What Is Coinbase And How Does It Work

American digital asset commutation visitor

Coinbase Global, Inc.

Blazon	Public company
Traded as	Nasdaq: Coin Russell grand component
Industry	Cryptocurrency
Founded	June 2012; 10 years ago  (2012-06) in San Francisco, California, U.Southward.[1]
Founders	Brian Armstrong Fred Ehrsam
Headquarters	Remote-first[a] No physical headquarters
Surface area served	100+ countries
Key people	Brian Armstrong (Chairman & CEO) Emilie Choi (President & COO) Alesia Haas (CFO)
Products	Bitcoin, Bitcoin Greenbacks, Ethereum, Litecoin, commutation of digital avails
Revenue	U.s.$7.84 billion (2021)
Operating income	US$3.08 billion (2021)
Cyberspace income	United states of america$iii.62 billion (2021)
Total assets	U.s.a.$21.iii billion (2021)
Full equity	US$6.38 billion (2021)
Owner	Brian Armstrong (19%)
Number of employees	three,730 (2021)
Website	www.coinbase.com
Footnotes / references ^ Legal address at Corporation Trust Center [2] [iii]

Coinbase Global, Inc., branded
Coinbase, is an American publicly traded company that operates a cryptocurrency exchange platform. Coinbase is a distributed company; all employees operate via remote work and the company lacks a physical headquarters. Information technology is the largest cryptocurrency commutation in the United States by trading volume.^[4]
The company was founded in 2012 by Brian Armstrong and Fred Ehrsam.^[ane]
In May 2020, Coinbase announced it would shut its San Francisco, California headquarters and change operations to remote-beginning, function of a wave of several major tech companies closing headquarters in San Francisco in the wake of the COVID-xix pandemic.^{[5]
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History

2012–2019: founding and early years

Coinbase was founded in June 2012 by Brian Armstrong, a sometime Airbnb engineer. Armstrong enrolled in the Y Combinator startup incubator program and received a $150,000 cash infusion.^[8]
Fred Ehrsam, a former Goldman Sachs trader, afterward joined as a co-founder afterward noticing Armstrong'south posts on Reddit.^{[9]
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British programmer and Blockchain.info co-founder Ben Reeves was originally supposed to exist part of the Coinbase founding team simply parted ways with Armstrong only before the Y Combinator funding event, due to their different stands on how the Coinbase wallet should operate.^[eight]
The company is named after coinbase transactions, which are special transactions that introduce cryptocurrency into circulation in proof of work cryptocurrencies.<sup>[14]

: ch. viii</sup>

In October 2012, the visitor launched the services to buy and sell bitcoins through bank transfers.^[fifteen]

In May 2013, the company received a Us$5 meg Series A investment led by Fred Wilson from the venture majuscule firm Union Square Ventures.^[16]
In December the same twelvemonth, the company received a U.s.a.$25 million investment, from the venture capital firms Andreessen Horowitz, Union Foursquare Ventures (USV), and Ribbit Capital.^[17]
Olaf Carlson-Wee, a graduate from Vassar College, was hired as the beginning employee in the same year.^[18]

In 2014, the company grew to one million users, acquired the blockchain explorer service Blockr and the web bookmarking company Kippt, secured insurance covering the value of bitcoin stored on their servers, and launched the vault arrangement for secure bitcoin storage.^{[19]
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Throughout 2014, the visitor as well partnered with Overstock, Dell, Expedia, Dish Network, and Time Inc. allowing those firms to accept bitcoin payments.^{[22]
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In the aforementioned year, visitor likewise added bitcoin payment processing capabilities to the traditional payment companies Stripe, Braintree, and PayPal.^[26]
[27]
In January 2014, Coinbase Global, Inc. was incorporated in Delaware every bit a belongings company for Coinbase and its subsidiaries. The corporate reorganization that saw Coinbase get a subsidiary of Coinbase Global was completed in Apr that year.^[28]

