’s almost like our little hidden secret,” Choi says.
Coinbase Ventures got its start in 2018, after Choi joined in March as head of corporate development after eight years spent in that function at LinkedIn. Meeting with cofounder and CEO Brian Armstrong, Choi says she took the job in part due to Coinbase’s willingness to aggressively consider acquisitions while still a private company. “I’m typically very skeptical of corp dev at late-stage startups,” Choi says. “Everybody says they want to do M+A, and they actually don’t, they just think they do.”
By April 2018, Choi had the idea that Coinbase should launch a program to invest in other crypto startups. Such a move wouldn’t necessarily come as a surprise considering that Armstrong’s cofounder, Fred Ehrsam, had left the previous year to cofound a crypto-focused venture capital firm, Paradigm; Coinbase also maintained close relationships with its own investors such as Union Square Ventures and Andreessen Horowitz. But the company didn’t have any venture professionals on staff; it also might face concerns, as a cryptocurrency exchange, of playing favorites with projects it backed.
Approached by Choi, Armstrong’s response was simple, she says: “Write the blog post.” Within 24 hours, Choi had drafted up a mission statement for Coinbase Ventures in such a public-facing format, and published it. The company’s venture arm was now announced.
But that doesn’t mean Choi, later promoted to Coinbase’s COO and president, went on a hiring spree. Coinbase employees, many of them in corporate development (more mindful of acquisitions or big partnerships) but also in product and also its coverage team, among others, communicate via a dedicated Slack channel. “We were like, we’re just going to wing it with resources that exist today,” Choi says. “And it’s a labor of love. We just work on it nights and weekends.”
While Coinbase often co-invests alongside the VC firm specialists it knows, many of its potential deals come in from its employees’ activity in the broader crypto ecosystem; others are Coinbase employees striking out on their own.“There is some amazing machinery behind the traditional VC ecosystem. Ours is using Google Docs,” says Choi.
At Messari, a startup that provides data insights around crypto assets, aspiring to be something like the Bloomberg for crypto, CEO Ryan Selkis says Coinbase was already a key customer and partner before investing in his company. The company’s insights were critical to the design of its enterprise-level asset monitoring service, now a multi-million dollar subscription business for Messari with more than 300 customers. Having Coinbase on the cap table — it invested in Messari’s seed round and again recently in its Series A — helped insure the startup would always have a friendly point-of-contact at the bigger firm, its CEO says.
Coinbase Ventures makes no contractual promises about strategic help — “I’ve seen that fail over and over again,” says Choi. But Selkis says he’s confident such assistance will keep coming. “They’re like the 800-pound gorilla in U.S. crypto, and they have so many different moving pieces,” he says. “With our early bet on taking them on as partners, we know that there are probably going to be multiple ways that we can work with Coinbase in the future.”
Coinbase has gone on to acquire several of the startups in which it invests, notably Bison Trails, which it gobbled up in January. At Coinbase, Choi calls such developments a “nice benefit” but not the primary goal of investments. And at Messari, Selkis, who previously worked on such types of deals at Digital Currency Group and CoinDesk, says the possibility of Coinbase bringing a startup in shouldn’t deter founders, provided they know not to share full information or product roadmap details with any strategic investor, including Coinbase. “A good outcome for an entrepreneur is to have an exist. I don’t really understand that as something to be concerned about, so much as something to be aware of as one potential outcome,” he says.
That’s also backed up by Coinbase’s willingness to invest in startups that compete with one of its products, says Choi, who argues that the company sees the expanding category as more of a rising-tide-lifts-all-boats scenario than a winner-take-all. “Brian is always like, good for them, and shame on us if we don’t build the best product,” she says.
Coinbase, which announced earnings last week, declined to provide data on its financial return from startup investments so far; Choi said the company does track performance as one factor, and that early returns look “incredible.”
Such claims should be taken cautiously without the numbers to back them up. But Choi’s willing to throw out one bigger number: "Coinbase Ventures could be a trillion-dollar market cap opportunity.”
How Coinbase Ventures Became One Of Crypto’s Busiest VCs — Without Any Full-time Staff (forbes.com) |
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| From: Glenn Petersen | 8/24/2021 2:00:06 PM | | | | | | Coinbase slammed for what users say is terrible customer service after hackers drain their accounts
PUBLISHED TUE, AUG 24 20219:00 AM EDT
UPDATED 5 HOURS AGO
Scott Zamost @SCOTTZAMOST
Eamon Javers @EAMONJAVERS
Jennifer Schlesinger @JENNYANNE211
Stephen Council @STEPHENCOUNCIL
Angélica Serrano-Román @ANGELICASERRAN0
CNBC.com
KEY POINTS
-- CNBC interviewed Coinbase users across the country and found thousands of customer complaints against the company.
