Coinbase's IPO: Chinese Capital Gets Involved, Valuation Could Reach $28 Billion
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Coinbase's IPO: Chinese Capital Gets Involved, Valuation Could Reach $28 Billion
Peeling Back the Capital Fog: TechFlow Deep Dive into the Secrets Behind Coinbase's IPO
Navigating Web3 tides with focused insightsEight years in the making, Coinbase finally files for上市!
On December 7, Coinbase Global announced it has submitted an上市application to the U.S. Securities and Exchange Commission (SEC), becoming the first cryptocurrency exchange to test the public capital markets.
Coinbase has been dreaming of going public for two years. Now, with Bitcoin prices breaking historical highs and drawing widespread attention, this cryptocurrency exchange founded in 2012 has decided to step into the spotlight.
Behind Coinbase's glamorous上市plans, however, numerous questions remain.
Will Coinbase go public via IPO or direct上市? What is its latest valuation? And which mysterious backers support Coinbase?
Peeling back the layers of capital intrigue, TechFlow dives deep into the secrets behind Coinbase's上市.
The Dream of Going Public Didn't Start Yesterday
Rumors about Coinbase上市have circulated for years.
As early as October 26, 2018, CNBC host and crypto analyst Ran NeuNer tweeted that he had spoken with Adam Draper, one of Coinbase’s earliest investors, confirming Coinbase was preparing for a $500 million IPO.
The initial public offering would occur in two rounds, including preferred and common shares, with unequal voting rights per share.
According to NeuNer, Coinbase then had around 25 million users, including approximately 600,000 active ones, and was expected to generate about $1.3 billion in revenue in 2018, with profits reaching $456 million—up from $380 million in 2017. About 80% of its revenue came from retail users and 15% from institutional accounts.
In response to these IPO rumors, DGroup founder Zhao Dong tweeted at the time: "Coinbase上市is a ridiculous idea."
To many in the crypto industry, it felt like Song Jiang joining Liangshan, shouting “Down with IPOs, transform finance,” only to be the first to surrender.
Amid growing speculation, Coinbase COO Asiff Hirji told Bloomberg that the company had no immediate plans for an IPO.
By the end of 2018, the crypto market entered a harsh winter, with Bitcoin plummeting sharply—widely seen as a key reason Coinbase shelved its上市plans.
Two years later, on December 17, amid Bitcoin hitting new highs, news resurfaced that Coinbase was pursuing上市—an indication of shifting tides.
Valuation Could Reach $28 Billion
Some media outlets claim Coinbase is currently valued at $8 billion, but this figure is outdated.
In November 2018, Coinbase announced a $300 million Series E round led by Tiger Global Management, with participation from Andreessen Horowitz, Y Combinator, Wellington Management, and Polychain, pushing its valuation to $8 billion.
That means the $8 billion valuation reflects data from two years ago.
Back then, Bitcoin hovered around $5,000; today, it has surpassed $23,000.
Does an $8 billion valuation underestimate both Bitcoin and Coinbase?
Currently, Coinbase’s true valuation remains a mystery, but several experts have begun offering estimates.
TechFlow obtained a July 2020 valuation analysis from Lex, a foreign fintech-focused analyst, who modeled Coinbase’s revenue across trading, custody, and other services, applying a 20x revenue multiple to arrive at an estimated $15 billion valuation at that time.
However, this was merely a conservative model based on July data. With Bitcoin now significantly higher, that estimate likely understates current value.
On December 18, Messari researcher Mira Christanto, after analyzing Coinbase’s business and transaction data, concluded a potential valuation of $28 billion.
Her model breaks down Coinbase’s operations into trading fees, custody fees, debit card revenue, etc.
In the trading segment, volume is largely driven by institutional clients, though the average holding per user is $703. Custody assets totaled $7 billion in 2019 and grew to $20 billion in 2020.
After reviewing past funding rounds and current valuations assigned by capital markets to crypto firms, Mira reached her conclusion.
