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Coinbase booked $1B in revenue last year, has told hovering VCs to back off
- millionairemob 9y agoSuch high feeeeeeeessssssssss
- conanbatt 9y agoI like how Coinbase, trading a largely unregulated 'security', has the moral indignity of telling its own investors that they better not be trading the assets they purchased. The fact that people cant buy or sell shares of private companies is ridiculous in general, but particularly in this case.
- optimuspaul 9y agoI don't think it's ridiculous at all, especially in this case.
- hartator 9y agoCrypto is originally about having a more liquid currency. There is some irony in the main company doesn't want its shares to be liquid.
- x3n0ph3n3 9y agoShares in private companies are rarely liquid and there's no moral or legal reason they should IPO before they are ready.
- baddox 9y agoWhy do you say that cryptocurrency was originally about having a more liquid currency? I've heard many states goals of cryptocurrency, and have never seen that goal featured prominently.
- x3n0ph3n3 9y agoThat's the deal when you invest in a private company. If you don't like it, don't invest in a private company and only invest in publicly traded companies. There's nothing ridiculous about it.
- conanbatt 9y agoBeing the way it is doesn't make it not ridiculous. It is absolutely ridiculous that you cant sell a share of a company, something you own, of a company that buys and sells things they don't own.
- x3n0ph3n3 9y agoIt's contractual. Abiding by contracts you sign is not ridiculous. These are very wealthy investors and this is part of the game they play. Stop acting like some little person is getting screwed.
- conanbatt 9y agoIts not contractual: by contract you cant sell the shares, but you can sell the futures of the shares, which are not the same thing. What stops you from doing that is the State. So its actually a rule that can only exist because other things are enforced.
- hmahncke 9y agoIt’s a private company. That’s among the many reasons that trading in private companies is different than trading in public companies.
- Pyxl101 9y agoBitcoin is (most likely) not a security. It's a commodity. Securities are typically assets that derive their value from a contractual claim (such as ownership rights to a company), which is not the case with Bitcoin. When you own Bitcoin, you just possess Bitcoin, not any kind of contract claim on some other asset. Bitcoin is more like gold and other commodities in this regard. An analysis of this topic: https://www.bu.edu/jostl/files/2016/01/21.1_Alberts_Final_web.pdf https://www.bu.edu/jostl/files/2016/01/21.1_Alberts_Final_we... Some crypto offerings (ICOs) might be securities depending on what's promised when purchased. If the creator of a coin advertises their ICO as an investment opportunity, where the buyers can expect to see gains from their investment, due to the labor of others, especially when there's no established market for the coin, then that ICO may be a security.
- gist 9y ago> has the moral indignity of telling its own investors that they better not be trading the assets they purchased. The way I read this they are not "telling them" as much as reminding them that legally they are not allowed to do this.
- JumpCrisscross 9y ago> legally they are not allowed to do this Shareholders in a Delaware corporation are legally allowed to sell their private shares. The general exemption for this is Regulation D. Most restrictions are of companies’ construction. Disclaimer: I am not a lawyer. This is not legal nor any other kind of advice.
- Pyxl101 9y agoI was just about to ask that question: what is the basis for the prohibition on selling shares? How are those prohibitions enforced? If the basis is contract law, then you can't necessarily prevent people from undertaking the prohibited action, can you? Just collect damages if they do. If an employee sells their shares in violation of a company contract, what happens? Can the company repossess the shares? Or are the shares structured so that they can be made worthless? Can employees construct a security based on their shares and then sell that instead? Nominally the employee retains the shares, and sells a contract based on them to someone else - an asset-backed security. The contract is an option that allows the contract-owner to request the shares-owner sell their shares in the event of liquidity, and the contract owner will receive the gains. Alternatively, the share-owner simply holds onto the shares until they are transferrable (eg IPO). In exchange for this the shares-owner is paid an up front fee. Presumably this kind of arrangement could also be prohibited in some way by the company, but if someone is willing to violate that agreement, it would be difficult to discover that the agreement exists.