In January 2015, the visitor received a Us$75 one thousand thousand investment, led by Draper Fisher Jurvetson, the New York Stock Exchange, USAA, and several banks.^[29]
Afterward in January, the company launched a U.South.-based bitcoin exchange for professional traders chosen Coinbase Exchange.^[30]
In September, Coinbase began to offer services in Canada and Singapore.^[31]

In May 2016, the company rebranded the Coinbase Exchange, irresolute the proper noun to Global Digital Asset Substitution (GDAX).^[32]
In July, they added retail support for Ether.^[33]
Also in July, they announced they would halt services in August later on the closure of Canadian online payments service provider Vogogo.^[34]

In January so March 2017, Coinbase obtained the BitLicense and licensed to merchandise in Ethereum and Litecoin from the New York State Department of Financial Services (DFS).^[35]
[36]
In November, Coinbase was ordered by the US Internal Revenue Service to report any users who had at least $20,000 in transactions in a yr.^[37]
On December 19, Coinbase listed Bitcoin Greenbacks, and the Coinbase platform experienced cost abnormalities that led to an insider trading investigation.^[38]

On February 23, 2018, Coinbase told approximately xiii,000 affected customers that the company would exist providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013 to 2015 to the IRS within 21 days. In March, Coinbase appointed Emilie Choi, a former LinkedIn executive, as Vice President of Corporate and Business concern Development.^[39]
She was promoted to the role of president and chief operating officer in May 2019.^[40]
On March 26, 2018, Coinbase announced their intention to add support for ERC-xx tokens.^[41]
On April 5, 2018, Coinbase announced that it had formed an early-stage venture fund, Coinbase Ventures, focusing on investment into blockchain- and cryptocurrency-related companies.^[42]
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On May 16, Coinbase Ventures announced its first investment in Compound Labs, a offset-up building Ethereum smart contracts similar to money markets.^[44]
On May 23, GDAX was rebranded equally Coinbase Pro.^[45]
Also in May, Coinbase launched Prime, a platform defended to institutional customers.^[46]
In Baronial, Amazon cloud executive Tim Wagner joined Coinbase equally vice president of engineering.^[47]
In September, Coinbase, along with Circle and Bitcoin miner company Bitmain, was role of a consortium called Centre that launched a digital money called USD Coin, pegged to the United states dollar.^[48]
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In January 2019, Coinbase stopped all trading on Ethereum Classic due to a suspicion of an set on on the network.^[50]
In Feb, Coinbase announced that it had caused "blockchain intelligence platform" Neutrino, an Italy-based startup, for an undisclosed cost.^[51]
The acquisition raised concern among some Coinbase users^[52]
based on Neutrino founders' connection to the Hacking Squad, which has been defendant of providing internet surveillance technology to governments with poor homo rights records.^[53]
On March 4, Coinbase CEO Brian Armstrong said his company "did non properly evaluate" the bargain from a due diligence perspective and thus any Neutrino staff who previously worked at Hacking Team "volition transition out of Coinbase."^[54]
In Apr, a Great britain corporate filing stated that Coinbase's non-U.S. revenue grew xx% to €153 meg (U.S.$173 million) in 2018 resulting in a net profit of €6.vi 1000000.^[55]
Coinbase U.k. CEO Zeeshan Feroz said the company's non-U.S. operations accounted for virtually one-3rd of the visitor's overall revenue and Reuters estimated that the visitor's global revenue totaled "effectually $520 million" in 2018.^[56]
In August, Coinbase announced that it was targeted by a sophisticated hacking attack endeavour in mid-June. This reported attack used spear-phishing and social engineering tactics (including sending simulated due east-mails from compromised email accounts and created a landing folio at the University of Cambridge) and 2 Firefox browser nada-day vulnerabilities. Ane of the Firefox vulnerabilities could allow an attacker to escalate privileges from JavaScript on a browser page (CVE-2019–11707) and the second i could allow the aggressor to escape the browser sandbox and execute code on the host computer (CVE-2019–11708). Coinbase's security team detected and blocked the assail, the network was not compromised, and no cryptocurrency was stolen.^{[57]
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2020–2021: remote-first model and IPO