-- The interviews and complaints revealed a pattern of account takeovers, where users see money suddenly vanish from their account, followed by poor customer service from the company.
-- Coinbase’s customer service has been primarily via email, and many customers say it is hard to reach representatives and that they have not been made whole for their losses.
-- Former employees say the company’s customer service practices shifted over time, with representatives struggling to keep up with demand.
-- A spokesperson for the cryptocurrency exchange said the company is working on customer service and soon rolling out more support channels.
For Tanja Vidovic, it was a moment of panic: She had received a series of alerts about someone changing access to her cryptocurrency account. And she realized, as she stared at her computer screen, that nearly all of her $168,000 in holdings was gone — vanished before her eyes.
She was stunned.
Nearly four months have passed, and it has yet to sink in, she said.
Tanja and Jared Vidovic jumped into cryptocurrency investing in 2017 and watched their funds nearly quadruple over four years.
The Vidovics used Coinbase, the country’s largest cryptocurrency exchange, for their plunge into the virtual currency. On exchanges such as Coinbase, users can deposit U.S. dollars and trade them for cryptocurrencies, such as bitcoin and ethereum, which the couple purchased.
“I looked into Coinbase, and it seemed like it was one that everybody used and trusted,” Tanja said.
The growing investment was a welcome boon for the Safety Harbor, Florida, couple and their three children. But in late April, Tanja, a firefighter, opened her computer to a barrage of security alerts and password change notifications.
“I signed onto the crypto. And I said, ‘It’s gone,’” Tanja said.
The Vidovics said they tried to contact Coinbase but they couldn’t get anybody on the phone.
Interviews with Coinbase customers around the country and a review of thousands of complaints reveal a pattern of account takeovers, where users see money suddenly vanish from their account, followed by poor customer service from Coinbase that made those users feel left hanging and angry.
Making the issue even worse, cryptocurrency transactions cannot be reversed, according to the FBI. Experts say once criminals access an account, funds can be drained in minutes.
Coinbase, which went public in April, has a market cap of about $65 billion, has more than 68 million users in 100-plus countries, more than 2,100 full-time employees and $223 billion in held assets, according to the company.
“Hopefully, Coinbase going public and having its direct listing is going to be viewed as kind of a landmark moment for the crypto space,” CEO Brian Armstrong told CNBC in April, when the company went public. “People no longer need to be scared of it like in the early days.”
While the cryptocurrency exchange company has grown rapidly, complaints have continued to arise. Since 2016, Coinbase users have filed more than 11,000 complaints against Coinbase with the Federal Trade Commission and Consumer Financial Protection Bureau, mostly related to customer service.
Former employees told CNBC the company’s customer service practices shifted over time, with representatives struggling to keep up with demand.
Money vanished
The Vidovics’ account had risen to $168,596 on April 28 when the hacking occurred, according to account statements the Vidovics shared with CNBC. That amount was essentially wiped out, with only a $587.15 balance shown the next day.
Tanja and Jared Vidovic with their daughters. / Source: CNBC
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Like the Vidovics, Ben, a Virginia resident who asked that his last name be withheld, said he saw thousands of dollars vanish. He logged onto his Coinbase app in March, verifying his identity with two-factor authentication, but over a four-minute stretch almost $35,000 in various coins disappeared from his account, he said.
In a response to his frantic email, Coinbase told Ben his computer had been hacked and there wasn’t anything the company could do.
“I really am baffled,” he said. “It just seems to me that Coinbase did absolutely zero research and just said, ‘Hey, yeah, sorry.’”
The CFPB responded to one of Ben’s ensuing complaints with an answer from Coinbase’s Regulatory Response Team. The email noted that transactions on the blockchain are irrevocable and said Coinbase’s insurance policy does not cover theft from individual accounts.
“There is no credible or supportable evidence that the compromise of your login credentials was the fault of Coinbase,” the message said. “As a result, Coinbase is unable to reimburse you for your alleged losses.”
Eventually, the company sent a $200 credit, telling Ben, “your Coinbase experience and your wait for a response to your formal complaint was not up to our standards.”
