Item 1. Financial Statements

152K characters. Original on sec.gov · Markdown

Item 1. Financial Statements

Coinbase Global, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(unaudited)


	March 31,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	6,711,400	$	5,139,351
Restricted cash	33,499		22,992
Customer custodial funds	5,201,906		4,570,845
Safeguarding customer crypto assets	329,506,477		192,583,060
USDC	860,669		576,028

Loan receivables	529,143		193,425
Crypto assets held as collateral	106,610		—
Crypto assets borrowed	231,348		45,212
Accounts receivable, net	280,357		168,290
Other current assets	379,537		286,643
Total current assets	343,840,946		203,585,846
Crypto assets held for investment	1,522,328		330,610
Deferred tax assets	879,671		1,272,233


Goodwill	1,139,670		1,139,670

Other non-current assets	653,862		654,594

Total assets	$	348,036,477	$	206,982,953
Liabilities and Stockholders’ Equity
Current liabilities:
Customer custodial cash liabilities	$	5,201,906	$	4,570,845
Safeguarding customer crypto liabilities	329,506,477		192,583,060

Crypto asset borrowings	272,805		62,980
Obligation to return collateral	315,090		1,063
Accrued expenses and other current liabilities	438,321		496,183

Total current liabilities	335,734,599		197,714,131


Long-term debt	4,225,014		2,979,957
Other non-current liabilities	5,870		7,216
Total liabilities	339,965,483		200,701,304
Commitments and contingencies (Note 19)
Preferred stock, $0.00001 par value; 500,000 shares authorized and zero shares issued and outstanding at each of March 31, 2024 and December 31, 2023	—		—
Stockholders’ equity:
Class A common stock, $0.00001 par value; 10,000,000 shares authorized at March 31, 2024 and December 31, 2023; 199,449 and 195,192 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	2		2
Class B common stock, $0.00001 par value; 500,000 shares authorized at March 31, 2024 and December 31, 2023; 45,922 and 46,856 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		—
Additional paid-in capital	4,550,408		4,491,571
Accumulated other comprehensive loss	(37,496)		(30,270)
Retained earnings	3,558,080		1,820,346
Total stockholders’ equity	8,070,994		6,281,649
Total liabilities and stockholders’ equity	$	348,036,477	$	206,982,953

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Coinbase Global, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)


	Three Months Ended March 31,
		2024		2023
Revenue:
Net revenue		$	1,587,677	$	736,398
Other revenue		49,893		36,131
Total revenue		1,637,570		772,529
Operating expenses:
Transaction expense		217,407		96,369
Technology and development		357,863		358,031
Sales and marketing		98,585		63,976
General and administrative		287,236		248,761
Gains on crypto assets held for operations, net		(86,358)		—
Crypto asset impairment, net		—		17,962
Restructuring		—		144,489
Other operating expense (income), net		2,376		(33,184)
Total operating expenses		877,109		896,404
Operating income (loss)		760,461		(123,875)
Interest expense		19,071		21,536
Gains on crypto assets held for investment, net		(650,429)		—
Other (income) expense, net		(45,605)		20,265
Income (loss) before income taxes		1,437,424		(165,676)
Provision for (benefit from) income taxes		261,179		(86,780)
Net income (loss)		$	1,176,245	$	(78,896)
Net income (loss) attributable to common stockholders:
Basic		$	1,175,479	$	(78,896)
Diluted		$	1,178,079	$	(78,896)
Net income (loss) per share attributable to common stockholders:
Basic		$	4.84	$	(0.34)
Diluted		$	4.40	$	(0.34)
Weighted-average shares of common stock used to compute net income (loss) per share attributable to common stockholders:
Basic		242,793		231,489
Diluted		267,945		231,489

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Coinbase Global, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)


	Three Months Ended March 31,
	2024		2023
Net income (loss)	$	1,176,245	$	(78,896)
Other comprehensive income (loss):
Translation adjustment	(6,898)		12,513
Income tax effect	328		2,316
Translation adjustment, net of tax	(7,226)		10,197
Comprehensive income (loss)	$	1,169,019	$	(68,699)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Coinbase Global, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(In thousands)


			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings
	Common Stock
		Shares		Amount						Total
























Balance at January 1, 2024		242,048		$	2		$	4,491,571		$	(30,270)	$	1,820,346	$	6,281,649
Cumulative-effect adjustment due to the adoption of Accounting Standards Update 2023-08, net of tax		—		—			—			—		561,489		561,489




Issuance of common stock upon settlement of stock awards, net of shares withheld		999		—			(117,225)			—		—		(117,225)

Issuance of common stock upon exercise of stock options, net of repurchases		2,324		—			44,603			—		—		44,603

Stock-based compensation expense		—		—			235,569			—		—		235,569


Purchase of capped calls		—		—			(104,110)			—		—		(104,110)
Comprehensive loss		—		—			—			(7,226)		—		(7,226)
Net income		—		—			—			—		1,176,245		1,176,245
Balance at March 31, 2024		245,371		$	2		$	4,550,408		$	(37,496)	$	3,558,080	$	8,070,994

Balance at January 1, 2023		230,866		$	2		$	3,767,686		$	(38,606)	$	1,725,475	$	5,454,557
Issuance of equity instruments as consideration for business combination		961		—			44,995			—		—		44,995
Issuance of common stock upon settlement of stock awards, net of shares withheld		1,955		—			(62,497)			—		—		(62,497)
Issuance of common stock upon exercise of stock options, net of repurchases		713		—			9,566			—		—		9,566
Stock-based compensation expense		—		—			212,982			—		—		212,982
Stock-based compensation expense recognized in relation to restructuring		—		—			84,042			—		—		84,042
Comprehensive income		—		—			—			10,197		—		10,197
Net loss		—		—			—			—		(78,896)		(78,896)
Balance at March 31, 2023		234,495		$	2		$	4,056,774		$	(28,409)	$	1,646,579	$	5,674,946

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Coinbase Global, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities
Net income (loss)	$	1,176,245	$	(78,896)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	29,327		41,208


Stock-based compensation expense	224,504		198,860
Restructuring stock-based compensation expense	—		84,042

Deferred income taxes	214,361		(84,169)

Unrealized (gain) loss on foreign exchange	(992)		8,428
Non-cash lease expense	2,793		12,215

Fair value gains on crypto assets borrowed and borrowings	(2,944)		(3,199)
Gains on crypto assets held as investments and operations	(736,787)		(84,685)

Realized loss on crypto futures contract	—		43,339
Crypto asset impairment expense (prior to ASU 2023-08)	—		28,935


Other operating activities, net	(21,020)		(18,327)
Net changes in operating assets and liabilities	(474,002)		315,327
Net cash provided by operating activities	411,485		463,078
Cash flows from investing activities




Fiat loans originated	(416,405)		(65,611)
Proceeds from repayment of fiat loans	254,600		31,779


Purchase of crypto assets held for investment	(135)		(53,223)
Sale of crypto assets held for investment	51,659		110,776
Settlement of crypto futures contract	—		(43,339)
Other investing activities, net	(15,400)		(6,462)
Net cash used in investing activities	(125,681)		(26,080)
Cash flows from financing activities
Issuance of common stock upon exercise of stock options, net of repurchases	44,216		8,873
Taxes paid related to net share settlement of equity awards	(117,225)		(62,497)
Proceeds received under the ESPP	5,460		4,562
Customer custodial cash liabilities	645,938		528,959
Issuance of convertible senior notes, net	1,246,025		—

Purchase of capped calls	(104,110)		—

Fiat received as collateral	340,296		3,117
Fiat received as collateral returned	(132,879)		(2,403)


Other financing activities	—		(20,482)
Net cash provided by financing activities	1,927,721		460,129
Net increase in cash, cash equivalents, and restricted cash	2,213,525		897,127
Effect of exchange rates on cash, cash equivalents, and restricted cash	(21,186)		11,377
Cash, cash equivalents, and restricted cash, beginning of period	9,555,448		9,429,646
Cash, cash equivalents, and restricted cash, end of period	$	11,747,787	$	10,338,150

Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	—	$	74
Cash paid during the period for income taxes	5,528		5,322
Operating cash outflows for amounts included in the measurement of operating lease liabilities	3,140		4,668

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

1. NATURE OF OPERATIONS

Coinbase, Inc. was founded in 2012. In April 2014, in connection with a corporate reorganization, Coinbase, Inc. became a wholly-owned subsidiary of Coinbase Global, Inc. (together with its consolidated subsidiaries, the “Company”). On April 14, 2021, the Company completed the direct listing of its Class A common stock on the Nasdaq Global Select Market (the “Direct Listing”).

The Company provides a trusted platform that serves as a compliant gateway to the onchain economy and enables customers to engage in a wide variety of activities, including discovering, trading, staking, storing, spending, earning, and using their crypto assets in both proprietary and third-party product experiences enabled by access to decentralized applications. The Company offers (i) consumers their primary financial account for the cryptoeconomy, (ii) institutions a full-service prime brokerage platform with access to deep pools of liquidity across the crypto marketplace, and (iii) developers a suite of products granting access to the Company’s ecosystem.