In May 2020, during the COVID-nineteen pandemic, the company announced information technology was shifting completely to remote piece of work and would no longer recognize a formal headquarters.^[5]
Also in May, the visitor announced the acquisition of New York-based digital asset trading house Tagomi for a price between $75 and $100 meg.^[4]
In June, Coinbase received internal backfire after CEO Brian Armstrong initially refused to make a statement about Black Lives Matter, citing the company's apolitical culture, simply Armstrong afterward reversed his course on Twitter.^[60]
In September, Armstrong published a blog post emphasizing that Coinbase would not appoint in social activism, citing that such activism had injure other technology firms such as Google and Facebook, and offered a severance package for those who disagreed with this direction.^{[threescore]
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The visitor too faced complaints past employees saying they were treated unfairly due to their race or gender.^[62]
In October, Coinbase appear the launch of a Visa debit menu program.^[63]
In December, the
New York Times
reported that based upon information up to 2018 (already ii years erstwhile equally of date of publication) women at Coinbase were paid an average of 8% less than men at comparable jobs and ranks within the visitor, and Black employees were paid 7% less than those in similar roles.^[64]
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In March 2021, the visitor savage under review past the Part of Strange Avails Command, with concerns that the company may accept provided their blockchain service to blacklisted individuals or companies, noting that the nature of blockchain technology makes it "technically infeasible" to foreclose specific users from making transactions.^[66]
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In March 2021, the company agreed to pay $half-dozen.v million to settle regulatory claims that it had reported misleading information about its trading volumes.^[68]
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Also in March, Coinbase announced that it was establishing a business presence in India and hiring employees for IT services, including engineering, software development and client back up operations. The company also announced plans to open a physical role in Hyderabad.^[70]
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In Apr 2021, with its final earnings release before its April fourteen direct listing, the company reported a 9-fold increase in Q1 revenue, to $1.8B, up from $190.6M the previous year. The jump was attributed to the increase in the cost of Bitcoin over that fourth dimension menstruation.^[72]

On April xiv, 2021, Coinbase became a public company on the Nasdaq exchange via a direct stock listing.^{[73]
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Before the list, Nasdaq set up a reference price of $250.00 a share, giving the company an estimated value of $47 billion.^[75]
At the stop of its commencement twenty-four hour period of trading, Coinbase closed at a toll of $328.28 per share.^[76]
In May, the company's Principal People Officer published a weblog mail service announcing that Coinbase was eliminating bacon and equity negotiations during recruiting, citing salary disparities with women and minorities. The proclamation said that "all employees in the aforementioned position, in the same location, receive the aforementioned bacon and equity offer."^[77]
In June, Coinbase added Dogecoin to its tradable assets for Coinbase Pro users.^[78]
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In September, the Securities and Commutation Commission reportedly threatened to sue Coinbase if the company decided to launch a cryptocurrency lending production called Lend.^[fourscore]
The visitor initially responded in a blog post that it was confused for being singled out by the SEC, simply later announced information technology had canceled the planned launch. Technology publication TechCrunch covered the story and noted the existence of similar cryptocurrency lending products already on the market place.^[81]
In November, Coinbase made its kickoff acquisition in India by purchasing AI-powered support platform Agara for an estimated $40–50 million. The company stated that it would employ Agara's technology to automate its client feel tools.^[82]
On December 15 a display glitch vastly inflated balances such that numerous users were patently, albeit briefly, trillionaires.^[83]

2022–present

Super Bowl ad

Coinbase's 60 second commercial during Super Bowl LVI achieved viral status and was considered to be the most constructive of any commercial during the game.^[84]
The advertizing, credited to Accenture Interactive, price $217,000 per second (or $xiii million)^[85]
and featured only a black, screensaver-like screen with a billowy color changing QR code. The lawmaking directed users to a web folio advertising a $fifteen in free Bitcoin for new accounts plus entry into a promotion for a sweepstakes to win three $1 million prizes for Bitcoin. The low tech prototype evoked the retro look of the old DVD screensaver logo bouncing around the screen.^[86]

