September 24, 2023

Coinbase studies subdued passion in debt buyback adjusts be offering

Coinbase’s announcement on Aug. 21 disclosed that their buyback program, initiated earlier this month, has garnered slightly above $50 million in bond tenders.

As a response, the exchange has increased its offering on the 3.625% Senior Notes maturing in 2031 from 64.5 cents to 67.5 cents on the dollar in a recent release from Coinbase.

Debt before the storm

Coinbase shared the early tender results of its offer made on Aug. 7 to purchase in cash up to $150 million, excluding unpaid interest of its Senior Notes due in 2031. The results of their program fell $100 million short, where the total raised is currently sitting at $50,034,000.

Back in September 2021, a sum of $1 billion in Coinbase 3.625% Senior Notes, set to mature in 2031, made their debut just before the advent of the cryptocurrency bear market, trading at nearly par value.

Later it was outlined in their filing with the United States Securities and Exchange Commission (SEC) in May 2022 that Coinbase cautioned that digital assets belonging to users and held on the platform could potentially become subject to bankruptcy proceedings, thereby being treated as “unsecured creditors.” These risk factors are commonly disclosed in SEC filings for publicly traded companies. Similar scenarios, such as those involving FTX and Celsius, have demonstrated that unsecured creditors often retrieve only a fraction of their initial assets.

In December 2022, the notes experienced an unprecedented drop, plummeting to below 50 cents on the dollar. This decline coincided with a cautionary statement from Coinbase CEO Brian Armstrong, who highlighted the potential for a 50% revenue decline due to the prevailing cryptocurrency downturn. Since then, their value has undergone a partial recovery, reaching approximately 64.5 cents on the dollar.

Coinbase continues to beat market expectations

Although this announcement highlighted subdued interest, it is worth noting that despite recent allegations from the SEC, the company reported stronger numbers than many expected. 

On Aug. 3, the company’s Q2 earnings showed that in the second quarter, the crypto exchange ranked second in trading volume after Binance, recorded a total revenue of $707.9 million, which, although was a decrease from the previous quarter’s $772.5 million and the $808.3 million reported in the same period last year, showed an adjusted EBITDA of $194 million.

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