Experts say SIM swapping, where fraudsters seize control of a victim’s phone number and SIM card through their phone company, is to blame for many of the cryptocurrency thefts.
“The problem with SIM swapping and cryptocurrency is the moment you lose access to your cell phone, professional hackers will steal all of your money in less than 30 minutes,” said David Silver, an attorney who focuses on cryptocurrency.
David Silver is an attorney specializing in cryptocurrency. / Source: CNBC
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Silver, whose firm represents the Vidovics, said the top complaints from potential clients are getting locked out of their cryptocurrency exchange platform account and SIM swaps.
“Most people who contact me would tell you it’s poor customer service,” Silver said. “They’re being almost victimized twice. Because they themselves have almost no ability to contact Coinbase and deal with them directly, they’re forced to retain professionals.”
Etay Maor, senior director of security strategy for cybersecurity company Cato Networks, said he’s seen cybercriminals on the dark web discussing how to break into accounts, including those of Coinbase users.
Once hackers break into Coinbase accounts, they put them up for sale on the dark web, according to Maor. He said while credit cards sell for a few dollars, hacked Coinbase accounts can sell for $100 to $150.
“These exchanges have to invest heavily, invest in security if they want to take it seriously, just like the banks have done and have learned the hard way,” Maor said.
Account takeovers are on law enforcement’s radar.
“When the attacker withdraws those funds from the exchange, that’s not a transaction that you can take back,” Ali Comolli, a management and program analyst at the FBI, told CNBC.
Ali Comolli is a management and program analyst at the FBI. / Source: CNBC
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Comolli said the FBI tries to help victims of account takeovers recover their stolen money.
“It’s obviously a huge impact on the victims, which is incredibly difficult for them,” Comolli said.
After a review of Coinbase’s complaints, the Better Business Bureau in March determined the company has a “pattern of complaints from customers who state they are locked out of their accounts, even after providing required information or updates.” The organization has received 1,128 complaints in the past three years, according to its website.
BBB said it sent a letter to Coinbase in order to address the customers’ complaints and receive feedback from any implemented improvements.
The group has “not heard a response from this business, about the situation, pattern of complaints for the last three years,” Alma Galvan, a marketing and communication manager with the organization, said in an email to CNBC.
Some customers with lost funds turn to social media to seek help from Coinbase or find community with other disgruntled users. Members of a 941-person Facebook group called “Coinbase Corruption/Scandal Awareness Group” update the page with their struggles to recoup money and accounts.
One poster referred to the group as a “sad party,” and several have brainstormed new places to report their complaints and new methods to pressure Coinbase into making them whole.
Complaints abound on Reddit and Twitter as well, where the company’s support accounts often publicly reply to the messages, sometimes writing that they have “escalated” the issue to an appropriate team.
The Coinbase Support account on Twitter also posts live updates about changes and temporary errors on the exchange platform.
Struggling to keep pace
As the company has scaled into its massive size, customer service practices have changed, former Coinbase employees told CNBC.
In Coinbase’s early years, employees spoke with customers through a live help chat.
Jason Rose, who worked part-time in customer service at Coinbase from 2014 until 2016, said many customers asked for reassurance about cryptocurrency.
“They need that touch of somebody being there while they’re going through this complex transaction,” he said.
When Rose worked at Coinbase, he said live chat acted as a sort of “release valve” for complaints, particularly helpful in moments of crypto volatility.
As the company grew, Rose said, his role changed. Coinbase started a repository of answers to frequently asked questions in order to automate its customer service.
Rose said when he left in 2016 Coinbase was starting to phase out live chat.
“The decision to do that was disastrous because the time that it took to respond back to emails took a lot longer than it would for a live chat. So, we went back to the email box, taking five days to complete a problem that could have been solved in a few minutes,” he said.
Jacques Reulet also fielded customer issues and said it was hard to keep up.
“We were very diligent about making sure that everyone who wrote in got a response, but things were getting a little unresponsive towards the end [of my time there],” said Reulet, who worked in operations and compliance at Coinbase from 2014 to 2015. “The sheer scale at which the company was growing was a lot to handle. I didn’t see that we were keeping up.”
On Jan. 15, Coinbase acknowledged that many new and existing customers are experiencing delays in their response time.
“We recognize this is frustrating. This is not the experience we want for you, our customers,” said Casper Sorensen, vice president of customer experience, in a blog post.
A July blog post announced the company’s intent to roll out live chat messaging and phone support this year, as well as to expand its customer support team.
The customer service issue also came up on an earnings call earlier this month.