The Company is a remote-first company. Accordingly, the Company does not maintain a headquarters or principal executive offices. Substantially all of the Company’s executive team meetings are held virtually, with meetings occasionally held in-person at locations that are either not in the Company’s offices or in various of the Company’s offices distributed around the world. The Company holds all of its stockholder meetings virtually.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and preparation

The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries – entities in which the Company holds, directly or indirectly, more than 50% of the voting rights, or where it exercises control. The Condensed Consolidated Financial Statements are unaudited but have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) on the same basis as the audited Consolidated Financial Statements, and in management’s opinion, reflect all adjustments, consisting only of normal, recurring adjustments, that are necessary for the fair presentation of the Company’s Financial Statements. Preparation of the Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions in the Condensed Consolidated Financial Statements and notes thereto. Certain prior period amounts in the Condensed Consolidated Financial Statements have been reclassified to conform to the current period’s presentation. The unaudited Condensed Consolidated Results of Operations for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year or any other period and should be read in conjunction with the audited Consolidated Financial Statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on February 15, 2024 (the “Annual Report”).

There were no changes to the Company’s most significant estimates and assumptions, significant accounting policies, or recent accounting pronouncements that were disclosed in Note 2. Summary of Significant Accounting Policies to the audited Consolidated Financial Statements included in the Annual Report, other than as discussed below.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

Concentration of credit risk

The Company’s cash and cash equivalents, restricted cash, customer custodial funds, accounts receivable, loan receivables and deposits are potentially subject to concentration of credit risk. Cash and cash equivalents, restricted cash, and customer custodial funds are primarily placed with financial institutions which are of high credit quality. The Company invests cash and cash equivalents and customer custodial funds primarily in highly liquid, highly rated instruments which are uninsured. The Company may also have corporate deposit balances with financial institutions which exceed the Federal Deposit Insurance Corporation insurance limit of $250,000. The Company has not experienced losses on these accounts and does not believe it is exposed to any significant credit risk with respect to these accounts.

The Company also holds cash, restricted cash, and crypto assets at crypto asset trading venues, payment processors, and clearing brokers, and performs a regular assessment of these venues as part of its risk management process. As of March 31, 2024, the Company held $203.3 million at these venues, including $124.8 million in unrestricted cash, $63.6 million in crypto assets, and $14.9 million in restricted deposits. As of December 31, 2023, the Company held $93.5 million at these venues, including $88.8 million in unrestricted cash, an immaterial amount of crypto assets, and $4.7 million in restricted deposits.

The issuer of USDC reported that, as of March 31, 2024, underlying reserves were held in cash, short-duration U.S. Treasuries, and overnight U.S. Treasury repurchase agreements within segregated accounts for the benefit of USDC holders.

As of March 31, 2024 and December 31, 2023, the Company had five and three counterparties and four and three counterparties, respectively, who accounted for more than 10% of the Company’s recorded loan receivables and unrecorded loans receivable, respectively. As of both March 31, 2024 and December 31, 2023, the Company had two counterparties who accounted for more than 10% of the Company’s Accounts receivable, net. See Note 6. Collateralized Arrangements and Financing for details on collateralization of loan receivables.

During the three months ended March 31, 2024 and 2023, one counterparty accounted for more than 10% of total revenue in each period.

Crypto assets held

The Company holds crypto assets for investment and operating purposes, as well as borrowed crypto assets and crypto assets held as collateral.

Effective January 1, 2024, the Company adopted ASU No. 2023-08, Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”) using a modified retrospective approach. Upon adoption, the Company recognized a fair value adjustment on crypto assets held of $739.5 million and established a deferred tax liability of $177.9 million, for a net cumulative-effect adjustment of $561.5 million increasing retained earnings.

As a result of the adoption of ASU 2023-08, the Company introduced four new categories of crypto assets held in the Condensed Consolidated Balance Sheets based on their nature. This updated presentation aligns with the requirements of ASU 2023-08 and describes the purpose of the various types of crypto assets held by the Company.

Crypto assets held for investment

Crypto assets held for investment are primarily held as long-term holdings. The Company does not engage in regular trading of these crypto assets. The Company may loan crypto assets held for investment through Prime Financing. See Note 6. Collateralized Arrangements and Financing for additional details on Prime Financing. Crypto assets held for investment are initially recorded at cost and

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

are subsequently remeasured at fair value on a specific identification basis at the end of each reporting period, with changes in fair value recognized in net income. Fair value is measured using quoted crypto asset prices at the time of measurement within the Company’s principal market. Fair value gains and losses on Crypto assets held for investment are recognized within Gains on crypto assets held for investment, net in the Condensed Consolidated Statements of Operations. Cash flows from crypto asset investment purchases and sales are recorded in Net cash used in investing activities in the Condensed Consolidated Statements of Cash Flows.

Crypto assets held for operations

The Company may receive crypto assets as a form of payment for transaction revenue, blockchain rewards, custodial fee revenue, and other subscriptions and services revenue which are recorded in Crypto assets held for operations when received. Crypto assets received as a form of payment are converted to cash nearly immediately or are used timely to fulfill corporate expenses. Crypto assets held for operations are initially recorded at the transaction price of the crypto assets at contract inception and are subsequently remeasured at fair value on a first in first out basis at the end of each reporting period, with changes in fair value recognized in net income. Fair value is measured using quoted crypto asset prices at the time of measurement within the Company’s principal market. Fair value gains and losses on Crypto assets held for operations are recorded in Gains on crypto assets held for operations, net in the Condensed Consolidated Statements of Operations. Cash flows from crypto assets held for operations are recorded as Net changes in operating assets and liabilities in the Condensed Consolidated Statements of Cash Flows. Crypto assets held for operations are recorded in Other current assets in the Condensed Consolidated Balance Sheets.

Crypto assets borrowed

Crypto assets borrowed represent crypto assets borrowed from third parties to facilitate Prime Financing. Prior to the adoption of ASU 2023-08, crypto assets borrowed were designated as fair value hedges, and accounted for as hybrid instruments, with a liability host contract that contained an embedded derivative based on the changes in fair value of the underlying crypto asset. Contemporaneously with the adoption of ASU 2023-08, the Company dedesignated $62.9 million of crypto assets borrowed that previously qualified as fair value hedges against the corresponding crypto asset borrowing. There was a net zero impact of the cumulative fair value hedge basis adjustments that were reversed and recorded in Transaction expense. As of December 31, 2023, the cumulative amount of fair value hedging adjustment was $3.9 million.

Post dedesignation and ASU 2023-08 adoption, crypto assets borrowed by the Company, that have not been loaned out, are recorded in Crypto assets borrowed in the Condensed Consolidated Balance Sheets. Crypto assets borrowed are initially recorded at cost and are subsequently remeasured at fair value using the average costing method at the end of each reporting period, with changes in fair value recognized in net income. Fair value is measured using quoted crypto asset prices at the time of measurement within the Company’s principal market. Fair value gains and losses on Crypto assets borrowed are recorded within Transaction expenses. See Note 6. Collateralized Arrangements and Financing for further details on Crypto assets borrowed and Note 21. Supplemental Disclosures of Cash Flow Information for details on cash flows from crypto assets borrowed included in the supplemental schedule of non-cash investing and financing activities.

Crypto assets held as collateral

For loans receivable, the Company requires borrowers to pledge collateral on loans offered under Prime Financing. Crypto assets held as collateral are initially recorded at cost if the Company has the right to sell, pledge or rehypothecate and are subsequently remeasured at fair value using the specific identification method at the end of each reporting period, with changes in fair value recognized in net income. Fair value is measured using quoted crypto asset prices at the time of measurement within the Company’s principal market. Fair value gains and losses on Crypto assets held as collateral are recorded

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

in Transaction expenses. See Note 6. Collateralized Arrangements and Financing for additional details on crypto assets borrowed and Note 21. Supplemental Disclosures of Cash Flow Information for details on cash flows from Crypto assets held as collateral included in the supplemental schedule of non-cash investing and financing activities.

The following table presents the effects of the changes in presentation in the Condensed Consolidated Balance Sheets (in thousands):


	December 31, 2023
		Previously Reported		Adjustment		As Adjusted
Crypto assets held(1)		$	449,925	$	(449,925)	$	—
Crypto assets held for investment		—		330,610		330,610
Crypto assets held for operations		—		74,103		74,103
Crypto assets borrowed		—		45,212		45,212
		$	449,925	$	—	$	449,925

(1)No crypto assets held as collateral met the recognition criteria as of December 31, 2023.

Recent accounting pronouncements

There have been no new developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company’s Consolidated Financial Statements and footnote disclosures, from those disclosed in the Annual Report.

3. RESTRUCTURING

In January 2023, the Company announced and completed a restructuring impacting approximately 21% of the Company’s headcount as of December 31, 2022. The restructuring was intended to manage the Company’s operating expenses in response to the ongoing market conditions impacting the cryptoeconomy and ongoing business prioritization efforts. As a result, the Company recorded restructuring charges of $144.5 million, which included $84.0 million in stock-based compensation, $57.7 million in separation pay, and an immaterial amount of other personnel costs. There were no restructuring charges during the three months ended March 31, 2024.

4. ACQUISITIONS

Information on acquisitions completed during the periods presented is set forth below. The impact of these acquisitions was not considered material to the Condensed Consolidated Financial Statements for the periods presented, and pro forma financial information has not been provided.

One River Digital Asset Management, LLC

On March 3, 2023, the Company completed the acquisition of One River Digital Asset Management, LLC (“ORDAM”) by acquiring all issued and outstanding membership units of ORDAM. ORDAM is an institutional digital asset manager which is registered as an investment adviser with the SEC. The Company believes the acquisition aligns with the Company’s long-term strategy to unlock further opportunities for institutions to participate in the cryptoeconomy.