- JumpCrisscross 9y ago> If the basis is contract law, then you can't necessarily prevent people from undertaking the prohibited action, can you? Just collect damages if they do The record of a private company’s shareholders are maintained by the company. If you try to buy shares in a prohibited transfer, the company won’t recognise the change of ownership. Forcing recognition would require the transacting parties to sue the company; this is frowned upon. That said, yes, companies who block transfers tend to spawn clever financial engineerings. Because of associated legal and banking costs, these structures only make sense for larger trades. Disclaimer: I am not a lawyer. This is not legal nor any other kind of advice.
- gsylvie 9y agoIf you don't like the terms of the shareholders agreement, then you don't have to buy the (private equity) shares. But if you buy the shares and sign the agreement, I don't see why the directors should honour illegitimate share transfers you attempt to make in the future.
- conanbatt 9y agoSo if you signed a terms of service of Apple that said all your assets are actually Apple's, you would happily comply?
- Pyxl101 9y agoAll contracts have consideration. If the consideration for the agreement that all my assets are Apple's is $1 billion USD, then sure I would happily comply, rather than risk voiding my contract. More seriously: people should comply with the agreements that they sign. Don't sign an agreement that says all of your assets are actually Apple's if you're not happy with it. Read all of the fine print and don't be surprised later. Don't buy stock in a privacy company if you're not happy with the constraints on it. One of the common key differences between private and public companies is that you can't sell or transfer stock in private companies without their approval. You know that when buying it initially, or when agreeing to receive it as compensation. There are legitimate reasons why private companies don't want their stock to be transferred willy-nilly. For one, it makes the cap table larger and more complex, which complicates further funding or purchase agreements. Two, if the cap table grows too large, then the company may become subject to onerous SEC regulations that are more appropriate for public companies (but without receiving the corresponding benefits). Three, since shareholders are entitled to certain information about the company, private companies limit ownership so that they're not obligated to share this information with people they do not trust. There are probably more reasons.
- conanbatt 9y ago> More seriously: people should comply with the agreements that they sign. Don't sign an agreement that says all of your assets are actually Apple's if you're not happy with it. Read all of the fine print and don't be surprised later. You have read every single word of all the TOS you ever signed? I find that very hard to believe. > Don't buy stock in a privacy company if you're not happy with the constraints on it. One of the common key differences between private and public companies is that you can't sell or transfer stock in private companies without their approval. You know that when buying it initially, or when agreeing to receive it as compensation. If we talk about the letter of the law, then you don't need to sell the stock, you can sell futures of it at your own compliance. The company can't prevent you from doing that by letter of the law. But the SEC can. The contract is only enforcible in practical terms because as an employee or investor you are disallowed from making any legal claim about the stocks you are entitled to. Also, the argument that it is 'legal' is entirely a different thing. I never mentioned legality, I said ridiculous. Its not a moral, economic or practical argument to say that something is 'legal'. Saying something is legal is one of the lowest forms of defense for an action. Its saying that the only purpose of it is that they cant put you to jail for doing it. > There are legitimate reasons why private companies don't want their stock to be transferred willy-nilly. For one, it makes the cap table larger and more complex, which complicates further funding or purchase agreements. Two, if the cap table grows too large, then the company may become subject to onerous SEC regulations that are more appropriate for public companies (but without receiving the corresponding benefits). Three, since shareholders are entitled to certain information about the company, private companies limit ownership so that they're not obligated to share this information with people they do not trust. There are probably more reasons. Very nice, but there is a much more important reason why companies want to not be able to sell off shares: they benefit economically directly because of it. Because the owners get the shares back when people dont buy them, and they have information asymmetry with the employees. AS an employee you have a lot less information. If employees could sell their stocks willy nilly, every employee that leaves a startup and doesnt want to buy stock to keep would sell them in the open market, which would dilute the value of companies big time while making employees richer. Hm.
