Leading cryptocurrency exchange Coinbase filed its S-1 statement, publicly disclosing its financials in advance of a planned initial public offering (IPO). In the prospectus, Coinbase identified some unique business risks, including the potential discovery of the real identity of Bitcoin’s pseudonymous creator, Satoshi Nakamoto.
Coinbase plans to raise up to $1 billion through an offering on Nasdaq through a direct listing. The filing shows that the company posted a profit of $108.3 million on a non-diluted basis in 2020, compared to a loss of $30.4 million in 2019.
In the filing, Coinbase cites Satoshi Nakamoto’s identity as a risk factor. The entire crypto market could be destabilized if Bitcoin’s anonymous creator is ever revealed, or sells the $30 billion stake, wrote Coinbase.
In 2008, Satoshi Nakamoto published the Bitcoin white paper, setting the stage for a financial revolution. Satoshi Nakamoto is the pseudonym used by the person or group of people who created Bitcoin (BTC).
Satoshi Nakamoto’s stake in Bitcoin, which totals over 1 million BTC, accounts for about 5% of the entire Bitcoin market, given that there are only 21 million bitcoins that can be mined in total.
Coinbase Pre-IPO Contract Drops on FTX
Coinbase noted that in the filling that Coinbase will face a major business risk if the identity of the Bitcoin creator was revealed, or the creator decided to transfer the Bitcoin holding, which is worth over $30 billion currently. The above incidents could cause the cryptocurrency’s price to fall, bringing a negative impact on Coinbase.
Following the news, Coinbase pre-IPO futures contracts trading on crypto derivatives exchange FTX dropped significantly from a record high of $488 a share. At the time of writing, it is trading at about $380, down 1.4% over the previous 24 hours – which would imply a valuation of about $95 billion.
After Coinbase’s first day of public trading, Coinbase pre-IPO contracts will convert into the equivalent amount of tokenized Coinbase fraction stock tokens.
Coinbase’s success is largely tied to Bitcoin’s rise. Coinbase lists the Bitcoin network address associated with Satoshi Nakamoto, alongside lawyers and other entities, as one of the recipients of the public filing, in a nod to the Bitcoin creator.
According to the prospectus, the company posted a profit of $108.3 million on a non-diluted basis in 2020, compared to a loss of $30.4 million in 2019. Its net revenue more than doubled to $1.14 billion in 2020 – 96% of the revenue last year came from transaction fees on its exchange.
A majority of its net revenue was derived from trades in Bitcoin and Ethereum. Verified users of the exchange rose 34% to 43 million last year, while monthly transacting users jumped 180% to 2.8 million.