Prior to the acquisition, the Company held a minority ownership stake in ORDAM, which was accounted for as a cost method investment. In accordance with ASC Topic 805, Business Combinations, the acquisition was accounted for as a business combination achieved in stages under the acquisition method. Accordingly, the cost method investment was remeasured to fair value as of the acquisition date. As the fair value of the cost method investment was equal to its carrying value, no gain or loss on remeasurement was recorded on the acquisition date.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

The purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date with the excess recorded as goodwill. The goodwill balance was primarily attributed to the assembled workforce, market presence, synergies, and time-to-market advantages. The Company finalized the fair value valuation analysis of assets acquired and liabilities assumed and as a result no measurement period adjustments were recorded.

The total consideration transferred in the acquisition was $96.8 million, consisting of the following (in thousands):


Cash	$	30,830
Cash payable	1,005
Previously-held interest on acquisition date	20,000
Class A common stock of the Company	44,995
Total purchase consideration	$	96,830

Included in the purchase consideration was $6.0 million in cash and 119,991 shares of the Company’s Class A common stock that are subject to an indemnity holdback. The cash and shares subject to the indemnity holdback will be released 18 months after the closing date of the transaction.

The results of operations and the provisional fair values of the assets acquired and liabilities assumed have been recorded in the Condensed Consolidated Financial Statements as of the date of acquisition. The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):


Goodwill	$	65,764
Intangible assets, net	21,100
Other assets and liabilities, net	9,966
Net assets acquired	$	96,830

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands, except for years data):


	Fair Value		Useful Life at Acquisition (in years)
Licenses	$	1,100	Indefinite
Customer relationships	17,100		6
In-process research and development (“IPR&D”)	2,900		N/A

Customer relationships are amortized on a straight-line basis over their respective useful lives to general and administrative expense. The licenses have an indefinite useful life and will not be amortized. Management applied significant judgment in determining the fair value of intangible assets, which involved the use of estimates and assumptions with respect to forecasted revenues and expenses, and costs to recreate the IPR&D and obtain the licenses.

Total acquisition costs incurred were $2.6 million and were recorded in General and administrative expense in the Condensed Consolidated Statements of Operations during the year ended December 31, 2023.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

5. REVENUE

The following table presents revenue of the Company disaggregated by revenue source (in thousands):


	Three Months Ended March 31,
		2024		2023
Net revenue
Transaction revenue









Consumer, net(1)		$	935,212	$	329,152
Institutional, net		85,392		22,311
Other transaction revenue(1)		56,137		23,250
Total transaction revenue		1,076,741		374,713
Subscription and services revenue
Stablecoin revenue		197,317		198,898
Blockchain rewards		150,929		73,749

Interest and finance fee income(2)		66,663		43,313
Custodial fee revenue		32,341		17,043

Other subscription and services revenue(2)		63,686		28,682
Total subscription and services revenue		510,936		361,685
Total net revenue		1,587,677		736,398
Other revenue
Corporate interest and other income		49,893		36,131

Total other revenue		49,893		36,131
Total revenue		$	1,637,570	$	772,529

(1)During the first quarter of 2024, the Company reclassified Base and payment-related revenue from consumer, net to other transaction revenue. Prior period amounts have been reclassified to conform to current period presentation.

(2)During the first quarter of 2024, the Company reclassified Prime Financing fees earned from other subscription and services revenue to interest income, and renamed interest income to interest and finance fee income. Prior period amounts have been reclassified to conform to current period presentation.

Revenue by geographic location

In the table below are the revenues disaggregated by geography, based on domicile of the customers, as applicable (in thousands):


	Three Months Ended March 31,
		2024		2023
United States		$	1,353,450	$	686,769
International(1)		284,120		85,760
Total revenue		$	1,637,570	$	772,529

(1)No other individual country accounted for more than 10% of total revenue.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

6. COLLATERALIZED ARRANGEMENTS AND FINANCING

Loans and related collateral

The Company may lend crypto assets borrowed, crypto assets held for investment, crypto assets held for operations, corporate cash, and corporate USDC to eligible institutional customers through Prime Financing. Prime Financing lending arrangements may have open ended or fixed terms, with the exception of trade finance, where the Company enables customers to instantly invest in crypto assets without pre-funding their trade, which transactions are typically settled in one to three days. Crypto asset and fiat loans are recorded in Loan receivables in the Condensed Consolidated Balance Sheets. USDC loaned to customers does not meet derecognition criteria under ASC 860, Transfers and Servicing (“ASC 860”) as the borrower has an obligation to return the same financial assets (USDC) back to the Company in order to release the collateral pledged for the loan. This constitutes a form of continuing involvement with the USDC transferred and therefore the Company maintains effective control over the USDC. USDC loaned remains recorded in corporate USDC in the Condensed Consolidated Balance Sheets.

The following table summarizes the Company’s Prime Financing lending arrangements (in thousands):


	March 31,		December 31,
	2024		2023
Loan receivables
Trade finance receivables	$	122,817	$	—
Fiat loan receivables	210,185		171,196
Crypto asset loan receivables	196,141		22,229
Total loan receivables	$	529,143	$	193,425

Customer loans not meeting recognition criteria
USDC	$	268,345	$	205,645

Prime Financing loans are fully collateralized by a customer’s pledged crypto assets, USDC, or fiat, with collateral requirements ranging from 100% to 400% of the fair value of the loan.

The Company adheres to strict internal risk management and liquidation protocols for loan counterparty defaults, including restricting trading and withdrawals and liquidating assets in borrowers’ accounts as contractually permitted. If the value of the borrower’s eligible collateral falls below the required collateral requirement, the customer is obligated to deposit additional collateral up to the required collateral level. The Company continuously and systematically monitors the fair value of the related collateral assets pledged compared to the fair value of the related loan receivable, and requires additional collateral pursuant to the contractual terms of the loan agreements. Due to the collateral requirements the Company applies to its loans, the collateral maintenance process, and collateral being held on its own platform, the Company’s credit exposure is significantly limited and no allowance, write-offs or recoveries were recorded against loans receivable for the periods presented. The Company would recognize credit losses on these loans if there were a collateral shortfall and it is not reasonably expected that the borrower will replenish such a shortfall.

If the Company receives fiat collateral into a Coinbase controlled collateral wallet, the Company records the collateral in Cash and cash equivalents and a corresponding liability in Obligation to return collateral in the Condensed Consolidated Balance Sheets. If the Company receives USDC or crypto assets as collateral with contractual rights to sell, pledge, or rehypothecate the collateral, the Company records the collateral in corporate USDC or Crypto assets held as collateral, respectively, and a corresponding liability in Obligation to return collateral in the Condensed Consolidated Balance Sheets. Obligation to return collateral, if a crypto asset, is accounted for as a hybrid instrument, with a liability host contract that contains an embedded derivative based on the changes in the fair value of the underlying

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

crypto asset. The remeasurement of the crypto assets held as collateral and the obligation to return collateral are recorded net in Transaction expense.

If the Company does not obtain control or have the right to sell, pledge, or rehypothecate customer collateral, the collateral is recorded in Safeguarding customer crypto assets and Safeguarding customer crypto liabilities if the collateral is USDC or crypto assets and Customer custodial funds and Customer custodial cash obligations if the collateral is fiat, as the collateral is required to be held on the Company’s platform.

The Company’s Crypto assets held as collateral and Obligation to return collateral consisted of the following (in thousands, except units):


	March 31, 2024			December 31, 2023
	Units	Fair Value		Units	Fair Value
Crypto assets held as collateral
Bitcoin(1)	1,495	$	106,610	—	$	—
Total held as collateral		$	106,610		$	—

Obligation to return collateral
Fiat	N/A	$	208,480	N/A	$	1,063
Bitcoin	1,495	106,610		—	—
Total obligation to return collateral		$	315,090		$	1,063

Customer collateral pledged, not recognized	nm	$	1,578,643	nm	$	712,644

nm - not meaningful

(1) The cost basis of bitcoin held as collateral as of March 31, 2024 was $75.4 million.

The following table summarizes the reconciliation of Crypto assets held as collateral for the three months ended March 31, 2024 (in thousands):


	January 1, 2024		Cumulative Adjustment		Collateral Received		Collateral Returned		Gains(1)		Losses(1)		March 31, 2024


Crypto assets held as collateral	$	—	$	—	$	90,798	$	(15,374)	$	31,186	$	—	$	106,610

(1)No cumulative realized gains or losses occurred during the period.