- PunchTornado 9y agoi can't wait for the moment coinbase crashes. they're the worst of the crypto world.
- lozaning 9y agoDo you have anything i can read that would lead me to think along your same lines? I dont currently think coinbase is any worse and is potentially slightly better than many of the other online exchanges. Wanna make sure I get out of my own bubble though and would be interested in the reasoning behind your dislike.
- Firebrand 9y agoCoinbase probably banned him.
- PunchTornado 9y agoHuge fees if you don't use gdax. Takes 1 month for my money to get into my account. Lack of support from their team while I had 50k hanging in the middle of nowhere for 3 weeks.
- dlanged 9y agoWhen bashing companies, it is usually more mature to give some reasons. Personally I've had nothing but positive experiences with them. Solid site, and fantastic customer service.
- rajathagasthya 9y agoTake a look at /r/coinbase for some horror stories too.
- gamblor956 9y agoCoinbase is infamous for delaying customer transactions, including crypto-to-fiat conversions. They've shut down access to accounts without warning or explanation. There are several dozen reports of them withdrawing money from bank accounts without crediting the account holder for the corresponding amount of cryptocurrencies.
- tristanj 9y agoTip for people buying on Coinbase: you can avoid their fee entirely by using GDAX. Deposit the money into your USD wallet first (no cost), then transfer the money to GDAX (no cost), and place a limit order (no cost). You may need to babysit your limit order for a couple minutes but this trick saves you $15 for every $1000 you buy. I think there is little reason not to do this unless 1) you value your time very highly or 2) you can't be bothered. I honestly think most of Coinbase's revenue comes from people in the latter group.
- hartator 9y agoYou still loose some money entering and exiting a currency. The price you can buy is more than the price you can sell at any given time.
- x3n0ph3n3 9y agoThe spread is usually a penny at any given time, though. Have you even watched the order books? You also have the option of exiting with a limit order rather than a market order to save yourself a fee.
- twohlix_ 9y agoI do this for manual buys when I'm doing large purchases/sells. However something I am willing to pay this .25-1% fee on is monthly automated purchases of cryptos for speculative holding.
- icelancer 9y agoYup. Anyone mining on Nicehash has that loophole too now. Transfer BTC to Coinbase off-chain for free, then do the GDAX loop. Aren't market orders free, though? Don't need to babysit a limit order if you do and you get the spot price. Last time I checked it was, anyway. You can get USD out of GDAX for free too using this. Well, "free." You pay the bid/ask spread for the liquidity, which is usually very small, especially on BTC. As for other strategies, use LTC to get into your account cheaply if Segwit isn't online, then sell the LTCBTC pair and repeat the above.
- deleted 9y ago[deleted]
- rrggrr 9y agoIf we don't start seeing real world DAP adoption and growth in legit crypto-payments soon - this all comes crashing down. My gut tells me the market will wait 4-8 months at best.
- icelancer 9y agoWe are seeing it. I pay for a ton of stuff on Newegg using BTC, and Bitpay is being adopted at a ton of places, particularly those that serve Wordpress-powered shops due to a simple plugin. Bitpay's switch to the payment protocol interface sucks, but it's workable enough and hackable if you know how to run a script. For everyone else, it's easier to use, so that's good in the long run. If you're expecting to go to Target or Walmart and see adoption before you declare it good, I don't know what to say. But cryptocurrency purchasing is rising on the Internet, and if the Lightning Network does half as much as they want to, then it's in really good shape.
- prostoalex 9y ago> I pay for a ton of stuff on Newegg using BTC Do you cover the transaction fee or does Newegg?
- icelancer 9y ago"I do," in that there's a fee for me but there's also obviously one from Bitpay that they are assessed as well. Some sites cover the tx fees or offer discounts, which are effectively the same thing, however.
- wellboy 9y agoBitcoin won't be the crypto payment method. It'll be the Crypto gold that keeps the market together. Another small and light coin will be the payment method and possibly replace bitcoin after a while.
