Coinbase

Coinbase is a digital currency exchange headquartered in San Francisco, California. They broker exchanges of Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Tezos, and many others, with fiat currencies in approximately 32 countries, and bitcoin transactions and storage in 190 countries worldwide.

Coinbase, Inc.
Type of businessPrivate
FoundedJune 2012 (2012-06)
HeadquartersSan Francisco, California, U.S.
Area served32 countries
Founder(s)Brian Armstrong
Fred Ehrsam
Key peopleBrian Armstrong (Chief Executive Officer & Co-Founder)[1]
Asiff S Hirji (President & Chief Operating Officer)[1]
Alesia Jeanne Haas (Chief Financial Officer)[1]
Balaji S Srinivasan (Chief Technology Officer)[1]
Emilie Choi (Vice president of Corporate & Business Development)[1]
Eric Scro (Vice president of Finance)[1]
Rachael Horwitz (Vice president of Communications)[1]
ProductsBitcoin, Bitcoin Cash, Ethereum, Litecoin, exchange of digital assets
Revenue US$1 billion (2017)[2]
Employees1,123 (2019)[3]
URLwww.coinbase.com
Alexa rank 956 (Global, July 2019)[4]
Users13,300,000 (November 2017)[5]

History

Coinbase was founded in June 2012 by Brian Armstrong and Fred Ehrsam.[6][7] Blockchain.info co-founder Ben Reeves was part of the original founding team but later parted ways with Armstrong due to a difference in how the Coinbase wallet should operate.[8] The remaining founding team enrolled in the Summer 2012 Y Combinator startup incubator program. In October 2012, the company launched the services to buy and sell bitcoin through bank transfers.[9] In May 2013, the company received a US$5 million Series A investment led by Fred Wilson from the venture capital firm Union Square Ventures.[10] In December 2013, the company received a US$25 million investment, from the venture capital firms Andreessen Horowitz, Union Square Ventures (USV), and Ribbit Capital.[11]

In 2014, the company grew to one million users, acquired the blockchain explorer service Blockr and the web bookmarking company Kippt, secured insurance covering the value of bitcoin stored on their servers, and launched the vault system for secure bitcoin storage.[12][13][14] Throughout 2014, the company also formed partnerships with Overstock, Dell, Expedia, Dish Network, and Time Inc. allowing those firms to accept bitcoin payments.[15][16][17][18] The company also added bitcoin payment processing capabilities to the traditional payment companies Stripe, Braintree, and PayPal.[19]

In January 2015, the company received a US$75 million investment, led by Draper Fisher Jurvetson, the New York Stock Exchange, USAA, and several banks.[20] Later in January, the company launched a U.S.-based bitcoin exchange for professional traders called Coinbase Exchange.[21] Coinbase began to offer services in Canada in 2015,[22] but in July 2016, Coinbase announced it would halt services in August after the closure of their Canadian online payments service provider Vogogo.

In May 2016, the company rebranded the Coinbase Exchange, changing the name to Global Digital Asset Exchange (GDAX).[23] In July 2016, they added retail support for Ether.[24]

In January and then March 2017, Coinbase obtained the BitLicense and licensed to trade in Ethereum and Litecoin from the New York State Department of Financial Services (DFS).[25][26] In November 2017, Coinbase was ordered by the US Internal Revenue Service to report any users who had at least $20,000 in transactions in a year.[27]

Coinbase listed Bitcoin Cash on December 19, 2017 and the coinbase platform experienced price abnormalities that led to an insider trading investigation.[28]

On February 23, 2018, Coinbase told approximately 13,000 affected customers that the company would be providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013 to 2015 to the IRS within 21 days.

On April 5, 2018, Coinbase announced that it has formed an early-stage venture fund, Coinbase Ventures, focused on investment into blockchain- and cryptocurrency-related companies.[29][30]

On May 16, 2018, Coinbase Ventures announced its first investment in Compound Labs,[31] a start-up building Ethereum smart contracts similar to money markets.

In August 2018, Amazon cloud executive Tim Wagner joined Coinbase as vice president of engineering.[32]

In January 2019 Coinbase stopped all trading on Ethereum Classic due to suspicion regarding an attack on the network.[33]

In February 2019, Coinbase announced that it had acquired "blockchain intelligence platform" Neutrino, an Italy-based startup, for an undisclosed price.[34] The acquisition raised concern among some Coinbase users[35] based on Neutrino founders' connection to the Hacking Team, which has been accused of providing internet surveillance technology to governments with poor human rights records.[36] On March 4, 2019, Coinbase CEO Brian Armstrong said his company "did not properly evaluate" the deal from a due diligence perspective and thus any Neutrino staff who previously worked at Hacking Team "will transition out of Coinbase."[37]