Borrowings and related collateral

To facilitate Prime Financing, the Company may borrow crypto assets from third parties and records the associated liability in Crypto asset borrowings in the Condensed Consolidated Balance Sheets. Crypto asset borrowings that have not been loaned out are recorded in Crypto assets borrowed. Crypto asset borrowings are accounted for as hybrid instruments, with a liability host contract that contains an embedded derivative based on the changes in the fair value of the underlying crypto asset. See Note 13. Derivatives for additional information. As of March 31, 2024 and December 31, 2023, the weighted average annual fees on these borrowings were 2.3% and 2.0%, respectively. See Note 13. Derivatives, for additional details regarding Crypto asset borrowings.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

The following table summarizes the units, cost basis, and fair value of crypto assets borrowed (in thousands, except units) and the associated crypto asset borrowings:


	March 31, 2024					December 31, 2023
	Units	Cost Basis		Fair Value		Carrying Value
Crypto assets borrowed
Bitcoin	2,688	$	112,099	$	191,573	$	36,368
Ethereum	1,122	2,214		4,093		3,720
Solana	55,575	5,198		11,247		3,516
Other crypto assets(1)	nm	14,247		24,435		1,608
Total borrowed		$	133,758	$	231,348	$	45,212

Crypto asset borrowings
Bitcoin	3,040	$	128,417	$	216,703	$	50,679
Ethereum	5,601	10,655		20,420		7,059
Solana	55,575	5,198		11,247		3,513
Other crypto assets(1)	nm	14,248		24,435		1,729
Total borrowings		$	158,518	$	272,805	$	62,980

nm - not meaningful

(1)Includes various other crypto assets balances, none of which individually represented more than 5% of total crypto assets borrowed and crypto asset borrowings.

The following table summarizes the reconciliation of Crypto assets borrowed for the three months ended March 31, 2024 (in thousands):


			Additions				Dispositions
	January 1, 2024		Crypto Borrowings Originated		Crypto Loans Repaid		Crypto Borrowings Repaid		Crypto Loans Originated		Gains(1)		Losses(1)		March 31, 2024
Crypto assets borrowed	$	45,212	$	191,436	$	285,254	$	(77,451)	$	(301,168)	$	88,352	$	(287)	$	231,348

(1)No cumulative realized gains or losses occurred during the period.

Under the terms of the Company’s borrowing arrangements, the Company may be required to maintain a collateral to loan ratio and pledge fiat, USDC, or crypto assets for crypto asset borrowings. If the lender has the right to use the collateral, or if the collateral is fiat, the Company records the collateral pledged as a right to receive the collateral within Other current assets in the Condensed Consolidated Balance Sheets. USDC pledged as collateral to lenders, where the lender does not have the right to sell, pledge or rehypothecate, is not recorded as assets pledged as collateral as the pledged USDC does not meet the derecognition criteria under ASC 860. This collateral continues to be recorded in USDC in the Condensed Consolidated Balance Sheets.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

The Company’s corporate assets pledged as collateral against crypto borrowings consisted of the following (in thousands, except units):


	March 31, 2024			December 31, 2023
	Units	Fair Value		Units	Fair Value
Assets pledged as collateral
USDC	73,096,425	$	73,096	51,879,705	$	51,880

Fiat	N/A	—		N/A	1,191
Total pledged as collateral		$	73,096		$	53,071

Assets pledged as collateral not meeting derecognition criteria
USDC	221,827,262	$	221,827	29,577,339	$	29,577

7. ACCOUNTS RECEIVABLE, NET

Accounts receivable, net of allowance consisted of the following (in thousands):


	March 31,		December 31,
	2024		2023
Stablecoin revenue receivable	$	75,499	$	57,885
Customer fee revenue receivable(1)	32,078		23,603
In-transit customer receivables	88,472		42,562
Other accounts receivable(1)	118,263		66,799

Less: allowance for doubtful accounts receivable	(33,955)		(22,559)
Total accounts receivable, net	$	280,357	$	168,290

(1)Includes accounts receivable denominated in crypto assets. See Note 13. Derivatives for additional details.

8. CRYPTO ASSETS HELD FOR INVESTMENT

The following table summarizes the units, cost basis, and fair value of Crypto assets held for investment (in thousands, except units):


	March 31, 2024					December 31, 2023
	Units	Cost Basis		Fair Value		Carrying Value(1)

Bitcoin	9,183	$	270,438	$	654,655	$	126,614
Ethereum	96,086	190,447		350,267		129,131
Other crypto assets(2)	nm	213,922		517,406		74,865
Total held for investment		$	674,807	$	1,522,328	$	330,610

nm - not meaningful

(1)Recorded at impaired cost as of December 31, 2023.

(2)Includes various other crypto assets balances, none of which individually represented more than 5% of total Crypto assets held for investment.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

The following table summarizes the reconciliation of Crypto assets held for investment for the three months ended March 31, 2024 (in thousands):


									Transfers
	January 1, 2024		Cumulative Adjustment(1)		Additions(2)		Sales		From Operating		Crypto Loans Originated		Crypto Loans Repaid		Gains(3)		Losses(3)		March 31, 2024

Crypto assets held for investment	$	330,610	$	717,373	$	3,530	$	(59,726)	$	1,972	$	(123,081)	$	1,221	$	655,688	$	(5,259)	$	1,522,328

(1)Fair value adjustment on Crypto assets held for investment upon the Company’s adoption of ASU 2023-08.

(2)Additions represent purchases of and staking rewards earned on Crypto assets held for investment.

(3)Includes $17.0 million of cumulative realized gains from sales that occurred during the period and no cumulative realized losses.

The Company has $264.3 million of assets subject to selling restrictions recorded in Crypto assets held for investment. The selling restrictions are time-based and lift between 2024 and 2029. Restrictions do not consist of any other obligations.

9. CUSTOMER ASSETS AND LIABILITIES

The following table presents customers’ cash and safeguarded crypto positions (in thousands):


	March 31,		December 31,
	2024		2023
Customer custodial funds	$	5,201,906	$	4,570,845
Safeguarding customer crypto assets	329,506,477		192,583,060
Total customer assets	$	334,708,383	$	197,153,905

Customer custodial cash liabilities	$	5,201,906	$	4,570,845
Safeguarding customer crypto liabilities	329,506,477		192,583,060
Total customer liabilities	$	334,708,383	$	197,153,905

During the three months ended March 31, 2024 and 2023, no losses were incurred in connection with safeguarding customer crypto assets.

The following table sets forth the fair values of Safeguarding customer crypto assets as shown on the Condensed Consolidated Balance Sheets (in thousands, except percentages):


	March 31, 2024				December 31, 2023
	Fair Value		Percentage of Total		Fair Value		Percentage of Total
Bitcoin	$	156,528,307	48	%	$	89,864,637	47	%
Ethereum	62,873,141		19	%	40,200,059		21	%
Solana	24,304,478		7	%	12,906,278		6	%
Other crypto assets(1)	85,800,551		26	%	49,612,086		26	%
Total safeguarding customer crypto assets	$	329,506,477	100	%	$	192,583,060	100	%

(1)Includes various other crypto assets balances, none of which individually represented more than 5% of total Safeguarding customer crypto assets.

See Note 14. Fair Value Measurements, for additional details regarding the Safeguarding customer crypto assets and Safeguarding customer crypto liabilities.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

10. OTHER CURRENT AND NON-CURRENT ASSETS

Other current assets and other non-current assets consisted of the following (in thousands):


	March 31,		December 31,
	2024		2023
Other current assets
Crypto assets held for operations	$	150,630	$	74,103
Prepaid expenses	98,004		79,552
Assets pledged as collateral(1)	73,096		53,071
Income tax receivable	39,945		63,726
Other	17,862		16,191

Total other current assets	$	379,537	$	286,643

Other non-current assets

Strategic investments	$	346,902	$	343,045
Property and equipment, net	193,056		192,550
Intangible assets, net	79,755		86,422
Lease right of use assets	10,164		12,737
Deposits and other	23,985		19,840

Total other non-current assets	$	653,862	$	654,594

(1) See Note 6. Collateralized Arrangements and Financing for additional details.

Crypto assets held for operations

The following table summarizes the units, cost basis, and fair value of crypto assets held for operations (in thousands, except units):


	March 31, 2024					December 31, 2023
	Units	Cost Basis		Fair Value		Carrying Value(1)

Bitcoin	101	$	5,548	$	7,174	$	7,243
Ethereum	15,006	44,799		54,565		15,775
Solana	144,193	25,967		29,128		10,275
Other(2)	nm	48,077		59,763		40,810
Total held for operations		$	124,391	$	150,630	$	74,103

nm - not meaningful

(1)Recorded at impaired cost as of December 31, 2023.

(2)Includes various other crypto assets balances, none of which individually represented more than 5% of total Crypto assets held for operations.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

Measurement alternative investments

The changes in the carrying value of strategic investments accounted for under the measurement alternative are presented below (in thousands):


	March 31,		December 31,
	2024		2023
Carrying amount, beginning of period	$	330,346	$	315,285
Net additions(1)	4,527		60,979
Upward adjustments	43		62
Previously held interest in ORDAM (see Note 4)	—		(20,000)
Impairments and downward adjustments	(937)		(25,980)
Carrying amount, end of period	$	333,979	$	330,346

(1)Net additions include additions from purchases and reductions due to exits of strategic investments.

Upward adjustments, impairments, and downward adjustments from remeasurement of investments are recorded in Other (income) expense, net in the Condensed Consolidated Statements of Operations. As of March 31, 2024, cumulative upward adjustments for investments held as of that date were $5.0 million and cumulative impairments and downward adjustments were $127.6 million. As of December 31, 2023, cumulative upward adjustments for investments held as of that date were $4.9 million and cumulative impairments and downward adjustments were $127.0 million.