The advertisement had no narration and but music. The influx of users caused Coinbase's website to crash. Coinbase's landing page received 20 meg hits in i minute. Its iOS app jumped from #186 to #2 in overall downloads afterward the advertisement.^{[87]
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The advertising was parodied later in the night past Meta (which posted its own, similar ad on social media to advertise a streaming Foo Fighters concert after the game). Meta quipped "Hopefully this doesn't interruption."^[88]
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The Super Bowl which has been nicknamed the "Crypto Bowl" besides featured commercials by Crypto.com, eToro, and FTX on the American telecast.^[87]

The Martin Bureau CEO Kristen Cavallo criticized Coinbase CEO Brian Armstrong for non acknowledging the office that agencies had played in the creation of the advertizement.^[ninety]

Russian invasion of Ukraine, failure of India expansion, layoffs, and partnerships

In response to the 2022 Russian invasion of Ukraine, Coinbase blocked 25,000 cryptocurrency wallet addresses related to Russia, assertive them to have engaged in illicit activity.^[91]

Coinbase began operations in India in April 2022.^[92]
The company initially relied on Unified Payments Interface to allow users to convert rupees to cryptocurrencies,^[92]
but ceased using UPI afterward a statement released by the National Payments Corporation of India indicating it was "non aware of whatsoever crypto exchange using UPI".^[92]
This statement forced Coinbase to append most of its business in India.^[93]
Users in India cannot convert rupees into cryptocurrency, but can trade between different cryptocurrencies.^[93]

On June fourteen, 2022, the company announced information technology would be laying off approximately 18 per centum of its workforce, near 1,100 full-time jobs, amid the global downturn in cryptocurrencies and services.^[94]

In August 2022, Coinbase announced a partnership with BlackRock. The venture allows BlackRock clients to utilise their Aladdin investment direction organization to oversee their exposure to Bitcoin forth with other portfolio assets, and to facilitate trading on Coinbase's exchange.^[95]
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Coinbase reported a net loss of $one.1 billion in the 2d quarter of 2022, a tape for the company.^[97]
In October 2022, Coinbase entered into a partnership with Google Cloud Platform that would allow the latter’s customers to pay for cloud services with cryptocurrencies supported past Coinbase Commerce. Coinbase also agreed to transfer its data-related applications from Amazon Web Services to Google Cloud.^[98]

Coinbase exposure to FTX'due south defalcation is $xv meg.^{[99]
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Products

Coinbase offers products for both retail and institutional cryptocurrency investors, equally well as other related cryptocurrency products.

The company's products for retail traders include:

• Coinbase, an app used to buy, shop and trade different cryptocurrencies, such equally Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic and Litecoin.^[33]
• Coinbase Pro, a professional nugget trading platform for trading digital assets.^[100]
• Coinbase Wallet, an app that allows customers to admission decentralized crypto apps (dapps) using a dapp browser.^[101]
• Coinbase NFT, a marketplace where NFT collectors tin buy and sell their pieces to i some other.^[102]

Products for institutional traders include:

• Coinbase Prime number, a trading platform for institutional customers.^[46]
• Coinbase Custody, specialist level services for institutions that hold bitcoin and other cryptocurrencies with Coinbase.^[46]

Other cryptocurrency-related products include:

• USD Coin, a digital stablecoin that lets customers put upward U.Due south. dollars in exchange for a cryptocurrency that has the same value just tin be traded more chop-chop.^[49]
• Coinbase Card, a debit Visa card that allows customers to spend cryptocurrency.^[63]
• Coinbase Commerce, a payment service for merchants.^[103]
• Coinbase Earn, a cryptocurrency learning platform that rewards users with small amounts of altcoins for watching videos and taking quizzes to larn nearly them.^[104]

The company develops an application programming interface (API) for developers and merchants to build applications and accept payments in digital currencies.^[105]