- hylianwarrior 9y agoRaiBlocks is looking pretty good with its zero fees and sub-minute transaction times
- jcrites 9y agoIf these reports are true, that's really impressive growth in just a few years! Congrats on hitting that milestone, Brian, keep it up!
- ActsJuvenile 9y agoWonder why Fred Erhsam quit if CB is crushing it. He doesn't strike me as a "follow the heart" kinda guy...
- aardvark291 9y agoDoes this "$1B in revenue" include the $ that customers have deposited in order to buy cryptocurrency?
- michaelchisari 9y agoAlso, how much of it is in fees collected and stored as cryptos themselves? If crypto takes a dive, does their revenue retroactively lose value?
- tomhoward 9y agoIt wouldn't, according to accounting principles. It would be accounted for as deposits received, with a balancing liability for when the customer makes a purchase or withdrawal. They would only record revenue when they charge a transaction fee, or any other charge/income that can't be used by/returned to the customer at their discretion. Revenue is only revenue if it doesn't incur a matching liability.
- aardvark291 9y agoI agree that that's how it should work, but I wouldn't be surprised if Coinbase wasn't completely orthodox in their accounting. Replies below indicate that they may indeed be counting customer deposits as "revenue".
- sethgecko 9y agoThey have like 20m users, that would mean $50 deposited per users so.. no
- btian 9y agoThat would be asset, not revenue.
- alant 9y agoYou mean Asset Under Management or AUM?
- richard___ 9y agoSince they make around 1% per transaction, $1billion transacted (I assume this means revenue) is 10 million net... what am I missing here because that's not impressive at all.
- idax 9y ago$1 Billion in REVENUE, not volume transacted. They transacted $681,271,650 USD in the last 24 hours alone.
- mathgenius 9y agoProbably most of that was in December, so: massive growth.
- deleted 9y ago[deleted]
- peterjlee 9y agoI don't think $1B is the transaction amount. In the last 24 hours, trade volume on GDAX(Coinbase's exchange) for Bitcoin alone was $247 million.[1] Their trade fees are around 0.25%[2] so in the last 24hr they made over $60M in Bitcoin trading alone. [1] https://coinmarketcap.com/exchanges/gdax/ https://coinmarketcap.com/exchanges/gdax/ [2] https://support.gdax.com/customer/en/portal/articles/2425097-what-are-the-fees-on-gdax- https://support.gdax.com/customer/en/portal/articles/2425097...
- irq11 9y ago.25% of 247 million is $617,500, not 60 million
- cobookman 9y ago247 * 365 * 0.0025 = 225,387,500 / year. How is that 1B?
- syntheticcdo 9y ago$1B in revenue sounds reasonable, seeing as there are higher volume days than just yesterday, and those trading revenues don't include revenue from fees on (non-GDAX) Coinbase buy transactions.
- kristianp 9y agoSo is YC sitting on a 5% holding in a $3B+ company?
- HorizonXP 9y agoMore like 7%, and yes, YC will typically "sit" and not do anything. In fact, given that Coinbase has raised recently, YC's share is probably higher than 7% through the YC Continuity fund. Who knows what will happen once an IPO happens, but no YC company has reached that point yet. We'll find out soon with Dropbox.
- kristianp 9y agoWhat do you mean 'who knows what will happen'? YC will have a big payday.
- dmitrygr 9y agoyou forgot "if and only if the public finds this valuation believable"
- make3 9y agoincluded in this is, if bitcoin doesn't fall to zero (as people wouldn't use coinbase if bitcoin was worthless). in a way I guess, it's kind of like owning some bitcoins, because if bitcoin tanks, coinbase will be worthless
- ActsJuvenile 9y agoI wouldn't bet on it. Coinbase valuation will drop drastically when Tether bubble pops and bear market sets in.