11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following (in thousands):


	March 31,		December 31,
	2024		2023
Accrued payroll and payroll related	$	117,309	$	224,237
Other accrued expenses	126,841		89,254
Income taxes payable	35,222		17,366


Accounts payable	26,825		39,294
Lease liabilities	8,820		10,902
Other payables(1)	123,304		115,130
Total accrued expenses and other current liabilities	$	438,321	$	496,183

(1)Includes other payables denominated in crypto assets. See Note 13. Derivatives for additional details.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

12. LONG-TERM DEBT

The components of long-term debt were as follows as of March 31, 2024 (in thousands, except percentages):



Long-term Debt	Effective Interest Rate		Principal Amount		Unamortized Debt Discount and Issuance Costs		Net Carrying Amount
0.50% 2026 Convertible Notes due on June 1, 2026	0.98	%	$	1,273,013	$	(13,890)	$	1,259,123
3.38% 2028 Senior Notes due on October 1, 2028	3.57	%	1,000,000		(7,810)		992,190
0.25% 2030 Convertible Notes due on April 1, 2030	0.55	%	1,265,000		(22,038)		1,242,962
3.63% 2031 Senior Notes due on October 1, 2031	3.77	%	737,457		(6,718)		730,739
Total			$	4,275,470	$	(50,456)	$	4,225,014

The components of long-term debt were as follows as of December 31, 2023 (in thousands, except percentages):



Long-term Debt	Effective Interest Rate		Principal Amount		Unamortized Debt Discount and Issuance Costs		Net Carrying Amount
0.50% 2026 Convertible Notes due on June 1, 2026	0.98	%	$	1,273,013	$	(15,378)	$	1,257,635
3.38% 2028 Senior Notes due on October 1, 2028	3.57	%	1,000,000		(8,218)		991,782
3.63% 2031 Senior Notes due on October 1, 2031	3.77	%	737,457		(6,917)		730,540
Total			$	3,010,470	$	(30,513)	$	2,979,957

2030 Convertible Notes

In March 2024, the Company issued an aggregate principal amount of $1.3 billion of convertible senior notes due 2030 (the “2030 Convertible Notes”), which included the full exercise by the initial purchasers of their option to purchase up to an additional $165.0 million aggregate principal amount of the 2030 Convertible Notes, pursuant to an indenture, dated March 18, 2024 between the Company and U.S Bank Trust Company, National Association, as trustee (the “Indenture”). The 2030 Convertible Notes were offered and sold in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The 2030 Convertible Notes are senior unsecured obligations of the Company and accrue interest of 0.25% per year payable semi-annually in arrears on April 1 and October 1 of each year, beginning on October 1, 2024. The 2030 Convertible Notes mature on April 1, 2030, unless earlier repurchased, redeemed or converted. The proceeds received of $1.2 billion, were net of a 1.5% original issue discount.

The 2030 Convertible Notes will be convertible into cash, shares of the Company’s Class A common stock, or a combination thereof, at the Company’s election at an initial conversion rate of 2.9981 shares of the Company’s Class A common stock per $1,000 principal amount of notes. This is equivalent to an initial conversion price of approximately $333.54 per share of the Company’s Class A common stock. The conversion rate and conversion price are subject to customary adjustments under certain circumstances in accordance with the terms of the Indenture.

The 2030 Convertible Notes will be convertible at the option of the holders after the calendar quarter ending on June 30, 2024, if the last reported sale price per share of Class A common stock exceeds 130% of the conversion price for each of at least 20 trading days, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter. Upon conversion, the Company may satisfy its conversion obligation by paying or delivering, as applicable, cash, shares of the Company’s Class A common stock or a combination of cash and shares of the

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

Company’s Class A common stock, at the Company’s election, based on the applicable conversion rate. In addition, if certain corporate events that constitute a make-whole fundamental change (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. Additionally in the event of a corporate event constituting a fundamental change (as defined in the Indenture), holders of the 2030 Convertible Notes may require the Company to repurchase all or a portion of their 2030 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2030 Convertible Notes being repurchased, plus accrued and unpaid special interest or additional interest, if any, to, but excluding, the date of the fundamental change repurchase.

The Company accounted for the 2030 Convertible Notes wholly as debt because (1) the conversion features do not require bifurcation as a derivative under ASC 815 and (2) the 2030 Convertible Notes were not issued at a substantial premium.

Debt issuance costs related to the issuance of the 2030 Convertible Notes recognized were $3.2 million, and include commissions payable to the underwriters and third-party offering costs. As of March 31, 2024, the outstanding aggregate principal balance of the 2030 Convertible Notes and the related unamortized discounts were $1.3 billion and $22.0 million, respectively.

Capped calls

On May 18, 2021, in connection with the pricing of the convertible senior notes due in 2026 (the “2026 Convertible Notes”), on March 13, 2024, in connection with the pricing of the 2030 Convertible Notes, and on March 14, 2024, in connection with the full exercise by the initial purchasers of their option to purchase additional 2030 Convertible Notes, the Company entered into privately negotiated capped call transactions (the “2026 Capped Calls” and “2030 Capped Calls,” respectively, and “the Capped Calls” collectively) with certain financial institutions (the “2026 Option Counterparties” and “2030 Option Counterparties,” respectively and the “Option Counterparties” collectively) at a cost of $90.1 million and $104.1 million, respectively, in each case in exchange for the right to receive a predetermined amount of cash, shares of the Company’s Class A common stock, or a combination thereof, at the Company’s election. The Capped Calls cover, subject to customary adjustments, the number of shares of the Company’s Class A common stock initially underlying each of the 2026 Convertible Notes and 2030 Convertible Notes (collectively, the “Convertible Notes”), as applicable. The Capped Calls allow the Company to hedge the economic effect of the conversion options embedded in the Convertible Notes and purchase shares of its own Class A common stock at a specified strike price. By entering into the Capped Calls, the Company expects to reduce the potential dilution to its Class A common stock (or, in the event a conversion of the Convertible Notes is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion of the Convertible Notes its Class A common stock price exceeds the conversion price of the Convertible Notes. The 2026 Capped Calls have an initial strike price of approximately $370.45 per share of Class A common stock (the “2026 Initial Strike Price”) and an initial cap price of approximately $478.00 per share of Class A common stock (the “2026 Initial Cap Price”). The 2030 Capped Calls have an initial strike price of approximately $333.54 per share of Class A common stock (the “2030 Initial Strike Price” and, together with the 2026 Initial Strike Price, the “Initial Strike Prices”) and an initial cap price of approximately $503.46 per share of Class A common stock (the “2030 Initial Cap Price” and, together with the 2026 Initial Cap Price, the “Initial Cap Prices”). Upon expiration of the agreements underlying the Capped Calls, the Capped Calls will be automatically exercised. If the closing market price of the Class A common stock is above the applicable Initial Cap Price, the initial investments will be returned with a premium in either cash or shares at the Company’s election. If the closing market price of the Class A common stock is at or below the applicable Initial Strike Price, the Company will receive the number of shares specified i n the agreements.

Upon certain extraordinary events, nationalization, insolvency or delisting event, or additional disruption events, the Capped Calls are contractually structured to terminate. The Company has the contractual right to terminate the Capped Calls upon repurchase, redemption or conversion (in the case of conversion, prior to December 1, 2025 or October 1, 2029, for the 2026 Capped Calls and 2030 Capped Calls, respectively) of the underlying Convertible Notes, in certain circumstances.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

The Capped Calls also include early termination provisions based on beneficial ownership positions of the counterparties. That is, if at any time the counterparty’s holdings exceed 8% beneficial ownership of the Company (as defined under Section 13 of the Exchange Act) and the counterparty is unable, after commercially reasonable efforts, to effect a transfer or assignment of all or a portion of the transaction such that an excess ownership position no longer exists, the counterparty may early terminate a portion of the Capped Calls, in which case the Company can settle in cash or shares of its Class A common stock.

13. DERIVATIVES

The following outlines the Company’s derivatives, which were all embedded forward contracts as of March 31, 2024:


Location of Host Contract and Derivative on Balance Sheets			Description of Derivative

Accounts receivable, net			The Company provided services for which, under the contract, the counterparty pays a fixed amount in crypto assets in the future.


Crypto asset borrowings			The Company borrowed crypto assets that resulted in the obligation to deliver a fixed amount of crypto assets in the future. See Note 6. Collateralized Arrangements and Financing for additional information.
Obligation to return collateral			The Company receives crypto asset collateral that results in the obligation to return collateral received as a fixed amount of crypto assets. See Note 6. Collateralized Arrangements and Financing for additional information.
Accrued expenses and other current liabilities			The Company entered into arrangements that result in the obligation to deliver a fixed amount of crypto assets in the future.