Ultimately, however, the market will decide Coinbase’s real valuation.
Analyst Lex expressed optimism about Coinbase, calling it “a better investment than Bitmain” because it bets on human nature rather than Bitcoin network usage.
Coinbase doesn’t rely on the Bitcoin network to operate, nor does it engage in hardware wars over mining rigs. It simply needs to keep attracting people to trade a novel asset—Bitcoin—that young generations find appealing.
IPO or Not?
Although blockchain media like Coindesk, traditional outlets like The New York Times, and Grayscale CEO Barry Silbert all use “Coinbase IPO” in headlines, Coinbase has not confirmed whether it will pursue an IPO.
Coinbase has only confirmed it has secretly filed a draft registration statement on Form S-1 with the SEC. This does not mean it will necessarily conduct an initial public offering (IPO)—both IPOs and direct上市require S-1 filings. It appears most people are using “IPO” in the broad sense, meaning any上市event.
In July 2020, Reuters first reported Coinbase was preparing for上市and suggested it might skip the IPO route and go directly上市instead.
Compared to an IPO, direct上市could save Coinbase tens of millions in investment banking fees. For example, Slack, the collaboration chat app that went public directly last June, paid just $22 million in advisory fees, while Lyft, a similarly sized ride-hailing firm, spent $70 million on banking fees during its IPO.
From Spotify to Slack, tech unicorns are increasingly bypassing IPOs and entering public markets directly—a growing trend.
Another feature of direct上市is that no new shares are issued, and early investors aren’t subject to lock-up periods. However, this also introduces risks—significant volatility in cash flow and stock price during the initial上市phase.
Choosing direct上市over IPO reflects Coinbase’s anti-Wall Street ethos. Jeff Roberts, Forbes journalist and author of Coinbase’s biography *King of Crypto*, explained on the Unchained podcast why Coinbase might choose direct上市: “It’s a way to push back against Wall Street—all those lawyers and bankers who profit from IPOs.” He added that selling shares directly could make all insiders rich immediately.
Additionally, Coinbase co-founder Fred Ehrsam once proposed the company could上市by issuing a digital token on a blockchain.
In a recent Forbes article, Roberts noted, “It’s unclear whether the SEC will approve an IPO. If the SEC rejects it, Coinbase could instead pursue a direct上市by selling shares directly to the public.”
On Twitter, Roberts recently responded to上市rumors: “No news yet—it could be traditional, direct, or token-based.”
Therefore, Coinbase’s上市method remains uncertain.
Chinese Capital Behind Coinbase
When a company goes public, the biggest beneficiaries besides the team are its investors.
According to Crunchbase, Coinbase has completed its Series E round, raising a total of $547 million from 59 investors.
Its top five investors include A16Z, Tiger Global, IVP, DFJ (Draper Fisher Jurvetson), and Mitsubishi UFJ Financial Group. Other notable names include the New York Stock Exchange (NYSE) and Union Square Ventures.
A few investors deserve special mention.
In 2012, Coinbase closed its Series A round led by Union Square, and Chinese capital IDG Capital participated in this round.
Li Feng, then a partner at IDG Capital, confirmed the investment. According to Li Feng, Bitcoin represented a completely new and exciting field. IDG Capital made an early move, investing in Coinbase in Silicon Valley in September 2012, becoming one of its primary investors—and the first domestic fund to invest in a Bitcoin company.
Later, in 2013, Li Feng also participated in Ripple’s early funding and joined Ripple Labs’ board after continuing to invest in its Series A in 2015.
In April 2015, Circle, the issuer of USDC, also received investment from IDG Capital. That same year, Li Feng left IDG to found Frees Fund.
In 2017, IDG Capital invested in Bitmain.
Bitmain, Ripple, Coinbase, Circle, imToken, KuCoin… IDG Capital has become one of the most significant value hunters in the blockchain space.
Next is tennis legend Serena Williams.
In 2019, world-famous tennis player Serena Jameka Williams revealed on Instagram that Serena Ventures launched in 2014 and had invested in over 30 companies—including Coinbase.