In April 2019, a UK corporate filing stated that Coinbase's non-U.S. revenue grew 20% to €153 million (U.S.$173 million) in 2018 resulting in a net profit of €6.6 million.[38] Coinbase UK CEO Zeeshan Feroz said the company's non-U.S. operations accounted for nearly one-third of the company's overall revenue and Reuters estimated that the company's global revenue totaled "around $520 million" in 2018.[39]

In August 2019, Coinbase announced that it was targeted by a sophisticated hacking attack attempt in mid-June. This reported attack used spear-phishing and social engineering tactics (including sending fake e-mails from compromised email accounts and created a landing page at the University of Cambridge) and two Firefox browser zero-day vulnerabilities. One of the Firefox vulnerabilities could allow an attacker to escalate privileges from JavaScript on a browser page (CVE-2019–11707) and the second one could allow the attacker to escape the browser sandbox and execute code on the host computer (CVE-2019–11708). Coinbase's security team detected and blocked the attack, the network was not compromised, and no cryptocurrency was stolen.[40][41][42]

Products

Coinbase has two core products: a Global Digital Asset Exchange (GDAX) for trading a variety of digital assets on its professional asset trading platform, and a user-facing retail broker of Bitcoin, Bitcoin Cash, Ether, Ethereum Classic, and Litecoin for fiat currency.[24] It also offers an API for developers and merchants to build applications and accept payments in both digital currencies. As of 2018, the company offered buy/sell trading functionality in 32 countries,[43] while the cryptocurrency wallet was available in 190 countries worldwide.[44] On March 26, 2018, Coinbase announced their intention to add support for ERC-20 tokens.[45]

Complaints

Coinbase CEO Bryan Armstrong was criticized on Twitter in January 2018 for creating excessive transaction demand on the Bitcoin network, in what some users referred to as "spamming the network."

On February 16, 2018, Coinbase admitted that some customers were overcharged in error for credit and debit purchases of cryptocurrencies. The problem was initiated when banks and card issuers changed the merchant category code (MCC) for cryptocurrency purchases earlier this month. This meant that cryptocurrency payments would now be processed as "cash advances", meaning that banks and credit card issuers could begin charging customers cash-advance fees for cryptocurrency purchases. Any customers who purchased cryptocurrency on their exchange between January 22 and February 11, 2018 could have been affected. At first, Visa blamed Coinbase, telling the Financial Times on February 16 that it had "not made any systems changes that would result in the duplicate transactions cardholders are reporting." However, the latest statement from Visa and Worldpay on the Coinbase blog clarifies: "This issue was not caused by Coinbase."[46]

In March 2018, Quartz reported that the number of monthly customer complaints against Coinbase jumped more than 100% in January of that year, to 889, citing official Consumer Financial Protection Bureau data, with more than 400 of those categorized as "money was not available when promised".[47]