Impact of derivatives on the Condensed Consolidated Balance Sheets

The following table summarizes the notional amounts of derivative instruments outstanding, measured in U.S. dollar equivalents (in thousands):


	March 31,		December 31,
	2024		2023
Designated as hedges

Crypto asset borrowings(1)	$	—	$	31,666

Not designated as hedging instrument

Accounts receivable denominated in crypto assets	21,362		16,335

Crypto asset borrowings	158,518		12,503
Obligation to return loan collateral	75,424		—
Other payables denominated in crypto assets	33,012		20,092

(1) Prior to the adoption of ASU 2023-08, the Company applied hedge accounting using these derivative instruments in qualifying fair value hedges to hedge the fair value exposure of crypto asset prices for the crypto assets borrowed. As of January 1, 2024, the date of ASU 2023-08 adoption, these derivative instruments have been dedesignated.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

The following tables summarize information on derivative assets and liabilities that are reflected on the Condensed Consolidated Balance Sheets, by accounting designation (in thousands):


	Gross Derivative Assets						Gross Derivative Liabilities
	Not Designated as Hedges		Designated as Hedges		Total Derivative Assets		Not Designated as Hedges		Designated as Hedges		Total Derivative Liabilities
March 31, 2024
Accounts receivable denominated in crypto assets	$	41,263	$	—	$	41,263	$	—	$	—	$	—




Crypto asset borrowings	264		—		264		114,551		—		114,551
Obligation to return loan collateral	—		—		—		31,186		—		31,186
Other payables denominated in crypto assets	2,687		—		2,687		4,367		—		4,367

Total fair value of derivative assets and liabilities	$	44,214	$	—	$	44,214	$	150,104	$	—	$	150,104


December 31, 2023
Accounts receivable denominated in crypto assets	$	28,065	$	—	$	28,065	$	—	$	—	$	—

Crypto asset borrowings	26		(25)		1		5,290		13,522		18,812
Other payables denominated in crypto assets	2,511		—		2,511		3,101		—		3,101



Total fair value of derivative assets and liabilities	$	30,602	$	(25)	$	30,577	$	8,391	$	13,522	$	21,913

Impact of derivatives on the Condensed Consolidated Statements of Operations

Gains (losses) on derivative instruments recognized in the Condensed Consolidated Statements of Operations were as follows (in thousands):


	Three Months Ended March 31, 2024						Three Months Ended March 31, 2023
	Derivatives		Hedged Items		Income Statement Impact(4)		Derivatives		Hedged Items		Income Statement Impact
Designated as hedging instrument
Crypto asset futures(1)	$	—	$	—	$	—	$	(43,116)	$	48,491	$	5,375
Crypto asset borrowings(1)	—		—		—		(91,714)		48,600		(43,114)

Not designated as hedging instrument

Accounts receivable denominated in crypto assets(2)	13,795		—		13,795		42,924		—		42,924


Crypto asset borrowings(3)	(95,914)		—		(95,914)		—		—		—
Obligation to return loan collateral(3)	(31,186)		—		(31,186)		—		—		—
Other payables denominated in crypto assets(1)	(1,721)		—		(1,721)		439		—		439


Other(1)	—		—		—		(213)		—		(213)

Total	$	(115,026)	$	—	$	(115,026)	$	(91,680)	$	97,091	$	5,411

(1)Changes in fair value are recorded in Other operating expense (income), net in the Condensed Consolidated Statements of Operations.

(2)Changes in fair value are recorded in Other (income) expense, net or Other operating expense (income), net in the Condensed Consolidated Statements of Operations depending on the nature of the receivable.

(3)Changes in fair value are recorded in Transaction expense in the Condensed Consolidated Statements of Operations.

(4)Though the Company has dedesignated crypto assets borrowed that previously qualified as fair value hedges, the impact of derivatives is naturally offset, at least in part, in the Condensed Consolidated Statements of Operations by the impact of associated naturally offsetting positions. See Quantitative and Qualitative Information about Market Risk in Part I, Item 3 of this Quarterly Report on Form 10-Q for more information.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

14. FAIR VALUE MEASUREMENTS

The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities measured and recorded at fair value on a recurring basis (in thousands):


	March 31, 2024				December 31, 2023
	Level 1		Level 2			Level 1		Level 2
Assets
Cash equivalents(1)	$	3,037,792	$	—		$	3,682,917	$	—
Customer custodial funds(2)	4,894,429		—			3,301,029		—
Crypto asset loan receivables	—		196,141			—		22,229
Crypto assets borrowed(3)	231,348		—			45,212		—
Safeguarding customer crypto assets	—		329,506,477			—		192,583,060
Derivative assets(4)	—		44,214			—		30,577
Crypto assets held for operations	150,630		—			74,103		—
Crypto assets held as collateral	106,610		—			—		—
Crypto assets held for investment	1,522,328		—			330,610		—
Total assets	$	9,943,137	$	329,746,832		$	7,433,871	$	192,635,866

Liabilities

Safeguarding customer crypto liabilities	$	—	$	329,506,477		$	—	$	192,583,060
Derivative liabilities(4)	—		150,104			—		21,913
Obligation to return collateral	106,610		—			—		—

Total liabilities	$	106,610	$	329,656,581		$	—	$	192,604,973

(1)Represents money market funds. Excludes $3.5 billion of corporate cash held in deposit at banks and $124.8 million held at venues, which were not measured and recorded at fair value as of March 31, 2024. Excludes $1.4 billion of corporate cash held in deposit at banks and $88.8 million held at venues, which were not measured and recorded at fair value as of December 31, 2023.

(2)Represents money market funds. Excludes customer custodial funds of $307.5 million and $1.3 billion held in deposit at financial institutions and not measured and recorded at fair value as of March 31, 2024 and December 31, 2023, respectively.

(3)Includes crypto assets held that were designated as hedged items in fair value hedges as of December 31, 2023 and excludes crypto assets of $404.7 million held at cost as of December 31, 2023.

(4)See Note 13. Derivatives for additional details.

Safeguarding customer crypto assets and liabilities represent the Company’s obligation to safeguard customer crypto assets and are based on Level 2 inputs. The Company has valued the assets and liabilities using quoted market prices for the underlying crypto assets.

Assets and liabilities measured and recorded at fair value on a non-recurring basis

The Company’s non-financial assets, such as goodwill, intangible assets and property and equipment are adjusted to fair value when an impairment charge is recognized. The Company’s crypto assets held, prior to the adoption of ASU 2023-08, and the Company’s strategic investments, are measured at fair value on a non-recurring basis. Fair value of crypto assets held are based predominantly on Level 1 inputs and fair value measurements for strategic investments are based predominantly on Level 3 inputs. The carrying value of the Company’s strategic investments is adjusted based on an Option-Pricing Model that uses publicly available market data of comparable companies and other unobservable inputs including expected volatility, expected time to liquidity, adjustments for other company-specific developments, and the rights and obligations of the securities the Company holds.

Assets and liabilities not measured and recorded at fair value

The Company’s financial instruments, including certain cash and cash equivalents, restricted cash, certain customer custodial funds, USDC, accounts receivable, fiat loan receivables, fiat collateral, and

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

customer custodial cash liabilities are not measured at fair value. The carrying values of these instruments approximate their fair values due to their liquid or short-term nature. If these financial instruments were recorded at fair value, they would be based on Level 1 inputs.

As of March 31, 2024, the estimated fair value of the 2026 Convertible Notes, 2030 Convertible Notes, and the 2028 and 2031 Senior Notes were $1.4 billion, $1.3 billion, and $1.5 billion, respectively. These are based on quoted prices in markets that are not active, which is considered a Level 2 valuation input.

15. STOCK-BASED COMPENSATION

Stock options

A summary of options activity for the three months ended March 31, 2024 is as follows (in thousands, except per share and years data):


	Options Outstanding	Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance at January 1, 2024	28,697	$	25.01	6.1	$	4,295,055

Exercised	(2,338)	18.84
Forfeited and cancelled	(24)	30.36

Balance at March 31, 2024	26,335	$	25.55	5.9	$	6,309,011

Exercisable at March 31, 2024	20,201	$	26.19	5.8	$	4,826,583
Vested and expected to vest at March 31, 2024	20,211	$	26.18	5.8	$	4,829,027

During the three months ended March 31, 2024, the Company granted no stock options.

As of March 31, 2024, there was total unrecognized compensation cost of $56.0 million related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately 2.3 years.

R**estricted stock units

The Company grants restricted stock units (“RSUs”) that vest upon the satisfaction of a service-based condition. In general, the RSUs vest over a service period ranging from one to four years. Once vested, the RSUs are settled by delivery of Class A common stock.

A summary of RSU activity for the three months ended March 31, 2024 is as follows (in thousands, except per share data):


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
Balance at January 1, 2024	3,016	$	108.07
Granted	5,139	142.75
Vested	(1,580)	131.48
Forfeited and cancelled	(212)	125.33
Balance at March 31, 2024	6,363	$	129.69

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

As of March 31, 2024, there was total unrecognized compensation cost of $782.2 million related to unvested RSUs. These costs are expected to be recognized over a weighted-average period of approximately 1.2 years.

Performance restricted stock units

The Company also grants performance restricted stock units (“PRSUs”), which are subject to either (a) a market condition or (b) the achievement of performance goals.

A summary of PRSU activity for the three months ended March 31, 2024 is as follows (in thousands, except per share data):


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
Balance at January 1, 2024	804	$	55.42

Vested	(80)	55.42

Balance at March 31, 2024	724	$	55.42

As of March 31, 2024, there was total unrecognized compensation cost of $13.0 million related to unvested PRSUs. These costs are expected to be recognized over a weighted-average period of approximately 1.7 years.