Coinbase has a mobile app for both iOS and Android.^[106]
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Operations

Coinbase operates as a remote-first visitor and has no physical headquarters.^[5]
As role of its SEC filing to go public, the company reported 43 one thousand thousand verified users, seven,000 institutions, and 115,000 ecosystem partners in over 100 countries. Information technology also reported internet revenue of $ane.14 billion in 2020, up from $483 million the previous year. The company also reported a net income of $322 meg subsequently posting a loss in 2019.^[108]
Out of the $782 billion worth of assets on the crypto marketplace, some $90 billion worth is held on the Coinbase platform.^[108]

Equally of 2018^[update], the company offered buy/sell trading functionality in 32 countries,^[109]
while the cryptocurrency wallet was available in 190 countries worldwide.^[110]

Custody of customer assets

In a May 2022 Form 10-Q filing, Coinbase stated that "because custodially held crypto assets may be considered to exist the property of a defalcation estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be discipline to bankruptcy proceedings and such customers could be treated every bit our general unsecured creditors".^{[111]
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Coinbase effect

The "Coinbase Effect" refers to the ascension in toll of cryptocurrencies listed for sale on a ascendant crypto exchange such as Coinbase in the days after the news becomes public.^[114]
Co-ordinate to
Barron's, the effect of getting a cryptocurrency listed on the exchange plays a big role in what cryptocurrencies gain widespread acceptance.^[115]

Complaints

On February 16, 2018, Coinbase admitted that some customers were overcharged in error for credit and debit purchases of cryptocurrencies. The problem was initiated when banks and menu issuers changed the merchant category code (MCC) for cryptocurrency purchases earlier that calendar month. This meant that cryptocurrency payments would now be processed as "cash advances", pregnant that banks and credit card issuers could begin charging customers cash advance fees for cryptocurrency purchases. Customers who purchased cryptocurrency on their exchange betwixt January 22 and Feb 11, 2018, could have been afflicted. At get-go, Visa blamed Coinbase, telling the
Financial Times
on Feb sixteen that it had "not fabricated any systems changes that would result in the duplicate transactions cardholders are reporting." However, the latest statement from Visa and Worldpay on the Coinbase blog clarifies: "This issue was not acquired by Coinbase."^[116]

In March 2018,
Quartz
reported that the number of monthly customer complaints against Coinbase jumped more than 100% in Jan of that yr, to 889, citing official Consumer Financial Protection Bureau data, with more than 400 of those categorized as "money was not available when promised".^[117]
The article also noted that the company was subsequently increasing its customer service staff to reduce await times.^[117]

In December 2021, CNBC reported that Coinbase froze the cryptocurrency GYEN due to a sudden cost spike, resulting in many traders losing money.^[118]

Insider trading

On July 22, 2022, a former Coinbase product manager, Ishan Wahi, forth with Nikhil Wahi (Ishan's brother) and Sameer Ramani (a friend), was charged in the starting time-ever insider trading example in cryptocurrency by prosecutors for the Southern Commune of New York and the Securities and Exchange Commission.^[119]
According to the complaint filed in
SEC 5. Wahi,
Ishan Wahi allegedly shared information that certain tokens were about to be listed by Coinbase with Nikhil Wahi and Ramani, who and then allegedly acted upon that information to make trades for an declared illicit turn a profit in excess of $1.5 million.^[120]
Co-ordinate to federal prosecutors, Ishan Wahi purchased a 1-way ticket to Republic of india upon existence summoned by Coinbase to the company'south Seattle function for a coming together. Wahi was after intercepted past law enforcement from boarding a May xvi flight to India. Coinbase'due south principal security officer, Philip Martin, noted that the visitor provided prosecutors with data from an internal investigation.^[120]

Run into also

• List of bitcoin companies

References

External links

• 
  Official website
  
• Business data for Coinbase Global, Inc.:
  • Bloomberg
  • Google
  • Reuters
  • SEC filings
  • Yahoo!