Coinbase, the global cryptocurrency market’s largest brokerage and wallet platform, reportedly made over $1 billion in revenue last year, according to technology publication Recode.
The company saw its popularity explode when the cryptocurrency ecosystem started seeing most top cryptocurrency skyrocket. So much so, Coinbase reportedly has over 13 million users, and even suffered outages amid trading frenzies last year. It got so popular, its app became number one on Apple’s store after surpassing YouTube.
Per the publication, Coinbase’s $1.6 billion August valuation has now likely doubled, as the company was expected to do around $600 million in revenue last year. Bitcoin’s bull run, that saw the company add over 100,000 users in a day in November, boosted the company’s revenue past the $1 billion mark.
Coinbase, just like any other exchange, makes its money off of fees. The more users trying to get in on the cryptocurrency ‘craze’, the more it makes. Its success, according to Recode, now attracted venture capitalists and private brokers who are trying to buy shares. However, it doesn’t allow its current shareholders to sell to outside investors.
In a statement, the company stated:
“As a private company, Coinbase does not allow trading of stock on secondary markets for a variety of reasons, including the fact that there is not full and equal information available to the market. We will take appropriate action if we find people have sold Coinbase shares in violation of our agreements not to do so.”
As reported by CCN, Coinbase raised $100 million back in August, which means outside investors might have to wait a while before Coinbase is ready to raise more money. Problem is, some company insiders believe it may not fundraise again, meaning the August round could’ve been its last before an IPO.
The tech publication even adds that investors who spoke to company leadership were told they couldn’t currently buy Coinbase shares. One shareholder told the company he was constantly being pinged by secondary brokers, who were looking to get a small amount of shares. Another shareholder claimed venture capitalists were trying to see if he would part with any of his shares.
While none of the conversation seemingly progressed to price specifics, Coinbase told Recode it wasn’t aware of any secondary trades and declined to comment on being aware of any other stock conversations. The problem for outside investors, according to brokers, is that few shareholders are willing to sell, which makes it hard to price a deal.
A solution could come later this year, as the company may launch a tender offer. This way shareholders would be authorized to sell their stock to new investors, once the company opens its books.
While investors are seemingly falling head over heels for Coinbase, some in the cryptocurrency community aren’t that happy with the company. Coinbase has been criticized for spamming the bitcoin mempool, contributing to the network’s congestion. In response, Coinbase CEO Brian Armstrong stated that “Coinbase is working on batching transactions, SegWit, and a number of other strategies to improve transaction backlog.”
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Last modified: May 20, 2020 9:09 PM UTC