update 14 September 2021

Coinbase Sets out to Raise About $1.5 Billion via Bond Sales

On Monday 13th, Coinbase announced plans to raise around $1.5 billion in a bond sale. The announcement comes after SEC’s threats of legal actions if Coinbase launches lending services. In fact, some investors see this as Coinbase’s alternative to their last week’s planned lending project.

The trading entity is the most popular crypto exchange, with over $5.6 billion daily trading volume. It announced on Monday plans to launch a debt offering worth $1.5 billion. This offering will raise capital to grow Coinbase and bolster its balance sheet. The report reads; 

“This capital raise represents an opportunity to bolster our already strong balance sheet with low-cost capital.”

The funds raised will help general corporate business including, product development and acquisitions. Yet, the market conditions will determine the closing of this offering.

Coinbase Inc will be the guarantee of these issued bonds, which will mature between 2028 and 2031. Each bond sale will be unique and customized. The policies and requirements will change depending on the agreement between the bondholder and the company. Thus, interest rates and amounts will all change based on the person involved.

Facing Regulatory Troubles

Although Coinbase is the largest crypto exchange, it has faced many regulatory issues recently. In fact, since its launch, Coinbase’s shares have lost over 34% of their launch price in May. Last week, the SEC threatened legal actions against Coinbase for launching lending services.

Coinbase earlier announced a lending program that would help users earn interest. The SEC immediately declared legal actions on the firm. SEC claimed that the new product required a government registration. Brian Armstrong, Coinbase CEO, said that many other crypto exchanges have a similar program. Mr. Armstrong was insinuating that the SEC was at war against his firm.

Coinbase did not launch the project. Yet, attempts to raise funds through bond sales could be an alternative to the lending program. Some reports claim that Coinbase is trying to circumvent the SEC saga through the bond issue. 

Did Coinbase Manipulate Customers?

Coinbase has also been fighting lots of customer complaints. Last week, cryptocurrencies faced a severe market dip. As a matter of fact, this dip was so hard that it drove assets to losses nearing or over 10%, with the crypto world losing over $400 billion in market cap.

Customers claim that the platform’s services were down in that period. Some were unable to access their accounts for hours. Investors claim that the crypto exchange was manipulating its customers by intentionally denying account access. However, Coinbase tweeted, refuting the claims. They said that the events occurred due to increased network activities. The statement reads in part;

Btc
Bitcoin
$41.091
price
6.0937%
price change
BUY NOW

“Transactions are going through normally, and service issues have been resolved. We’ve taken steps on our end to maintain stability and keep our services up.”