Coinbase made $1 billion in revenue last year. A tremendous increase fueled by increasing mainstream interest in both bitcoin and competing virtual currencies that users can buy and sell through the coinbase app and website. This is 66% more than it’s 2017 revenue forecast of $600 mln. This has led to a demand in acquiring a stake in the company by outside investors. However, the company remains private and does not allow stock to be traded on secondary markets.
The platform was swamped by an influx of new users looking to set up trading accounts as Bitcoin entered a massive bull run in November, 2017. Following the announcement of Bitcoin futures launch early that month on CME, Coinbase saw 100,000 new users sign up in just 24 hours.
The company’s valuation has likely to have soared since its last valuation of $1.6 billion in August, and could now be well north of $3 billion.
Although Bitcoin’s long bull run ended in the week leading up to Christmas, its rise to an all time high of $20,000 in mid-December saw Coinbase make massive revenues through trades on its platform. The cryptocurrency exchange makes revenue by charging fees for fiat to crypto conversions via its Buy/Sell feature and for trades on its GDAX exchange.
However, the comnpany is not interested in selling further stake in it’s business, and has expressly forbidden and trading in it’s stock:
“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.”
In August 2017, Coinbase raised $100 mln in a series D funding run aimed at increasing its engineering and customer service teams as well as opening a new GDAX office in New York. Investors that missed out on the latest fundraising series are trying their best to entice current shareholders to part ways with lucrative shares.
Large venture backers of Coinbase include Union Square Ventures, Andreessen Horowitz and DFJ, each of whom has a seat on its board.
The company, founded in 2012 by Brian Armstrong and Fred Ehrsam, allows both consumers and merchants to buy and sell not just bitcoin but also competing digital currencies such as litecoin and ethereum. The portal is attractive to venture capitalists, they say, because it allows them to place a bet on the broader cryptocurrency market as opposed to an investment in a specific blockchain-enabled technology or a specific currency.
Coinbase recently experienced an outcry over it’s controversial handling of adding Bitcoin Cash to the list of cryptocurrencies that could be bought and sold on the exchange. The company launched an internal probe to identify whether its employees engaged in insider trading of Bitcoin Cash shortly before the cryptocurrency was officially introduced to the exchange in December of last year. Increased trading led to a spike in Bitcoin Cash’s valuation, and just four hours after its introduction, Coinbase suspended trading of the digital currency, and is enabling it tomorrow on the 25th January.
By December, Coinbase had over 13 million users.