According to undisclosed sources cited by Bloomberg, Coinbase’s highly anticipated Nasdaq IPO has been tentatively pushed to April.
Coinbase IPO News
Coinbase, one of the most popular cryptocurrency exchange platforms with backing by venture funds such as Andreessen Horowitz and Y Combinator, originally announced in December 2020 its intention to go public. In January of this year, more information was revealed indicating it would be listed on Nasdaq with the ticker “COIN” in a direct-listing IPO. The listing was originally planned to occur this month, and private transactions had pointed towards a lofty valuation of roughly $68 billion. The valuation implied a price-to-earnings ratio of 53 (relative to Coinbase’s 2020 earnings), which some consider high even by tech stock standards and may reflect the market’s high expectations for both Coinbase’s future performance and the growing relevance of cryptocurrency investing.
A few days ago, the CEO and co-founder of Coinbase, Brian Armstrong, launched a question-and-answer thread on social media platform Reddit to publicize Coinbase’s IPO, promising to record answers to the most popular and relevant questions in video format. No date has been announced for the release of this information, but the Reddit thread has already drawn over 1,000 questions.
CFTC Fine
The rumor of Coinbase’s delayed IPO follows an announcement by the Commodity Futures Trading Commission (CFTC) that it was fining COINBASE $6.5M for false and misleading reporting and wash trading, which is the practice of matching trades between accounts by the same owner, usually in order to inflate trading volume. The CFTC order writes: "between January 2015 and September 2018, Coinbase recklessly delivered false, misleading, or inaccurate reports concerning transactions in digital assets, including Bitcoin, on the GDAX electronic trading platform it operated. […] The order also finds that over a six-week period—August through September 2016—a former Coinbase employee used a manipulative or deceptive device by intentionally placing buy and sell orders in the Litecoin/Bitcoin trading pair on GDAX that matched each other as wash trades." The wash trading and inaccurate reporting generated a misleading image to investors that certain coins had greater liquidity and trading interest on Coinbase than in reality.
Although the fine is minuscule relative to Coinbase’s net revenue of over $1B, the news may raise some short-term doubts about Coinbase among potential investors, which could be a strategic reason for delaying the IPO.
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