“So proud to report that we are doing much better [with customer service], but there’s always more to do,” said CEO Armstrong. “We’ve increased the headcount five times or so since January, beginning of this year, working on support specifically.”
Coinbase, which declined repeated requests from CNBC for an on-camera interview, instead said in an email, “Over the years, we’ve consistently updated our customer support offerings to help us scale. In early 2020, we moved to email as our primary channel of support. Many of our customer inquiries require our agents to conduct a significant amount of research to resolve the issue. And, to avoid long wait times, communicating asynchronously via email was the preferred method. However, we recognize that customers want real-time support, and that’s why we’re rolling out phone support for ATOs this month and live messaging for all customers later this year.”
Asked about the number of customer service complaints, the company said: “Over the past several years, our customer base grew exponentially. We grew from 43+ million users at the end of 2020 to 68+ million registered users, as of June 30, 2021. Through all this growth, some of our customers unfortunately experienced challenges and delays reaching our support team, which resulted in a negative impact for some of our customers. Improving our customer experience remains a top priority for Coinbase.”
The company would not disclose how many customers’ accounts have been taken over by fraudsters or the total amount it has refunded customers as a result of hacks.
It added that since customers have a two-factor authentication, at the minimum, to access their accounts, only “a small number (less than .01%) of our customers have been impacted by account takeovers.”
Marci Preble, a California-based marketer, said Coinbase did credit her account the approximate amount of her original investment. But she said that was after months of a nightmare of what seemed like endless emails.
Marci Preble / Source: CNBC
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Preble had saved enough money to take the plunge into bitcoin and ethereum earlier this year, investing about $8,000. By April, her investment had grown to $12,000.
But one day that month, when she was trying to buy more crypto, it all started disappearing, she said.
“In front of my eyes, it went to $800,” she said. Suspected fraudsters were able to somehow gain access to her account.
To this day, she said she still has no idea how they did it.
“Horrifying. And all I think could think is, ‘Wow, shouldn’t there be a better firewall?’”
Like the Vidovics, Preble said she never spoke to a human — just email after email.
Then, suddenly in August, she regained access to her account. There was just $502 left in it.
But to her shock, the next day, she received an email from the company informing her that it had transferred $6,583 in ALGO coin.
“My question is how can a publicly traded company on the New York Stock Exchange be doing this to customers? How can they not have a customer service dedicated line worldwide?” Preble said.
Tanja and Jared Vidovic said they have not been able to recover their stolen funds.
After CNBC inquired about what happened to the couple, Coinbase sent Tanja an email on Aug. 20 that said the company “does not have the ability to reverse crypto transfers sent off our platform. Unlike traditional banks or credit card companies, once crypto currency transfers are confirmed on the blockchain, they are permanent.”
“Because this attack was not the result of a breach of Coinbase security or our systems, we cannot reimburse you for this loss. This attack was only possible because the attacker had prior access to your email account and access to your 2-factor authentication codes (meaning they had access to your phone number through a SIM swap) before they attempted to access your Coinbase account,” the email said.
Jared, a nurse, said he knew a hack was possible. “But you don’t think it’s going to happen to you. You think that as long as you’re careful with your password, you don’t have a virus on your computer.”
If you think you are the victim of an account takeover, the FBI asks that you report it to your local FBI office or the Internet Crime Complaint Center at IC3.gov.
Please email tips to investigations@cnbc.com.
Coinbase slammed for terrible customer service after hackers drain user accounts (cnbc.com) |
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| To: Glenn Petersen who wrote (56) | 8/24/2021 5:02:15 PM | | From: Zen Dollar Round | | | | Yeah, if I've learned anything about stocks, stories like that (poor customer service) don't matter to shareholders and usually don't affect stock prices much. Shareholders and traders care about the bottom line.
Not even most lawsuits do anymore, unless it's a final judgment against a company with enough of a settlement to affect material earnings.
For me the story is just further confirmation for not investing directly in crypto, but the stocks that deal in it are interesting to me. |
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| From: Glenn Petersen | 9/8/2021 9:35:24 AM | | | | | | Coinbase shares fall after it reveals SEC plans to sue over interest-earning product
PUBLISHED WED, SEP 8 20216:45 AM EDT
UPDATED 38 MIN AGO
Tanaya Macheel @TANAYAMAC
CNBC.com
Coinbase has received notice of a possible enforcement action from the Securities and Exchange Commission related to its interest-earning product, which the company had planned to launch in the coming weeks.