Restricted common stock

As part of the Company’s past acquisitions, the Company has issued shares of restricted Class A common stock. Vesting of this restricted Class A common stock is dependent on a service-based vesting condition that is generally satisfied over three years. The Company has the right to repurchase shares, at par value, for which the vesting condition is not satisfied. Activity of restricted Class A common stock is as follows (in thousands, except per share data):


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
Balance at January 1, 2024	543	$	114.22

Vested	(182)	129.03
Forfeited and cancelled	(4)	267.48
Balance at March 31, 2024	357	$	104.97

As of March 31, 2024, there was total unrecognized compensation cost of $24.3 million related to unvested restricted Class A common stock. These costs are expected to be recognized over a weighted-average period of approximately 1.3 years.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

Stock-based compensation expense

The effects of stock-based compensation expense in the Condensed Consolidated Statements of Operations are as follows (in thousands):


	Three Months Ended March 31,
		2024		2023
Technology and development		$	139,830	$	122,696
Sales and marketing		16,623		14,209
General and administrative		68,051		61,955
Restructuring		—		84,042
Total		$	224,504	$	282,902

During the three months ended March 31, 2024 and 2023, $11.1 million and $14.1 million of stock-based compensation expense was recorded in capitalized software, which is included in Other non-current assets in the accompanying Condensed Consolidated Balance Sheets, respectively.

16. OTHER (INCOME) EXPENSE, NET

Other (income) expense, net consisted of the following (in thousands):


	Three Months Ended March 31,
		2024		2023
Foreign exchange losses, net		$	1,651	$	13,878
Strategic investment losses, net		849		6,319
Gains on crypto asset loan receivables(1)		(25,526)		—
Gains on other financial instruments, net		(13,186)		—
Other		(9,393)		68
Total Other (income) expense, net		$	(45,605)	$	20,265

(1)Represents unrealized gains on crypto asset loans made from the Company’s portfolio of crypto assets held as investment. See Note 6. Collateralized Arrangements and Financing for additional details.

17. INCOME TAXES

For the three months ended March 31, 2024, the Company calculated the tax provision using a discrete effective tax rate method. Historically, the tax provision was calculated for interim periods using an estimated annual effective tax rate, applied to year-to-date ordinary income. The Company’s estimated annual effective tax rate can fluctuate significantly based on the amount of estimated pretax income or loss in the period. For example, when pretax income is lower, the effect of non-deductible expenses or other discrete items will have a significant impact on the effective tax rate. Therefore, the Company determined the discrete effective tax rate method is the appropriate method for calculating the interim tax provision.

The Company’s effective tax rate for the three months ended March 31, 2024 and 2023 was 18.2% and 52.4%, respectively. The effective tax rate of 18.2% for the three months ended March 31, 2024 was lower than the U.S. statutory rate of 21.0% primarily due to the Company’s deductible stock-based compensation and research and development credits.

As of March 31, 2024, the Company had a net deferred tax asset balance of $879.7 million, compared to $1.3 billion as of December 31, 2023. The decrease resulted from the deferred tax liability of $177.9 million established upon the adoption of ASU 2023-08 and the deferred tax provision of $214.6 million recorded on pretax earnings and other comprehensive income during the quarter.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

As of December 31, 2023, the Company had a valuation allowance of $8.7 million recorded against its deferred capital loss tax asset balance of $207.6 million. The Company’s capital loss tax asset is comprised primarily of impairment charges related to crypto assets held and strategic investments made by Coinbase Ventures. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of March 31, 2024, because crypto assets appreciation during the quarter provided more gains to offset losses, management determined that there is sufficient positive evidence to conclude that it is more likely than not that capital loss tax assets are realizable, resulting in a valuation allowance release of $8.7 million for the quarter.

18. NET INCOME (LOSS) PER SHARE

The computation of Net income (loss) per share is as follows (in thousands, except per share amounts):


	Three Months Ended March 31,
	2024		2023
Basic Net income (loss) per share:
Numerator
Net income (loss)	$	1,176,245	$	(78,896)
Less: Income allocated to participating securities	(766)		—
Net income (loss) attributable to common stockholders, basic	$	1,175,479	$	(78,896)

Denominator
Weighted-average shares of common stock used to compute Net income (loss) per share attributable to common stockholders, basic	242,793		231,489
Net income (loss) per share attributable to common stockholders, basic	$	4.84	$	(0.34)

Diluted Net income (loss) per share:
Numerator
Net income (loss)	$	1,176,245	$	(78,896)
Less: Income allocated to participating securities	(697)		—
Add: Interest on convertible notes, net of tax	2,531		—

Net income (loss) attributable to common stockholders, diluted	$	1,178,079	$	(78,896)

Denominator
Weighted-average shares of common stock used to compute Net income (loss) per share attributable to common stockholders, basic	242,793		231,489
Weighted-average effect of potentially dilutive securities:
Stock options	18,534		—
Convertible notes	4,145		—
RSUs	2,164		—

Restricted common stock	309		—


Weighted-average shares of common stock used to compute Net income (loss) per share attributable to common stockholders, diluted	267,945		231,489
Net income (loss) per share attributable to common stockholders, diluted	$	4.40	$	(0.34)

Certain shares of the Company’s restricted Class A common stock granted as consideration in past acquisitions are participating securities. These participating securities do not contractually require the holders of such shares to participate in the Company’s losses.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

The rights, including the liquidation and dividend rights, of the holders of Class A common stock and Class B common stock are identical, except with respect to voting. As a result, the undistributed earnings are allocated on a proportionate basis and the resulting income (loss) per share will, therefore, be the same for both Class A common stock and Class B common stock on an individual or combined basis.

The following potentially dilutive shares were not included in the calculation of diluted shares outstanding as the effect would have been anti-dilutive (in thousands):


	March 31,
	2024	2023
Stock options	6,671	31,274
ESPP	733	822
PRSUs	322	—
RSUs	292	10,592
Restricted common stock	242	1,004
Convertible notes	—	3,880
Contingent consideration	—	76

Total	8,260	47,648

19. COMMITMENTS AND CONTINGENCIES

Indemnifications

In the event any registrable securities are included in a registration statement, the Company’s Amended and Restated Investors’ Rights Agreement (the “IRA”) entered into with certain of the Company’s stockholders provides indemnity to each stockholder, their partners, members, officers, directors, and stockholders, legal counsel, and accountants; each underwriter, if any; and each person who controls each stockholder or underwriter, against any damages incurred in connection with investigating or defending any claim or proceeding arising as a result of such registration from which damages may result. The Company will reimburse each such party for any legal and any other expenses reasonably incurred, provided that the Company will not be liable in any such case to the extent the damages arise out of or are based upon any actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such stockholder or underwriter and stated to be specifically for use therein.

The Company also has indemnity agreements with certain officers and directors of the Company pursuant to which the Company must indemnify the officer or director against all expenses, judgments, fines, and amounts paid in settlement reasonably incurred in connection with a third party proceeding, if the indemnitee acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Company, and in the case of a criminal proceeding, had no reasonable cause to believe the indemnitee’s conduct was unlawful.

It is not possible to determine the maximum potential exposure under these indemnification agreements: (i) because the facts and circumstances involved in each claim are unique and the Company cannot predict the number or nature of claims that may be made; (ii) due to the unique facts and circumstances involved in each particular agreement; and (iii) due to the requirement for a registration of the Company’s securities before any of the indemnification obligations contemplated in the IRA become effective.

The Company has also provided indemnities or similar commitments on standard commercial terms in the ordinary course of business.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

Legal and regulatory proceedings

The Company is subject to various litigation, regulatory investigations, and other legal proceedings that arise in the ordinary course of its business. The Company is also subject to regulatory oversight by numerous regulatory and other governmental agencies. The Company reviews its lawsuits, regulatory investigations, and other legal proceedings on an ongoing basis and provides disclosure and records loss contingencies in accordance with the loss contingencies accounting guidance. In accordance with such guidance, the Company establishes accruals for such matters when potential losses become probable and can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the possible loss in the Condensed Consolidated Financial Statements.

In July and August 2021, three purported securities class actions were filed in the U.S. District Court for the Northern District of California against the Company, its directors, certain of its officers and employees, and certain venture capital and investment firms. The complaints alleged violations of Sections 11, 12(a)(2) and 15 of the Securities Act, in connection with the registration statement and prospectus filed in connection with the Direct Listing. In November 2021, these actions were consolidated and recaptioned as In re Coinbase Global Securities Litigation, and an amended complaint was filed. The plaintiff seeks, among other relief, unspecified compensatory damages, attorneys’ fees, and costs. The Company disputes the claims in these cases and is vigorously defending against them. Based on the preliminary nature of the proceedings in these cases, the outcome of these matters remain uncertain and the Company cannot estimate the potential impact, if any, on its business or financial statements at this time. The Company has subsequently received, and expects to receive in the future, similar shareholder claims.

In October 2021, a purported class action captioned Underwood et al. v. Coinbase Global, Inc., was filed in the U.S. District Court for the Southern District of New York (the “District Court”) against the Company alleging claims under Sections 5, 15(a)(1) and 29(b) of the Exchange Act, and violations of certain California and Florida state statutes. On March 11, 2022, plaintiffs filed an amended complaint adding Coinbase, Inc. and Brian Armstrong as defendants and adding causes of action, including alleging claims under Sections 5, 12(a)(1) and 15 of the Securities Act and violations of certain New Jersey state statutes. Among other relief requested, the plaintiffs sought injunctive relief, unspecified damages, attorneys’ fees and costs. On February 1, 2023, the District Court dismissed all federal claims (with prejudice) and state law claims (without prejudice) against Coinbase Global, Inc., Coinbase, Inc. and Brian Armstrong. Subsequently, on February 9, 2023, the plaintiffs appealed that ruling to the U.S. Court of Appeals for the Second Circuit (the “Court of Appeals”), and the parties completed briefing the appeal on September 13, 2023. Oral argument took place on February 1, 2024 and on April 5, 2024, the Court of Appeals issued a Summary Order affirming the District Court’s dismissal order with respect to the claims alleging violations of the Exchange Act, and reversing the District Court’s dismissal order with respect to the claims alleging violations of the Securities Act and violations of the state statutes. The defendants continue to dispute the claims in this case and intend to vigorously defend against them. Based on the nature of the proceedings in this case, the outcome of this matter remains uncertain and the Company cannot estimate the potential impact, if any, on its business or financial statements at this time.

