Coinbase Raising $1.5B Through Senior Note Sale

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In Brief
  • Coinbase announced that it would be raising $1.5 billion in Senior Notes through a private offering.

  • However, Coinbase also acknowledged that it is bound by US legislation to limit the clientele to whom it can offer these notes.

  • Despite Coinbase’s efforts to adhere to existing securities laws, the exchange has recently come under scrutiny from the SEC.

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Coinbase announced that it would be raising $1.5 billion in senior notes through a private offering. 

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Subject to market conditions and other factors, the notes, unconditionally guaranteed by Coinbase, Inc., will be due 2028 and 2031. Meanwhile, the interest rate, redemption provisions, and other terms will be negotiated between Coinbase and the initial buyers.

Coinbase said the capital raise represented an opportunity “to bolster our already-strong balance sheet with low-cost capital.” It said it will use the proceeds from the offering for general corporate purposes. These may include continued investments in product development, or potential investments in or acquisitions of other companies, products, or technologies. 

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However, Coinbase also acknowledged that it is bound by US legislation to limit the clientele to whom it can offer these notes. The notes and the related guarantee can only be offered and sold to qualified institutional buyers, due to Rule 144A under the Securities Act of 1933. Additionally, only non-Americans outside the United States can purchase the notes, pursuant to Regulation S under the Securities Act. 

Coinbase Lend under fire

Yet, despite Coinbase’s efforts to adhere to existing securities laws, the exchange has recently come under scrutiny from the SEC. The Securities and Exchange Commission issued a warning to Coinbase against launching a product that would allow consumers to earn interest on their crypto holdings. 

The Coinbase Lend project would allow its clients the ability for interesting earning on their crypto holdings. In the lead up to the launch of this project, the exchange said it has remained proactive in complying with regulation. However, Coinbase said it received a Wells notice, meaning the SEC would bring an enforcement action if the company rolls out its Lend product.

Coinbase expressed confusion over the warning and replied to the regulator asking for further clarification. Chief Legal Officer Paul Grewal said that they needed a better understanding before they knew how to react appropriately. “They’ve offered us the chance to submit a written defense of Lend, but that would be futile when we don’t know the reasons behind the SEC’s concerns,” Grewal explained

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Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage. He can best be described as an optimistic center-left skeptic.

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