The cryptocurrency exchange and services firm received a Wells notice from the SEC last Wednesday saying the regulator intends to sue Coinbase over the product, called Coinbase Lend, the company disclosed in a Tuesday night blog post. The SEC didn’t immediately return a call for comment.
Shares of Coinbase fell 3% in premarket trading Wednesday.
Chief legal officer Paul Grewal indicated in the post that the company was caught off guard by the threat considering its efforts to engage with the regulatory agency for the last six months. CEO Brian Armstrong claims in a series of tweets that when he traveled to Washington, D.C. in May, the SEC “refused” to meet with him.
That visit took place shortly after Coinbase became the first publicly traded crypto exchange and about a month after Gary Gensler had been confirmed as chairman of the SEC.
“We’re committed to following the law. Sometimes the law is unclear. So if the SEC wants to publish guidance, we are also happy to follow that,” Armstrong said.
The product in question is billed as allowing users to earn a 4% annual percentage yield on a so-called stablecoin (USD Coin) by allowing Coinbase to lend those funds to verified borrowers. Coinbase backs USD Coin and guarantees that it can always be redeemed for $1. High interest accounts have become popular among crypto users, with companies like BlockFi and Gemini similarly offering a high yield on stablecoin and other cryptocurrency balances.
Armstrong said when the company initially reached out to the SEC for a briefing ahead of the launch, the regulator responded by saying the Lend feature is a security. When the company asked the SEC to help it understand their view, the agency responded with a number of demands, with which Coinbase complied, according to Armstrong.
The product’s launch has been delayed until at least October.
Coinbase shares fall after it reveals SEC plans to sue over interest-earning product (cnbc.com) |
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| From: Glenn Petersen | 9/19/2021 9:36:11 AM | | | | | | U.S. Homeland Security Signs $1.36M Contract with Coinbase
Coinbase’s new deal with the U.S. government is around forty times bigger than its last.
By Tim Hakki
Decrpt
2 min read
Sep 18, 2021
In brief: Coinbase will provide the Immigrations and Customs Enforcement branch with blockchain analytics software. The crypto exchange has also provided software to the U.S. Secret Service and Inland Revenue.
The Immigration and Customs Enforcement branch of the U.S. Homeland Security has given a $1.36 million contract to crypto exchange giant Coinbase for “business application” and “application
The new deal is Coinbase’s largest federal development software”, according to the Federal Procurement Data System contract yet. The deal was signed on Thursday and is worth around forty times more than Coinbase’s last contract with the Homeland Security branch.
Back on August 9 this year, the ICE paid Coinbase $29,000 for forensics software. According to a document dated August 3, the contract was given to Coinbase on the basis that the company is “the only vendor who can reasonably provide the services required by the agency."
Details as to exactly what the ICE wants Coinbase software for are scarce. The same document later states, “This requirement is LAW ENFORCEMENT SENITIVE[sic], therefore minimal information will be provided publicly."
ICE is not the first government agency to request Coinbase’s services. Last year, Coinbase announced its desire to sell analytics tools to two U.S. government branches: the Drug Enforcement Agency and the Inland Revenue Service.
The IRS said that it could use several analytics tools to help catch blockchain-savvy tax dodgers, including “Coinbase Analytics”, formerly known as Neutrino. Coinbase acquired Neutrino back in 2019 for $13.5 million.
It was a controversial acquisition at the time since Neutrino members had been linked to an Italian organization called Hacking Team, which sold spyware to authoritarian regimes in Saudi Arabia, Sudan and Venezuela.
Coinbase CEO Brian Armstrong later expressed his regret towards the purchase and sacked the more dubious members of the team. Coinbase later sourced analytics software deals with both the Secret Service and the IRS.
Coinbase is now inking million-dollar deals with the federal government. Move over Chainalysis: the U.S. government may have a new favorite blockchain company.
U.S. Homeland Security Signs $1.36M Contract with Coinbase - Decrypt |
| | Coinbase Global, Inc. (COIN) | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last ReadRead Replies (1) |
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| To: Glenn Petersen who wrote (59) | 9/23/2021 2:38:38 PM | | From: zax | | | | I sold all my crypto holdings which were at Binance, in protest of Binance's piss poor customer service. Seriously, 8 weeks or more to respond to customer support requests?
Took a healthy profit on my cryptos; ~400% return.
Coinbase has hit my buy point. I'm in.
-- Zax |
| | Coinbase Global, Inc. (COIN) | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
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