See also

References
  1. "Coinbase Inc: Company Profile - Bloomberg". Bloomberg. Bloomberg L.P. Retrieved May 6, 2018.
  2. "Bitcoin exchange Coinbase reportedly made more than $1 billion in revenues last year". Business Insider. Retrieved May 6, 2018.
  3. "Coinbase company profile". Craft. September 4, 2019.
  4. "Coinbase.com Site Overview". Alexa.com. Alexa Internet. Retrieved July 19, 2019.
  5. Cheng, Evelyn (November 27, 2017). "Bitcoin exchange Coinbase has more users than stock brokerage Schwab". CNBC.
  6. Ludwig, Sean (February 8, 2013). "Y Combinator-backed Coinbase now selling over $1M Bitcoins per month". VentureBeat. Retrieved May 20, 2018.
  7. "Dish Network Says It Will Accept Bitcoin". The New York Times. Retrieved July 1, 2014.
  8. "The Fierce Battle for the Soul of Bitcoin". WIRED. March 26, 2014.
  9. Ludwig, Sean (February 8, 2013). "Y Combinator-backed Coinbase now selling over $1M Bitcoins per month". VentureBeat.
  10. Needleman, Sarah E. (May 7, 2013). "Coinbase Nabs $5M in Biggest Funding for Bitcoin Startup". The Wall Street Journal. Retrieved October 10, 2014.
  11. Alex Williams (December 12, 2013). "Coinbase Raises $25M Led By Andreessen Horowitz To Build Its Bitcoin Wallet And Merchant Services". TechCrunch. Retrieved December 13, 2013.
  12. Cutler, Kim-Mai (May 6, 2014). "Coinbase Acquires YC-Backed Kippt To Beef Up Its Product, Design Talent". TechCrunch.
  13. Cutler, Kim-Mai (August 18, 2014). "Coinbase Acquires Blockchain Explorer Blockr.io".
  14. Knight, Shawn (September 1, 2014). "Coinbase has been insuring Bitcoin deposits for nearly a year". TechSpot.
  15. Burns, Matt (December 21, 2013). "Overstock.com partners with Coinbase and starts accepting bitcoins as payment". TechCrunch. Retrieved January 10, 2014.
  16. Kharif, Olga. "Expedia to Accept Bitcoins for Online Hotel Bookings". Bloomberg. Retrieved September 28, 2014.
  17. "Expedia.com Now Accepts Bitcoin to Give Travelers More Choice and Flexibility in Hotel Payments". Bloomberg. June 11, 2014. Retrieved September 28, 2014.
  18. Wilhelm, Alex (July 18, 2014). "Dell Now Accepts Bitcoin For All Online U.S. Purchases". TechCrunch. Retrieved July 24, 2014.
  19. Del Rey, Jason (March 27, 2014). "Stripe Merchants Will Soon Be Able to Accept Bitcoin Payments". Recode.
  20. Vigna, Paul; Casey, Michael (January 20, 2015). "Coinbase raises 75 million in funding round". Wall Street Journal.
  21. Bensinger, Greg (January 25, 2015). "First U.S. Bitcoin Exchange Set to Open". Wall Street Journal.
  22. "Coinbase launches retail bitcoin service in Singapore, Canada". Reuters. September 2, 2015. Retrieved August 23, 2019.
  23. "GDAX – Trusted Digital Asset Exchange". GDAX. Archived from the original on June 3, 2017. Retrieved June 7, 2017.
  24. Tepper, Fitz (July 21, 2016). "Coinbase is adding support for Ethereum". TechCrunch. Retrieved July 23, 2016.
  25. Suarez, Juan (January 17, 2017). "Coinbase obtains the Bitlicense". Coinbase. Retrieved June 10, 2017.
  26. "DFS authorizes Coinbase, Inc. to provide additional virtual currency products and services". New York State Department of Financial Services. March 22, 2017.
  27. "Coinbase ordered to report 14,355 users to the IRS". The Verge. Retrieved November 29, 2017.
  28. Osipovich, Alexander (December 20, 2017). "Coinbase may have given away its own Bitcoin Cash surprise". TechCrunch. Retrieved November 2, 2019.
  29. Choi, Emilie (April 5, 2018). "Introducing Coinbase Ventures". The Coinbase Blog. Retrieved November 11, 2018.
  30. Rooney, Kate (April 5, 2018). "Bitcoin exchange Coinbase launches early-stage venture fund". CNBC. Retrieved November 11, 2018.
  31. "Coinbase's first investment, Compound, earns you interest on crypto". Techcrunch. May 16, 2018.
  32. Sheetz, Michael (August 6, 2018). "Amazon cloud executive Tim Wagner joins crypto platform Coinbase". CNBC. Retrieved August 7, 2018.
  33. "Coinbase freezes Ethereum Classic trading following attack". TechCrunch. Retrieved January 8, 2019.
  34. Russell, Jon. "Coinbase buys blockchain intelligence startup to boost security and new asset discovery". TechCrunch. Retrieved March 7, 2019.
  35. Franceschi-Bicchierai, Lorenzo; Pearson, Jordan; Maiberg, Emanuel (February 26, 2019). "Former Hacking Team Members Are Now Spying on the Blockchain for Coinbase". Motherboard. Retrieved March 7, 2019.
  36. Currier, Cora; Marquis-Boire, Morgan (July 7, 2015). "A Detailed Look at Hacking Team's Emails About Its Repressive Clients". The Intercept. Retrieved March 7, 2019.
  37. Armstrong, Brian (March 5, 2019). "Living up to our values and the Neutrino acquisition". The Coinbase Blog. Retrieved March 7, 2019.
  38. Field, Matthew (April 15, 2019). "Coinbase UK makes £130m but growth slows as Bitcoin bubble bursts". The Telegraph. Retrieved April 18, 2019.
  39. Wilson, Tom (April 18, 2019). "Big corporates back crypto 'plumbing' despite currency caution". Reuters. Retrieved April 18, 2019.
  40. Orcutt, Mike (August 8, 2019). "An attempted heist at Coinbase was scary good, even though it failed". MIT Technology Review. Retrieved August 22, 2019.
  41. Nichols, Shaun (June 20, 2019). "Digi-dosh exchange Coinbase: Someone tried to pwn our staff via this week's Firefox zero-day security hole". The Register. Retrieved August 22, 2019.
  42. Martin, Philip (August 8, 2019). "Responding to Firefox 0-days in the wild". Retrieved August 13, 2019.
  43. "Insurers are getting in on the crypto game with bitcoin heist cover". Business Insider. Retrieved February 20, 2018.
  44. Reisinger, Don (September 11, 2014). "Bitcoin platform Coinbase expands to 13 European countries". CNet News.
  45. "Adding ERC20 Support to Coinbase". The Coinbase Blog. March 26, 2018. Retrieved April 27, 2018.
  46. "Update: VISA issuers and Mastercard make it harder to buy Bitcoin and other cryptocurrencies". TechCrunch. February 5, 2018. Retrieved November 29, 2018.
  47. Detrixhe, John (March 5, 2018). "Coinbase's customer complaints more than doubled in January". Quartz. Retrieved March 6, 2018.
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