San Francisco-based cryptocurrency exchange Coinbase, is reportedly working on a deal with Tiger Global Management that may potentially increase the crypto firm’s valuation to around $8 billion. If the agreement is finalized, Coinbase could become “one of the highest-valued startups” in the US, according to Recode.
In April of 2018, the American fintech firm had attempted to value itself at $8 billion - when it acquired Earn.com, which is a company that lets users earn cryptocurrency by simply responding to emails and completing other routine tasks.
$500 Million Investment
At present, Coinbase is trying to secure a $500 million investment from its existing shareholders and New York-based investment firm Tiger Global. The exchange is also planning to invest $250 million into improving its current operations (from its own reserves).
According to inside sources, Coinbase may spend an additional $250 million to buy out current investors. As one of the world’s largest digital asset trading platforms, Coinbase’s revenue exceeded $1 billion for financial year (FY) 2017.
Having previously received substantial investments from venture capital firm Andreessen Horowitz and Union Square Ventures, Coinbase’s valuation was estimated at $1.5 billion during the summer months of 2017.
When cryptocurrency prices reached record-level highs toward the end of 2017, the US-based exchange managed to attract millions of new users to its platform. As of November 2017, Coinbase has approximately 13.3 million users.
However, the crypto trading platform has struggled to accommodate the large number of new users who’ve registered to use its services. As CryptoGlobe reported in June, the exchange’s users filed 134 pages of complaints to the US Securities and Exchange Commission (SEC).
Many of the complaints alleged that Coinbase had “stolen” their funds as the users were unable to access them for long periods of time. The crypto asset exchange was also criticized for not communicating effectively with its existing customers as it was mostly focusing on expanding its operations.
In addition to these issues, Coinbase’s business has suffered due to the extended crypto bear market of 2018. However, its co-founder and CEO, Brian Armstrong, has said he has a long-term vision for the digital asset trading platform.
"Open Financial System", Secondary Stock Sale
According to Armstrong, Coinbase aims to “build an open financial system for the world.” At a time when many crypto firms are struggling due to declining digital currency prices, the exchange claims its business is still profitable.
Notably, Coinbase has been in talks with various investors throughout this year regarding a “secondary stock sale.” Should this materialize, then it would give its current investors the option to cash out and the crypto exchange firm would not have to raise more capital to fund its business operations.
Sources familiar with Coinbase’s internal operations have said that its secondary stock sale has not made much progress. The exchange also experienced a setback in August of 2018 when Facebook’s vice president of messaging products, David Marcus, left Coinbase’s board of directors.
However, the crypto startup is still pushing forward in an effort to expand its operations and may even be planning to launch an IPO. It recently added Charles Schwab advisor, Christopher V. Dodds, to its board of directors.