- SwellJoe 9y agoOne can be short-term bearish, long-term bullish, on cryptocurrency. I am. Tether is a disaster looming on the horizon for every cryptocurrency investor and business, but it, too, will pass. Mt. Gox was very bad for crypto for a while...and, then it didn't matter anymore. If I were a betting man, I'd wager we'll see Tether play out similarly: Big spike in price (which we've already seen), massive drop to something reasonable based on actual demand and participation by real people with real money (currently ongoing, though surprisingly drawn out...the Tether trick seems to be working better than I would have believed, if it were pitched as a film plot), and then long slow climb back to a new all-time high (two years, perhaps). Then again, at some point, something that works better is going to replace Bitcoin. Maybe the terrifying Tether crash will be the straw that breaks BTCs back. But, Coinbase/GDAX will be well-placed to profit from whatever that next thing is, as long as they're vigilant for new opportunities and careful as hell about security. Coinbase can only lose by making mistakes at this point. They profit whether BTC is going up or down, as they take (very high) fees regardless.
- zerostar07 9y agoWhy don't they build a competitor? It's not like it will fail.
- bpicolo 9y agoRegulatory requirements are the hard part. The governments (of many different countries) are by no means required to license you to do what they do - it's not just a storefront, it's tons of financial regulation, they're even fdic insured for cash deposits. It’s a legal challenge
- zerostar07 9y agobut not much beyond that. almost guaranteed profit
- bpicolo 9y agoNot sure that's true. Absolutely massive target for blackhats. Security has to be off the rails good
- heurist 9y agoFairX is an near-term project assumed to be targeting this space.
- ActsJuvenile 9y agoNo bank would service your account. At this point you need to found your own banking charter like ItBit or Gemini.
- debt 9y agoScreenshot'd this headline for a year from now, ya know long after the crypto thing has just absolutely imploded. Figure it'd give me a good laugh.
- bfuller 9y agoWhy don't you short bitcoin then?
- otp124 9y agoBecause no one knows when the market will stop being volatile or irrational. "Markets can remain irrational longer than you can remain solvent" - Keynes
- bfuller 9y agoThe person I responded to said they believed in one year the market would have entirely imploded.
- lucaspm98 9y agoOut of curiosity, is there a feasible way to do this currently?
- pfarnsworth 9y agoWhat we need is the ability for people to do 1:1 forward or options trades on their existing private shares. So if you have 10,000 RSUs or options in Coinbase, you can instead write an options contract and sell that to investors that will only exercise on IPO. The trick is making these contracts tradeable on a secondary market but I don't see how Coinbase or whoever else could regulate that, as long as there is a solid legal contract underlying it.
- DenisM 9y agoThis sort of activity is routinely prohibited by the share purchase agreement, and exactly for that reason.
- aetherspawn 9y agoWhen are they going to let me sell my coins from Australia... can buy but not sell and no date advertised, just ‘soon’. I feel like I got scammed.
- jsloss 9y agoThey only recently put in a disclaimer clearly stating the ability to buy and not sell, here in Canada. Was deceptive as hell before that. Set up a GDAX account, send your coins there (save fees), then transfer them to a better off/on ramp for your location.
- Blindedwino 9y agoBecause they like to take your money but won't tell you that you can't take it out until you try.
- obmelvin 9y agoCan't you transfer them to another wallet and sell via another means? I agree that's lame on their part, but you should be able to work around it.
- AluminiumPoint 9y agoPlenty of places to sell BTC for AUD; btcmarkets, coinjar, coinspot, livingroomofsatoshi, etc. Why do you want coinbase?
- yorby 9y agoThey should have enough money to scale up their servers to be able to handle peek usage... not sure why they don't do it... maybe they like it that way (they can claim that their servers are down when they want to stop trading?)
- shepardrtc 9y agoI wonder if they're going to put that money toward generating 1099's for their clients.
- goodoldboys 9y agoLooks like they can afford at least one FT customer service person now, awesome!