Ryze Recap 7/10: The Coinbase IPO

What We Know, The Good, The Bad, and The Ugly

It’s Friday, July 10th. If you’re new here, Ryze Recaps is a newsletter covering the top stories that Bitcoiners need to know in 2 minutes or less.

We’ve got one huge story for you today.

The Coinbase IPO: The Good, The Bad, and The Ugly

Coinbase, a pioneer in bringing cryptocurrency exchange services to consumers, is planning to file for an IPO (Initial Public Offering) with the SEC, with its sights set on a listing later this year. For the uninitiated— this means that everyday people will be able to buy Coinbase stock just like you can buy Apple, Amazon, or any other publicly-traded company.

Regardless of your opinion of Coinbase, this is undeniably huge news for the crypto industry as a whole, barring any complications with the listing. Here's what we know, along with the good, the bad, and the ugly.

What we know:

  • Coinbase is yet to actually register with the SEC. No official filings have been made, but sources confirmed that Coinbase is actively pursuing investment banks and law firms to assist with the IPO process. Among them is likely JP Morgan, which recently started servicing Coinbase in a 180 -degree turn from its previous anti-crypto stance.

  • In its last round of venture funding, Coinbase was valued at roughly $8 billion. It boasts $1 Billion in revenue during 2017's crypto boom, over 1000 employees, and 35 million users in 100+ countries.

The good:

  • Coinbase is committed to building an "open financial system for the world," and has done a lot for the advancement of the crypto ecosystem. They've become an easy-to-use platform for millions of people to discover the benefits of crypto-assets, invested in DeFi (decentralized finance) projects such as Compound, and are working towards bringing financial institutions into crypto.

  • An IPO would be an incredibly successful exit for Coinbase's early investors, which include Y Combinator, Union Square Ventures, Andreesen Horowitz, Tim Draper, and The NYSE. For budding crypto startups, Coinbase is a success story to learn from, and investors who missed out on the opportunity will be keeping their eyes peeled for the chance to invest in the next Coinbase.

  • Coinbase is choosing to IPO at an incredibly opportune moment in capital markets, which have rallied unprecedentedly in the face of rising COVID-19 cases worldwide. The FED is printing cash and putting a good chunk of it in the hands of everyday consumers. These retail traders are bored, stuck in their homes, and gambling on stocks, as evidenced by Robinhood's rise in popularity, Dave Portnoy, and your unemployed cousin who won't stop talking about options. A few days ago, insurance startup Lemonade IPO'd and its stock went up 139% on the first day. It wouldn't be surprising to see Coinbase play out similarly. In a way, it's a perfect merger between r/CryptoCurrency and r/WallStreetBets.

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The bad

  • Though Coinbase has advanced crypto as a whole, it's notorious among the Bitcoin community for being pro-crypto but anti-Bitcoin. Coinbase has supported "attacks" on Bitcoin such as Bitcoin Cash and SegWit2x. In addition, Coinbase invests in the Ethereum-based DeFi ecosystem, but barely offers support for cutting-edge Bitcoin technology such as the Lightning Network. Moreover, Coinbase lists these DeFi tokens, which it has a stake in, on its exchange for consumers to trade.

The Ugly:

  • Coinbase started as a way to get everyday people into Bitcoin. It's founder, Brian Armstrong, was known for giving away Bitcoin at small community meetups in San Francisco. Now, Coinbase has a surveillance arm that sells data to the DEA and IRS. Some of its recently hired execs ran a hacking company that sold data to authoritarian governments cracking down on dissent. Arguably, actions such as these are the antithesis of what Bitcoin stands for— censorship-resistant money, not controlled by any government.

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Written by Ryze Financial— helping you understand and invest in Bitcoin, on your own terms.