But in October this year, Coindesk discovered that Coinbase was no longer listed on Serena Ventures’ portfolio website, suggesting Williams may have exited her investment.
Moreover, in 2019, Bloomberg reported that Temasek, one of the world’s largest sovereign wealth funds, invested in Coinbase in 2018, although Coinbase never disclosed the deal.
Notably, in 2018, Vertex Ventures, a subsidiary of Singapore’s government investment arm Temasek, announced a strategic investment in Binance.
Coinbase’s Controversial History
In 2016, after the Satoshi Roundtable, early Bitcoin influencer “Sihai” described Coinbase’s CEO as “a political player trying to control Bitcoin—extremely dangerous.”
Looking back, Coinbase has indeed shown considerable ambition.
Following Bitcoin’s second halving in July 2016, Coinbase inserted itself into the debate over block size to expand its influence.
As The Guardian wrote in August 2015, Bitcoin was undergoing a “civil war,” with supporters of larger blocks launching a hard fork called “Bitcoin XT.”
Coinbase chose to back Bitcoin XT, angering many Bitcoin evangelists.
However, Bitcoin XT was soon sabotaged by malware before gaining traction.
In February 2016, after attending the Satoshi Roundtable, Coinbase CEO Brian Armstrong criticized Bitcoin Core, the main development team, calling it potentially “the greatest systemic risk to Bitcoin.” He claimed Bitcoin Core suffered from poor communication and immaturity, deterring other developers. Worse, Core developers favored “perfect solutions” over “good enough” ones—often just an excuse for inaction.
He concluded: “We need a new Bitcoin protocol development team to help Bitcoin become a multi-party system, avoiding the systemic risk of having Core as the sole developer group.”
Later, another Bitcoin fork, BCH, further embroiled Coinbase in controversy—even landing it in court.
On December 20, 2017, Coinbase listed Bitcoin Cash (BCH) on its GDAX trading platform (now Coinbase Pro) nearly a month earlier than planned, causing BCH’s price to spike instantly, with spreads exceeding $6,000 compared to other exchanges.
Investors subsequently filed a class-action lawsuit alleging insider trading, claiming employees had set up “rat trades” to profit beforehand. The accusation was later dismissed by U.S. District Judge Vince Chhabria.
In November 2018, plaintiffs appealed again, arguing Coinbase profited through price manipulation: inflating prices and capturing spreads.
According to the lawsuit, when BCH launched, users could only place buy orders—not sell orders—on the platform, causing prices to surge. Coinbase allegedly halted trading minutes after the announcement, allowing insiders with advance knowledge to sell BCH at peak prices for massive gains.
“Coinbase’s goal was to suppress BTC prices, inflate BCH prices, encourage more trading, and boost its own profits.” plaintiffs alleged.
The lawsuit also claimed BCH prices briefly spiked to $9,000 on Coinbase, after which Coinbase erased that price history.
More recently, Coinbase’s close ties with the government have stirred fresh controversy.
In June 2020, TheBlock reported that the U.S. Drug Enforcement Administration (DEA) and Internal Revenue Service (IRS) were interested in purchasing CoinbaseAnalytics’ blockchain analysis tools from Coinbase to combat crypto-related crime.
Investor backlash was immediate, with many users leaving Coinbase.
According to BeInCrypto on June 11, users withdrew over $200 million from Coinbase after the government deal was revealed. Coinbase insisted it wouldn’t share sensitive user data with authorities, but few seemed convinced.
For Coinbase, regulatory compliance brings both liberation and constraints.
Founded in June 2012, Coinbase has witnessed the birth, growth, downturns, and booms of the crypto market. Today, as Bitcoin gains increasing acceptance among institutional investors, Coinbase chooses to enter the capital markets. Cryptocurrency is no longer just geeks’ self-indulgence—it has become an undeniable financial ecosystem.
*TechFlow reminds investors to beware of high-price risks. The views expressed in this article do not constitute investment advice.
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