Who Bought Coinbase?

Who Bought Coinbase?

If you've been wondering who bought Coinbase, you're not alone. Other investors have jumped on the bandwagon too. We've looked at Fred Ehrsam's ARK Innovation and Brian Armstrong's Jupiter Asset Management. But do any of these investors have a direct stake in the company? Let's take a closer look. Listed below are their names and companies. What do they have in common?

Fred Ehrsam

The IPO of Coinbase on Wednesday valued the company at $99.6 billion. Founded in 2012, the company had a rocky start as the value of bitcoin was only $6. But over two years, it has become one of the biggest names in the cryptocurrency industry and boasts over 600 employees. It has also been described as a "watershed moment" in the cryptocurrency space, with investors warning that there are risks and potential for government regulation. In 2017, Ehrsam left Coinbase but remains on its board, and owns approximately 6% of the company's stock. As of the end of the first quarter of 2021, the company has reported up to $1.8 billion in revenue and about $800 million in net income. It has 56 million users.

The stock has been down almost 80% since its April 2021 IPO, and it has been a consistent seller for Ehrsam. Ehrsam, a former Coinbase co-founder, is now a board member and managing partner of Paradigm, which owns 3.6 million shares. But while Ehrsam is now in the green on his recent purchases, he remains in the red on his Coinbase shares.

ARK Innovation

Investors in ARK Innovation and ARK Fintech Innovation ETFs bought 33,092 and 282,894 shares, respectively, of Coinbase. At Thursday's closing price, the purchases value the company at $110 million. Those funds are up by more than 166% in the past year. Coinbase's steep drop echoes a number of factors, including the weakening cryptocurrency market and the decline in investor interest in speculative assets.

The exchange-traded fund, ARK Innovation, holds shares of 45 companies. While it holds a large position in Coinbase, its stake is still relatively modest compared to its holdings yesterday. Cathie Wood, an investor with the Cathie's Ark fund, has sold 170,000 shares of Coinbase, which is a relatively small percentage of its total holdings. Wood has been a vocal critic of the company, including taking jabs at GM in past interviews.

The funds have also invested in Tesla, another company focused on cryptocurrencies. But the Ark funds also sold some of their Tesla shares. The acquisition of Coinbase by Cathie Wood's company will give them an indirect exposure to the cryptocurrency market. In March, Wood talked up Tesla in her book, and last year she forecasted that its share price would hit US$3,000 by 2025. The move comes a week after she purchased a majority of the company's stock.

Brian Armstrong

Coinbase is the largest cryptocurrency exchange in the United States and was the first major cryptocurrency focused company to go public. CEO Brian Armstrong has recently become the latest cryptocurrency executive to buy a luxury home. Another CEO, Jonathan Yantis, bought a 70-acre estate outside Denver for $12.5 million. But, how much is Brian Armstrong worth? The company's IPO valuation is not enough to justify buying a luxury home, but Armstrong certainly can afford to live the life of luxury.

Armstrong's background in economics made him think that cryptocurrencies weren't much better than Monopoly money. He was struck by the unfairness of global financial systems while living in Buenos Aires, where hyperinflation was eating away at the wealth of the poorest. The entrepreneur went on to co-found Paradigm, an investment firm that recently announced a $2.5 billion venture fund. But that doesn't explain his motivation to purchase Coinbase...

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