In December 2021, a shareholder derivative suit captioned Shin v. Coinbase Global, Inc., was filed in New York state court against the Company and its directors, alleging breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, and seeking unspecified damages and injunctive relief. The Company has subsequently received, and expects to receive in the future, similar derivative claims. The Company disputes the claims in these cases and intends to vigorously defend against them. Based on the preliminary nature of the proceedings in these cases, the outcome of these matters remain uncertain and the Company cannot estimate the potential impact, if any, on its business or financial statements at this time.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

During 2022, the Company’s subsidiary, Coinbase, Inc., which holds a BitLicense from the New York Department of Financial Services (“NYDFS”) and is therefore subject to examinations and investigations by the NYDFS, was subject to an investigation by the NYDFS relating to its compliance program including compliance with the Bank Secrecy Act and sanctions laws, cybersecurity, and customer support. In January 2023, the NYDFS announced a consent order focused on historical shortcomings in Coinbase, Inc.'s compliance program. Pursuant to the consent order, Coinbase, Inc. paid a $50.0 million penalty in January 2023 and agreed to invest an additional $50.0 million in its compliance function by the end of 2024.

In April 2022, a dissenting stockholder to the Company’s acquisition of FairXchange, Inc. (“FairX”) filed a Verified Petition for Appraisal of Stock in the Court of Chancery of the State of Delaware seeking, among other relief, an appraisal of the fair value of their common and preferred shares of FairX stock. Petitioners contend that the valuation of FairX was higher than the valuation ascribed by the parties at the time of the transaction. The case is captioned Hyde Park Venture Partners Fund III, L.P. et al. v. FairXchange, LLC, et al. Trial took place in November 2023 and post-trial briefing and argument was completed on March 5, 2024 and March 22, 2024, respectively. A settlement offer was made and rejected in November 2023. Based on the nature of the proceedings in this case, the outcome of this matter remains uncertain and the Company cannot reasonably estimate the potential impact, if any, on its business or financial statements at this time.

In June 2023, the SEC filed a complaint in the District Court against the Company and Coinbase, Inc. alleging that Coinbase, Inc. has acted as an unregistered securities exchange, broker, and clearing agency in violation of Sections 5, 15(a) and 17A(b) of the Exchange Act and that, through its staking program, Coinbase, Inc. has offered and sold securities without registering its offers and sales in violation of Sections 5(a) and 5(c) of the Securities Act. The SEC has also alleged that the Company is liable for the alleged violations as an alleged control person of Coinbase, Inc. The case is captioned SEC v. Coinbase, Inc. et al. The SEC seeks, among other relief, injunctive relief, disgorgement and civil money penalties. The Company and Coinbase, Inc. filed an answer to the SEC complaint in June 2023, dispute the claims in this case, and intend to vigorously defend against them. On August 4, 2023, the Company and Coinbase, Inc. filed a motion for judgment on the pleadings. The SEC filed its response on October 3, 2023 and the Company and Coinbase, Inc. filed their reply on October 24, 2023. Oral argument took place on January 17, 2024. On March 27, 2024, the District Court denied in part the Company and Coinbase, Inc.’s motion for judgment on the pleadings with respect to the SEC’s claims that Coinbase, Inc. has operated as an unregistered securities exchange, broker, and clearing agency and has engaged in an unregistered offer and sale of securities through the Company’s staking program. The District Court dismissed the SEC’s claim that Coinbase, Inc. acts as an unregistered broker through its wallet service. Subsequently, on April 12, 2024, the Company and Coinbase, Inc. filed a motion with the District Court seeking certification of an interlocutory appeal to the Court of Appeals. Based on the preliminary nature of the proceedings in this case, the outcome of this matter remains uncertain and the Company cannot estimate the potential impact, if any, on its business or financial statements at this time. An adverse resolution of the SEC’s lawsuit could have a material impact on the Company’s business and financial statements.

In June 2023, the Company and Coinbase, Inc. were issued notices, show-cause orders, and cease-and-desist letters, and became the subject of various legal actions initiated by U.S. state securities regulators in the states of Alabama, California, Illinois, Kentucky, Maryland, New Jersey, South Carolina, Vermont, Washington and Wisconsin alleging violations of state securities laws with respect to staking services provided by Coinbase, Inc. In July 2023, the Company and Coinbase, Inc. entered into agreements with state securities regulators in California, New Jersey, South Carolina and Wisconsin, pursuant to which customers in those states will no longer be able to stake new funds, in each case pending final adjudication of the matters. In October 2023, the Company and Coinbase, Inc. entered into a similar agreement with the Maryland state securities regulator. The Company and Coinbase, Inc. dispute the claims of the state securities regulators and intend to vigorously defend against them. Based on the preliminary nature of these actions, the final outcome of these matters remains uncertain and the

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

Company cannot estimate the potential impact on its business or financial statements at this time. An adverse resolution could have a material impact on the Company’s business and financial statements.

The Company has, from time to time, received investigative subpoenas and requests from regulators for documents and information about certain customer programs, operations, and existing and intended future products, including the Company’s processes for listing assets, the classification of certain listed assets, its staking programs, and its stablecoin and yield-generating products.

Except as otherwise disclosed, the Company believes the ultimate resolution of existing legal and regulatory investigation matters will not have a material adverse effect on the financial condition, results of operations, or cash flows of the Company. However, in light of the uncertainties inherent in these matters, it is possible that the ultimate resolution of one or more of these matters may have a material adverse effect on the Company’s results of operations for a particular period, and future changes in circumstances or additional information could result in additional accruals or resolution in excess of established accruals, which could adversely affect the Company’s results of operations, potentially materially.

Tax regulation

Current promulgated tax rules related to crypto assets are unclear and require significant judgments to be made in interpretation of the law, including but not limited to the areas of income tax, information reporting, transaction level taxes and the withholding of tax at source. Additional legislation or guidance may be issued by U.S. and non-U.S. governing bodies that may differ significantly from the Company's practices or interpretation of the law, which could have unforeseen effects on the Company’s financial condition and results of operations, and accordingly, the related impact on the Company’s financial condition and results of operations is not estimable.

20. RELATED PARTY TRANSACTIONS

Revenue and accounts receivable

Certain of the Company’s directors, executive officers, and principal owners, including immediate family members, are users of the Company’s platform. The Company recognized revenue from related party customers of $6.9 million and $3.1 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and December 31, 2023, accounts receivable from related party customers were $4.2 million and $3.4 million, respectively.

Customer assets and liabilities

Safeguarding customer crypto assets and safeguarding customer crypto liabilities for related parties as of March 31, 2024 and December 31, 2023 were $13.0 billion and $8.8 billion, respectively. Customer custodial funds and Customer custodial cash liabilities for related parties as of March 31, 2024 and December 31, 2023 were $4.5 million and $348.0 million, respectively.

Other assets

As of March 31, 2024 and December 31, 2023, the Company made strategic investments of an aggregate of $0.1 million and $4.0 million, respectively, in investees in which certain related parties of the Company held an interest over 10%.

Expenses and accounts payable

During the three months ended March 31, 2024 and 2023, the Company incurred $1.1 million and an immaterial amount, respectively, for professional and consulting services provided by entities affiliated with related parties. As of March 31, 2024 and December 31, 2023, accounts payable to related party parties were $1.3 million and an immaterial amount, respectively.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

21. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Changes in operating assets and liabilities affecting cash were as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
USDC	$	(299,507)	$	497,303
Accounts receivable	(108,802)		(67,126)
Deposits in transit	(21,260)		(15,262)
Income taxes, net	41,613		(7,608)

Other current and non-current assets	(3,856)		(14,892)


Other current and non-current liabilities	(82,190)		(77,088)
Net changes in operating assets and liabilities	$	(474,002)	$	315,327

Reconciliation of cash, cash equivalents, and restricted cash (in thousands):


	Three Months Ended March 31,
	2024		2023
Cash and cash equivalents	$	6,711,400	$	5,018,409
Restricted cash	33,499		26,712
Customer custodial cash	5,002,888		5,293,029
Total cash, cash equivalents, and restricted cash	$	11,747,787	$	10,338,150

Supplemental schedule of non-cash investing and financing activities were as follows (in thousands):


	Three Months Ended March 31,
	2024		2023
Crypto assets borrowed	$	191,436	$	170,599
Crypto assets borrowed repaid with crypto assets	77,451		200,151
Crypto asset loans originated	424,248		—
Crypto asset loans repaid	286,475		—
Non-cash assets received as collateral	90,798		19,116
Non-cash assets received as collateral returned	15,374		45,990
Non-cash assets pledged as collateral	42,020		30,774
Non-cash assets pledged as collateral returned	20,804		10,743
Non-cash consideration paid for business combinations	—		51,494
Realized gains on crypto assets held for investment	—		48,491
Cumulative-effect adjustment due to the adoption of ASU 2023-08	561,489		—

Previous: Cover and table of contents · Next: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations