Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

Coinbase Global, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(unaudited)


	September 30,		December 31,
	2024		2023
Assets
Current assets:
Cash and cash equivalents	$	7,723,806	$	5,139,351
Restricted cash and cash equivalents	31,881		22,992
Customer custodial funds	4,035,045		4,570,845
Safeguarding customer crypto assets	272,669,307		192,583,060
USDC	871,425		576,028
Loan receivables	398,239		193,425

Crypto assets borrowed	252,885		45,212
Accounts receivable, net	187,004		168,290
Other current assets	255,975		286,643
Total current assets	286,425,567		203,585,846
Crypto assets held for investment	1,260,718		330,610
Deferred tax assets	1,032,959		1,272,233
Goodwill	1,139,670		1,139,670
Other non-current assets	699,694		654,594
Total assets	$	290,558,608	$	206,982,953
Liabilities and Stockholders’ Equity
Current liabilities:
Customer custodial cash liabilities	$	4,035,045	$	4,570,845
Safeguarding customer crypto liabilities	272,669,307		192,583,060
Crypto asset borrowings	265,259		62,980
Obligation to return collateral	118,224		1,063
Accrued expenses and other current liabilities	500,603		496,183
Total current liabilities	277,588,438		197,714,131

Long-term debt	4,231,047		2,979,957
Other non-current liabilities	11,001		7,216
Total liabilities	281,830,486		200,701,304
Commitments and contingencies (Note 18)
Stockholders’ equity:
Preferred stock, $0.00001 par value; 500,000 shares authorized and zero shares issued and outstanding at each of September 30, 2024 and December 31, 2023	—		—
Class A common stock, $0.00001 par value; 10,000,000 shares authorized at September 30, 2024 and December 31, 2023; 204,850 and 195,192 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	2		2
Class B common stock, $0.00001 par value; 500,000 shares authorized at September 30, 2024 and December 31, 2023; 45,440 and 46,856 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively	—		—
Additional paid-in capital	5,087,238		4,491,571
Accumulated other comprehensive loss	(28,843)		(30,270)
Retained earnings	3,669,725		1,820,346
Total stockholders’ equity	8,728,122		6,281,649
Total liabilities and stockholders’ equity	$	290,558,608	$	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)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue:
Net revenue	$	1,128,597	$	623,004	$	4,096,216	$	2,021,902
Other revenue	76,596		51,144		196,175		132,686
Total revenue	1,205,193		674,148		4,292,391		2,154,588
Operating expenses:
Transaction expense	171,781		90,577		580,665		295,146
Technology and development	377,440		322,756		1,099,561		1,001,454
Sales and marketing	164,770		78,178		428,617		226,007
General and administrative	330,387		252,630		937,738		760,379
Gains on crypto assets held for operations, net	(142)		—		(55,484)		—
Crypto asset impairment, net	—		7,180		—		17,089
Restructuring	—		(860)		—		142,594
Other operating (income) expense, net	(8,556)		3,512		28,203		(10,806)
Total operating expenses	1,035,680		753,973		3,019,300		2,431,863
Operating income (loss)	169,513		(79,825)		1,273,091		(277,275)
Interest expense	20,530		20,821		60,108		64,029
Losses (gains) on crypto assets held for investment, net	120,507		—		(210,902)		—
Other income, net	(40,105)		(135,307)		(21,883)		(131,606)
Income (loss) before income taxes	68,581		34,661		1,445,768		(209,698)
(Benefit from) provision for income taxes	(6,914)		36,926		157,878		(31,132)
Net income (loss)	$	75,495	$	(2,265)	$	1,287,890	$	(178,566)
Net income (loss) attributable to common stockholders:
Basic	$	75,455	$	(2,265)	$	1,287,106	$	(178,566)
Diluted	$	75,459	$	(2,265)	$	1,296,949	$	(178,566)
Net income (loss) per share:
Basic	$	0.30	$	(0.01)	$	5.23	$	(0.76)
Diluted	$	0.28	$	(0.01)	$	4.76	$	(0.76)
Weighted-average shares of common stock used to compute net income (loss) per share:
Basic	248,834		237,270		245,986		234,479
Diluted	267,440		237,270		272,239		234,479

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)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net income (loss)	$	75,495	$	(2,265)	$	1,287,890	$	(178,566)
Other comprehensive income (loss):
Translation adjustment	11,437		(10,354)		1,754		(4,822)
Income tax effect	9		(33)		327		685
Translation adjustment, net of tax	11,428		(10,321)		1,427		(5,507)
Comprehensive income (loss)	$	86,923	$	(12,586)	$	1,289,317	$	(184,073)

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

Coinbase Global, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

For the Three Months Ended September 30, 2024 and September 30, 2023

(In thousands)

(unaudited)


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
























Balance at July 1, 2024		248,337		$	2		$	4,816,808		$	(40,271)	$	3,594,230	$	8,370,769
Issuance of common stock upon settlement of stock awards		1,567		—			—			—		—		—
Issuance of common stock upon exercise of stock options		386		—			10,738			—		—		10,738

Stock-based compensation (inclusive of capitalized stock-based compensation)		—		—			259,692			—		—		259,692

Other comprehensive income		—		—			—			11,428		—		11,428
Net income		—		—			—			—		75,495		75,495
Balance at September 30, 2024		250,290		$	2		$	5,087,238		$	(28,843)	$	3,669,725	$	8,728,122

Balance at July 1, 2023		236,888		$	2		$	4,239,319		$	(33,792)	$	1,549,174	$	5,754,703
Issuance of common stock upon settlement of stock awards, net of shares withheld		1,621		—			(68,570)			—		—		(68,570)
Issuance of common stock upon exercise of stock options, net of repurchases		660		—			11,383			—		—		11,383
Stock-based compensation (inclusive of capitalized stock-based compensation)		—		—			233,904			—		—		233,904
Other		—		—			2,291			—		—		2,291
Other comprehensive loss		—		—			—			(10,321)		—		(10,321)
Net loss		—		—			—			—		(2,265)		(2,265)
Balance at September 30, 2023		239,169		$	2		$	4,418,327		$	(44,113)	$	1,546,909	$	5,921,125

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

Coinbase Global, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

For the Nine Months Ended September 30, 2024 and September 30, 2023

(In thousands)

(unaudited)


			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			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 (“ASU”) 2023-08, net of tax		—		—			—			—		561,489		561,489
Issuance of common stock upon settlement of stock awards, net of shares withheld		4,129		—			(117,225)			—		—		(117,225)
Issuance of common stock upon exercise of stock options, net of repurchases		3,898		—			80,815			—		—		80,815
Issuance of common stock under the Employee Stock Purchase Plan (the “ESPP”), net of shares withheld		215		—			10,557			—		—		10,557
Stock-based compensation (inclusive of capitalized stock-based compensation)		—		—			725,630			—		—		725,630
Purchases of capped calls		—		—			(104,110)			—		—		(104,110)
Other comprehensive income		—		—			—			1,427		—		1,427
Net income		—		—			—			—		1,287,890		1,287,890
Balance at September 30, 2024		250,290		$	2		$	5,087,238		$	(28,843)	$	3,669,725	$	8,728,122

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		5,248		—			(183,962)			—		—		(183,962)
Issuance of common stock upon exercise of stock options, net of repurchases		1,840		—			29,384			—		—		29,384
Issuance of common stock under the ESPP		254		—			12,381			—		—		12,381
Stock-based compensation (inclusive of capitalized stock-based compensation)		—		—			661,510			—		—		661,510
Stock-based compensation expense recognized in relation to restructuring		—		—			84,042			—		—		84,042
Other		—		—			2,291			—		—		2,291
Other comprehensive loss		—		—			—			(5,507)		—		(5,507)
Net loss		—		—			—			—		(178,566)		(178,566)
Balance at September 30, 2023		239,169		$	2		$	4,418,327		$	(44,113)	$	1,546,909	$	5,921,125

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

Coinbase Global, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities
Net income (loss)	$	1,287,890	$	(178,566)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	94,523		110,157


Stock-based compensation expense	690,854		616,785

Deferred income taxes	61,075		(50,217)

Non-cash lease expense	8,571		37,271

Gains on crypto assets held for operations, net	(55,484)		—
Gains on crypto assets held for investment, net	(210,902)		—

Gain on extinguishment of long-term debt, net	—		(99,446)

Stock-based compensation expense recognized in relation to restructuring	—		84,042

Realized loss on crypto futures contract	—		43,339
Gains on crypto assets held, net (prior to ASU 2023-08)	—		(110,610)
Crypto asset impairment expense (prior to ASU 2023-08)	—		77,151
Crypto assets received as revenue (prior to ASU 2023-08)	—		(299,304)
Crypto asset payments for expenses (prior to ASU 2023-08)	—		185,149
Other operating activities, net	38,315		(2,164)
Net changes in operating assets and liabilities	(322,616)		514,550
Net cash provided by operating activities	1,592,226		928,137
Cash flows from investing activities




Fiat loans originated	(1,270,063)		(348,252)
Proceeds from repayment of fiat loans	1,075,000		242,384


Purchase of crypto assets held for investment	(18,486)		—
Sale of crypto assets held for investment	52,586		—
Settlement of crypto futures contract	—		(43,339)
Purchase of crypto assets held (prior to ASU 2023-08)	—		(150,827)
Sale of crypto assets held (prior to ASU 2023-08)	—		265,042
Other investing activities, net	(72,006)		(50,125)
Net cash used in investing activities	(232,969)		(85,117)
Cash flows from financing activities
Issuance of common stock upon exercise of stock options, net of repurchases	80,222		27,653
Taxes paid related to net share settlement of equity awards	(117,225)		(183,962)

Customer custodial cash liabilities	(550,776)		(1,349,666)
Issuance of convertible senior notes, net	1,246,025		—


Purchases of capped calls	(104,110)		—
Repurchases of senior and convertible notes	—		(222,664)
Fiat received as collateral	525,699		5,324
Fiat received as collateral returned	(410,438)		(4,585)


Other financing activities, net	13,266		(6,228)
Net cash provided by (used in) financing activities	682,663		(1,734,128)
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents	2,041,920		(891,108)
Effect of exchange rates on cash, cash equivalents, and restricted cash and cash equivalents	19,664		(27,353)
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of period	9,555,429		9,429,646
Cash, cash equivalents, and restricted cash and cash equivalents, end of period	$	11,617,013	$	8,511,185

Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	33,424	$	42,913
Cash paid during the period for Income taxes	$	113,107	$	19,676

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

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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 remote-first and accordingly, does not maintain a headquarters. 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 (“U.S.”) 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 and nine months ended September 30, 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 thereto 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 material 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.

Concentration of credit risk

The Company’s cash and cash equivalents, restricted cash and cash equivalents, customer custodial funds, USDC, loan receivables, certain crypto assets held, accounts receivable, and deposits are potentially subject to concentration of credit risk. See below for a discussion of each of these risks by counterparty and type of transaction.

Funds held at financial institutions

Cash and cash equivalents, restricted cash and cash equivalents, and customer custodial funds are

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

primarily placed with financial institutions which are of high credit quality. The Company holds 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.

Funds held at trading venues, payment processors, and clearing brokers

The Company holds cash, restricted cash and deposits, 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 September 30, 2024, the Company held $135.6 million at these venues, including $92.0 million in cash, $17.0 million in restricted cash and deposits, and $26.6 million in crypto assets. As of December 31, 2023, the Company held $93.5 million at these venues, including $88.8 million in cash.

USDC

The Company holds USDC, a stablecoin redeemable on a one-to-one basis for U.S. dollars. USDC is accounted for as a financial instrument in the Condensed Consolidated Financial Statements. The issuer of USDC reported that, as of September 30, 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.

Accounts receivable

As of September 30, 2024 and December 31, 2023, the Company had one and two counterparties, respectively, who accounted for more than 10% of the Company’s Accounts receivable, net. The Company performs a regular assessment of accounts receivable as part of its risk management process. In determining expected credit losses, the Company considers historical loss experience and the aging of its receivable balance. See Note 7. Accounts Receivable, Net for additional details.

Loan receivables

As of September 30, 2024 and December 31, 2023, the Company had four and three counterparties, respectively, who accounted for more than 10% of the Company’s recorded loan receivables. As of both of these dates, the Company also had two and three counterparties, respectively, who accounted for more than 10% of the Company’s customer loans that did not meet the recognition criteria. See Note 6. Collateralized Arrangements and Financing for additional details.

Revenue

During the three and nine months ended September 30, 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 an associated deferred tax liability of $177.9 million, for a net cumulative-effect adjustment of $561.5 million increasing retained earnings.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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 ASU 2023-08 requirements 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 long term. The Company does not engage in regular trading of these crypto assets but may lend crypto assets held for investment through Prime Financing or stake these assets. When crypto assets that were loaned are returned, they continue to be held for investment. See Note 6. Collateralized Arrangements and Financing for additional details on Prime Financing. Crypto assets held for investment are initially recorded at cost and 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 within the Company’s principal market at the time of measurement. Fair value gains and losses on Crypto assets held for investment are recorded in Losses (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 within the Company’s principal market at the time of measurement. 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. 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 borrowings. 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 the fair value hedge adjustment was $3.9 million.

Post hedge 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 within the Company’s principal market at the time of measurement. Fair value gains and losses on Crypto assets borrowed are recorded in Transaction expense. See Note 6. Collateralized Arrangements and Financing for further details on Crypto assets borrowed and Note 20. Supplemental Disclosures of Cash Flow Information for details on Crypto assets borrowed included in the supplemental schedule of non-cash investing and financing activities.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Crypto assets held as collateral

The Company requires borrowers to pledge collateral on loans originated through Prime Financing. Crypto assets held as collateral are initially recorded at cost if the Company has the right to sell, pledge, or rehypothecate the assets 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 within the Company’s principal market at the time of measurement. Fair value gains and losses on Crypto assets held as collateral are recorded in Transaction expense in the Condensed Consolidated Statements of Operations. See Note 6. Collateralized Arrangements and Financing for additional details on crypto assets held as collateral and Note 20. Supplemental Disclosures of Cash Flow Information for details on flows of non-cash collateral, including crypto assets, included in the supplemental schedule of non-cash investing and financing activities. There were no crypto assets held as collateral that were recognized as collateral as of September 30, 2024 and December 31, 2023.

The following table shows the changes in presentation in the Condensed Consolidated Balance Sheets upon the Company’s adoption of ASU 2023-08 (in thousands):


	December 31, 2023
		Previously Reported		Adjustment		As Adjusted
Crypto assets held		$	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

Recent accounting pronouncements

There have been no material developments relating to recent accounting pronouncements, including the expected dates of adoption and estimated effects on the Consolidated Financial Statements and footnote disclosures thereto, since those disclosed in the Annual Report.

3. RESTRUCTURING

In January 2023, the Company announced and completed a restructuring impacting 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 then-ongoing market conditions impacting the cryptoeconomy and business prioritization efforts. As a result, in 2023, the Company recorded restructuring charges of $142.6 million, which included $84.0 million in stock-based compensation, $56.7 million in separation pay, and an immaterial amount of other personnel costs. All amounts were recorded during the nine months ended September 30, 2023 and were settled in 2023. There were no restructuring charges recorded during the nine months ended September 30, 2024.

4. ACQUISITIONS

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 Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, the acquisition was accounted for as a business combination

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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.

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. Upon finalization of the fair value analysis of assets acquired and liabilities assumed, no measurement period adjustments were recorded.

The total consideration transferred in the acquisition was $96.8 million and consisted 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 were subject to an indemnity holdback. The cash and shares subject to the indemnity holdback were released 18 months after the closing date of the transaction.

The results of operations and the 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. 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 immaterial and were recorded in General and administrative expense in the Condensed Consolidated Statements of Operations during the year ended December 31, 2023.

The impact of this acquisition was not considered material to the Condensed Consolidated Financial Statements for the periods presented, and supplemental pro forma information has not been provided.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5. REVENUE

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net revenue
Transaction revenue
Consumer, net(1)	$	483,261	$	246,980	$	2,083,245	$	865,103
Institutional, net	55,293		14,070		204,309		53,442
Other transaction revenue(1)	33,950		27,525		142,593		71,841
Total transaction revenue	572,504		288,575		2,430,147		990,386
Subscription and services revenue
Stablecoin revenue	246,856		172,357		684,609		522,650
Blockchain rewards	154,815		74,461		490,883		235,824
Interest and finance fee income(2)	63,987		42,517		200,050		137,762
Custodial fee revenue	31,723		15,805		98,569		49,839
Other subscription and services revenue(2)	58,712		29,289		191,958		85,441
Total subscription and services revenue	556,093		334,429		1,666,069		1,031,516
Total net revenue	1,128,597		623,004		4,096,216		2,021,902
Other revenue
Corporate interest and other income	76,596		51,144		196,175		132,686
Total other revenue	76,596		51,144		196,175		132,686
Total revenue	$	1,205,193	$	674,148	$	4,292,391	$	2,154,588

(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 fee income from Other subscription and services revenue to Interest and finance fee income. Prior period amounts have been reclassified to conform to current period presentation.

Revenue by geographic location

Below is Total revenue disaggregated by geography based on domiciles of the customers (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
U.S.	$	1,037,705	$	603,648	$	3,623,771	$	1,928,278
International(1)	167,488		70,500		668,620		226,310
Total revenue	$	1,205,193	$	674,148	$	4,292,391	$	2,154,588

(1)No country accounted for more than 10% of Total revenue.

6. COLLATERALIZED ARRANGEMENTS AND FINANCING

Loans and related collateral

The Company may lend crypto assets borrowed, crypto assets held for investment, 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 arrangements, which enable customers to instantly invest in crypto assets without pre-funding their trade. These

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

arrangements 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 the recognition criteria under ASC Topic 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. If a lending arrangement is open-ended, there is a call option and written put option on the same or similar asset embedded within 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 USDC in the Condensed Consolidated Balance Sheets.

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


	September 30,		December 31,
	2024		2023
Loan receivables
Fiat loan receivables	$	366,105	$	171,196
Crypto asset loan receivables	31,979		22,229
Fiat trade finance receivables	155		—
Total loan receivables	$	398,239	$	193,425

Customer loans not meeting recognition criteria
USDC	$	122,020	$	205,645

Prime Financing loans are fully collateralized by a customer’s pledged crypto assets, USDC, or fiat. As of September 30, 2024 and December 31, 2023, the collateral requirements for all loans outstanding, including customer loans not meeting recognition criteria, ranged from 100% to 300% 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 customer loans not meeting recognition criteria, 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. No allowance, write-offs, or recoveries were recorded against loan receivables or customer loans not meeting recognition criteria during the periods presented. The Company would recognize credit losses on these loans if there were a collateral shortfall and it was not reasonably expected that the borrower would replenish such a shortfall.

The Company accounts for collateral it receives as follows:

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 USDC or Crypto assets held as collateral, respectively, and a corresponding liability in Obligation to return collateral in the Condensed Consolidated Balance Sheets, unless the non-cash collateral provision of ASC 860 applies, in which case the collateral is not recognized as collateral.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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, or in Customer custodial funds and Customer custodial cash liabilities if the collateral is fiat, as the collateral is required to be held on the Company’s platform.

Obligation to return collateral in the form of crypto assets is accounted for as a hybrid instrument, with a liability host contract that contains an embedded derivative based on the changes in fair value of the underlying crypto asset. See Note 12. Derivatives for additional information. The gain or loss on remeasurement of the Obligation to return collateral (as well as of the Crypto assets held as collateral) is recorded in Transaction expense.

There were no crypto assets held as collateral that were recognized as collateral as of September 30, 2024 and December 31, 2023. The fair value of the Company’s Obligation to return collateral and customer collateral pledged that is not recognized as collateral, consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023




Obligation to return collateral
Fiat	$	118,224	$	1,063


Customer collateral pledged, not recognized as collateral
Crypto assets	$	1,013,188	$	593,816
Fiat	42,048		109,501
USDC	40,924		9,327
Total customer collateral not recognized as collateral	$	1,096,160	$	712,644

The following table provides a rollforward of Crypto assets held as collateral (in thousands):


	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024
Beginning balance	$	21,119	$	—
Collateral received	103,344		465,063
Collateral returned	(122,882)		(495,574)
Gains	—		30,511
Losses	(1,581)		—
Ending balance	$	—	$	—

No cumulative realized gains or losses occurred during the periods presented as no Crypto assets held as collateral were sold or rehypothecated.

Borrowings and related collateral

To facilitate Prime Financing, the Company may borrow crypto assets from third parties and record the associated liabilities in Crypto asset borrowings in the Condensed Consolidated Balance Sheets. Crypto asset borrowings are accounted for as hybrid instruments, with a liability host contract that contains an embedded derivative based on the changes in fair value of the underlying crypto asset. See Note 12. Derivatives for additional information. As of September 30, 2024 and December 31, 2023, the weighted average annual fees on these borrowings were 2.7% and 2.0%, respectively. Crypto asset borrowings that have not been loaned out are recorded in Crypto assets borrowed.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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


	September 30, 2024					December 31, 2023
	Units	Cost Basis		Fair Value		Carrying Value
Crypto assets borrowed(1)
Bitcoin	2,667	$	123,492	$	168,797	$	36,368
Ethereum	22,384	63,826		58,226		3,720
Solana	32,575	1,579		4,968		3,516
Other crypto assets(2)	nm	20,029		20,894		1,608
Total borrowed		$	208,926	$	252,885	$	45,212

Crypto asset borrowings
Bitcoin	2,744	$	127,756	$	173,703	$	50,679
Ethereum	23,894	68,131		62,154		7,059
Solana	32,575	1,579		4,968		3,513
Other crypto assets(2)	nm	23,401		24,434		1,729
Total borrowings		$	220,867	$	265,259	$	62,980

nm - not meaningful

(1)Recorded at fair value as of December 31, 2023.

(2)Includes various other crypto asset balances, none of which individually represented more than 5% of the carrying value of total Crypto assets borrowed or total Crypto asset borrowings, as applicable.

The following table provides a rollforward of Crypto assets borrowed (in thousands):


	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024
Beginning balance	$	223,123	$	45,212
Borrowing activity:
Borrowings	128,287		353,325
Repayment of borrowings	(76,704)		(176,990)
Lending activity:
Origination of loan receivables(1)	(343,437)		(1,055,533)
Customer repayment of loan receivables(1)	344,413		1,056,298
Gains	4,490		40,198
Losses	(27,287)		(9,625)
Ending balance	$	252,885	$	252,885

(1)Represents loans originated from borrowed assets. See Note 8. Crypto Assets Held for Investment for loans originated from assets held for investment.

No cumulative realized gains or losses occurred during the periods presented as no Crypto assets borrowed were sold.

Under the terms of the Company’s crypto asset borrowing arrangements, the Company may be required to maintain a collateral to borrowing ratio and pledge fiat, USDC, or crypto assets as collateral. The Company may use borrowed assets to fulfill these requirements. If the lender has the right to use the Company’s collateral, or if the collateral is fiat, the Company records the collateral pledged as Assets pledged as collateral in 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

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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.

The fair value of the Company’s corporate assets pledged as collateral against Crypto asset borrowings consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
Assets pledged as collateral
USDC	$	58,528	$	51,880
Fiat	—		1,191
Total pledged as collateral	$	58,528	$	53,071
Assets pledged as collateral not meeting derecognition criteria
USDC	$	241,145	$	29,577

7. ACCOUNTS RECEIVABLE, NET

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


	September 30,		December 31,
	2024		2023
Stablecoin revenue receivable	$	81,285	$	57,885
Customer fee revenue receivable	35,990		23,603
In-transit customer receivables	25,745		42,562
Other accounts receivable	64,762		66,799
Gross accounts receivable	207,782		190,849
Less: allowance for doubtful accounts	(20,778)		(22,559)
Total accounts receivable, net	$	187,004	$	168,290

8. CRYPTO ASSETS HELD FOR INVESTMENT

The following table summarizes Crypto assets held for investment (in thousands, except units):


	September 30, 2024					December 31, 2023
	Units	Cost Basis		Fair Value		Carrying Value(1)
Bitcoin	9,363	$	243,296	$	592,684	$	126,614
Ethereum	119,696	271,943		311,394		129,131
Other crypto assets(2)	nm	341,259		356,640		74,865
Total held for investment		$	856,498	$	1,260,718	$	330,610

nm - not meaningful

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

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

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table provides a rollforward of Crypto assets held for investment (in thousands):


	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024
Beginning balance	$	1,234,158	$	330,610
Cumulative-effect adjustment from adoption of ASU 2023-08	—		717,373
Additions(1)	69,740		85,149
Sales	(4,358)		(68,982)

Lending activity:
Origination of loan receivables(2)	(62,946)		(188,580)
Customer repayment of loan receivables(2)	144,631		174,246
Gains(3)	43,566		311,000
Losses(3)	(164,073)		(100,098)
Ending balance	$	1,260,718	$	1,260,718

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

(2)Represents loans originated from Crypto assets held for investment. See Note 6. Collateralized Arrangements and Financing for loans originated from borrowed assets.

(3)We measure gains and losses by each asset held. These amounts include cumulative realized gains of $3.5 million and unrealized losses of $124.0 million during the three months ended September 30, 2024, and cumulative realized gains of $16.9 million and unrealized gains of $194.0 million during the nine months ended September 30, 2024.

As of September 30, 2024, the Company had $111.1 million of crypto assets subject to selling restrictions recorded in Crypto assets held for investment. The selling restrictions are time-based and lift between 2024 and 2029.

9. CUSTOMER ASSETS AND LIABILITIES

The following table presents customer assets and liabilities positions (in thousands):


	September 30,		December 31,
	2024		2023


Customer custodial funds	$	4,035,045	$	4,570,845
Safeguarding customer crypto assets	272,669,307		192,583,060
Total customer assets	$	276,704,352	$	197,153,905

Customer custodial cash liabilities	$	4,035,045	$	4,570,845
Safeguarding customer crypto liabilities	272,669,307		192,583,060
Total customer liabilities	$	276,704,352	$	197,153,905

Safeguarding customer crypto assets and liabilities represent the Company’s obligation to safeguard customer crypto assets. During the nine months ended September 30, 2024 and 2023, no losses were incurred in connection with customer custodial funds or safeguarding customer crypto assets.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table sets forth the fair values of Safeguarding customer crypto assets and liabilities by asset type (in thousands, except percentages):


	September 30, 2024				December 31, 2023
	Fair Value		% of Total		Fair Value		% of Total
Bitcoin	$	143,160,959	52	%	$	89,864,637	47	%
Ethereum	43,330,072		16	%	40,200,059		21	%
Solana	17,865,901		7	%	12,906,278		6	%
Other crypto assets(1)	68,312,375		25	%	49,612,086		26	%
Total safeguarding customer crypto assets and liabilities	$	272,669,307	100	%	$	192,583,060	100	%

(1)Includes various other crypto asset balances, including stablecoins that are considered crypto assets for safeguarding purposes, none of which individually represented more than 5% of total Safeguarding customer crypto assets and liabilities.

10. OTHER CONDENSED CONSOLIDATED BALANCE SHEETS DETAILS

The following table presents certain other details of the Condensed Consolidated Balance Sheets (in thousands):


	September 30,		December 31,
	2024		2023
Other current assets
Crypto assets held for operations	$	98,277	$	74,103
Prepaid expenses	58,507		79,552
Assets pledged as collateral(1)	63,128		53,071
Income taxes receivable	16,831		63,726
Other	19,232		16,191
Total other current assets	$	255,975	$	286,643

Other non-current assets
Strategic investments	$	359,051	$	343,045
Software and equipment, net	193,000		192,550
Intangible assets, net	52,060		86,422
Income taxes receivable	55,968		—
Other	39,615		32,577
Total other non-current assets	$	699,694	$	654,594

Accrued expenses and other current liabilities
Accrued payroll and payroll related expenses	$	192,645	$	224,237
Other accrued expenses	139,244		89,254
Accounts payable	39,375		39,294
Income taxes payable	7,122		17,366
Other payables	122,217		126,032
Total accrued expenses and other current liabilities	$	500,603	$	496,183

(1)See Note 6. Collateralized Arrangements and Financing for details on the portion relating to Crypto asset borrowings.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Crypto assets held for operations

The following table summarizes Crypto assets held for operations (in thousands, except units):


	September 30, 2024					December 31, 2023
	Units	Cost Basis		Fair Value		Carrying Value(1)
Bitcoin	99	$	5,912	$	6,259	$	7,243
Ethereum	10,687	24,144		27,755		15,775
Solana	198,125	29,029		29,951		10,275
Other crypto assets(2)	nm	48,809		34,312		40,810
Total held for operations		$	107,894	$	98,277	$	74,103

nm - not meaningful

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

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

11. LONG-TERM DEBT

The components of Long-term debt as of September 30, 2024 and December 31, 2023 were as follows (in thousands, except percentages):


	Effective Interest Rate		Principal Amount		Unamortized Debt Discount and Issuance Costs		Net Carrying Amount
September 30, 2024
0.50% 2026 Convertible Notes due on June 1, 2026	0.98	%	$	1,273,013	$	(10,899)	$	1,262,114
3.38% 2028 Senior Notes due on October 1, 2028	3.57	%	1,000,000		(6,981)		993,019
0.25% 2030 Convertible Notes due on April 1, 2030	0.55	%	1,265,000		(20,229)		1,244,771
3.63% 2031 Senior Notes due on October 1, 2031	3.77	%	737,457		(6,314)		731,143
Total			$	4,275,470	$	(44,423)	$	4,231,047

December 31, 2023
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.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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.

Beginning with the third quarter of 2024, the 2030 Convertible Notes are convertible at the option of the holder 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 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 accounts for the 2030 Convertible Notes wholly as debt because (1) the conversion features do not require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging 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 September 30, 2024, the outstanding aggregate principal balance of the 2030 Convertible Notes and the related unamortized discounts were $1.3 billion and $20.2 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

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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 in 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.

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.

12. DERIVATIVES

During the periods presented, the Company’s derivatives were all embedded forward contracts to receive or deliver a fixed amount of crypto assets in the future.

Impact of derivatives on the Condensed Consolidated Balance Sheets

The following table summarizes the balance sheet impact of derivative instruments as measured in U.S. dollar equivalents (in thousands):


Condensed Consolidated Balance Sheets Location	Notional		Fair Value, Net		Total
September 30, 2024
Not designated as hedging instruments
Accounts receivable, net(1)	$	8,616	$	9,705	$	18,321
Crypto asset borrowings	220,867		44,392		265,259

Accrued expenses and other current liabilities(1)	28,015		187		28,202

December 31, 2023
Designated as hedging instruments
Crypto asset borrowings	$	31,666	$	13,547	$	45,213
Not designated as hedging instruments
Accounts receivable, net(1)	16,335		28,065		44,400
Crypto asset borrowings	12,503		5,264		17,767
Accrued expenses and other current liabilities(1)	20,092		590		20,682

(1)Represents the portion of the Condensed Consolidated Balance Sheet line item that is denominated in crypto assets.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table summarizes information on derivatives by accounting designation (in thousands):


	Gross Derivative Assets						Gross Derivative Liabilities
Condensed Consolidated Balance Sheets Location	Not Designated as Hedges		Designated as Hedges		Total Derivative Assets		Not Designated as Hedges		Designated as Hedges		Total Derivative Liabilities
September 30, 2024
Accounts receivable, net	$	9,705	$	—	$	9,705	$	—	$	—	$	—
Crypto asset borrowings	12,585		—		12,585		56,977		—		56,977

Accrued expenses and other current liabilities	2,473		—		2,473		2,660		—		2,660
Total fair value of derivatives	$	24,763	$	—	$	24,763	$	59,637	$	—	$	59,637

December 31, 2023
Accounts receivable, net	$	28,065	$	—	$	28,065	$	—	$	—	$	—
Crypto asset borrowings	26		(25)		1		5,290		13,522		18,812
Accrued expenses and other current liabilities	2,511		—		2,511		3,101		—		3,101
Total fair value of derivatives	$	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 recorded in the Condensed Consolidated Statements of Operations were as follows (in thousands):


	Derivatives		Hedged Items		Income Statement Impact(4)		Derivatives		Hedged Items		Income Statement Impact(4)
	Three Months Ended September 30, 2024						Nine Months Ended September 30, 2024



Not designated as hedging instruments
Crypto asset borrowings(1)	$	23,797	$	—	$	23,797	$	(26,018)	$	—	$	(26,018)
Obligation to return collateral(1)	1,581		—		1,581		(30,511)		—		(30,511)
Other(2)	4,712		—		4,712		(9,921)		—		(9,921)
Total	$	30,090	$	—	$	30,090	$	(66,450)	$	—	$	(66,450)


	Three Months Ended September 30, 2023						Nine Months Ended September 30, 2023
Designated as hedging instruments
Crypto asset futures(3)	$	1,329	$	(1,331)	$	(2)	$	(41,782)	$	47,160	$	5,378
Crypto asset borrowings(3)	12,707		(4,247)		8,460		(75,848)		44,686		(31,162)
Not designated as hedging instruments
Accounts receivable, net(3)	(8,466)		—		(8,466)		38,614		—		38,614
Other(2)	12,320		—		12,320		12,963		—		12,963
Total	$	17,890	$	(5,578)	$	12,312	$	(66,053)	$	91,846	$	25,793

(1)As of January 1, 2024, the date of the Company’s adoption of ASU 2023-08, changes in fair value are recorded in Transaction expense in the Condensed Consolidated Statements of Operations.

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

(3)Prior to adoption of ASU 2023-08, changes in fair value were recorded in Other operating (income) expense, net 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, by the impact of associated naturally offsetting positions in the Condensed Consolidated Statements of Operations.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

13. 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):


	September 30, 2024				December 31, 2023
	Level 1		Level 2			Level 1		Level 2
Assets
Cash equivalents(1)	$	6,087,747	$	—		$	3,682,917	$	—
Restricted cash equivalents(2)	15,970		—			—		—
Customer custodial funds(3)	2,818,825		—			3,301,029		—
Safeguarding customer crypto assets	—		272,669,307			—		192,583,060
Crypto asset loan receivables	—		31,979			—		22,229

Crypto assets borrowed(4)	252,885		—			45,212		—
Crypto assets held for operations	98,277		—			—		—
Crypto assets held for investment	1,260,718		—			—		—
Derivative assets(5)	—		24,763			—		30,577
Total assets	$	10,534,422	$	272,726,049		$	7,029,158	$	192,635,866

Liabilities
Safeguarding customer crypto liabilities	$	—	$	272,669,307		$	—	$	192,583,060
Derivative liabilities(5)	—		59,637			—		21,913
Total liabilities	$	—	$	272,728,944		$	—	$	192,604,973

(1)Represents cash equivalents, which comprise money market funds and government bonds. Excludes cash, comprising $1.5 billion of corporate cash held in deposit at banks and $92.0 million held at venues as of September 30, 2024 and $1.4 billion of corporate cash held in deposit at banks and $88.8 million held at venues as of December 31, 2023.

(2)Represents restricted cash equivalents, which comprise money market funds. Excludes restricted cash, comprising $15.9 million held in deposit at banks and held at venues as of September 30, 2024.

(3)Represents customer custodial cash equivalents, which comprise money market funds. Excludes customer custodial funds, comprising $1.2 billion and $1.3 billion held in deposit at financial institutions and customer custodial funds in transit as of September 30, 2024 and December 31, 2023, respectively.

(4)December 31, 2023 amount represents crypto assets designated as hedged items in fair value hedges.

(5)See Note 12. Derivatives for additional details.

The Company has valued all Level 2 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 software and equipment, goodwill, crypto assets held prior to the adoption of ASU 2023-08, and other intangible assets, are adjusted to fair value when an impairment charge is recognized.

The Company’s strategic investments are recorded at cost and adjusted to fair value for observable transactions for same or similar investments of the same issuer or for impairment, on a non-recurring basis. Fair value measurements for strategic investments are based predominantly on Level 3 inputs to 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.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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


	Nine Months Ended September 30,
	2024		2023
Beginning balance	$	330,346	$	315,285
Net additions(1)	26,931		54,271
Upward adjustments	1,861		62
Previously held interest in ORDAM (see Note 4)	—		(20,000)
Impairments and downward adjustments	(18,217)		(5,774)
Ending balance	$	340,921	$	343,844

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

The following table summarizes the cumulative impact from remeasurement of measurement alternative investments outstanding at the dates shown, recorded in Other income, net (in thousands):


	September 30,		December 31,
	2024		2023
Cumulative upward adjustments	$	6,774	$	4,913
Cumulative impairments and downward adjustments	$	(145,262)	$	(127,045)

Assets and liabilities not measured and recorded at fair value

Certain of the Company’s financial instruments, including cash, restricted cash, certain customer custodial funds and related liabilities, USDC, fiat accounts and loan receivables, fiat and USDC collateral, and fiat accounts payable are not measured and recorded 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 valuation inputs, except for fiat accounts receivable, fiat loan receivables, and fiat accounts payable which would be based on Level 2 valuation inputs.

The Company’s long-term debt is not measured and recorded at fair value. As of September 30, 2024, the estimated fair value of the 2026 Convertible Notes, the 2030 Convertible Notes, the 2028 Senior Notes, and the 2031 Senior Notes were $1.2 billion, $1.1 billion, $897.5 million and $624.1 million, respectively. As of December 31, 2023, the estimated fair value of the 2026 Convertible Notes, the 2028 Senior Notes, and the 2031 Senior Notes were $1.2 billion, $828.4 million, and $557.8 million, respectively. These are based on quoted prices for these instruments in markets that are not active and other market observable inputs, which are considered Level 2 valuation inputs.

14. STOCK-BASED COMPENSATION

Stock options

A summary of stock options activity is as follows (in thousands, except per share and years data):


		Weighted Average
	Options Outstanding	Exercise Price Per Share		Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance at January 1, 2024	28,697	$	25.01	6.1	$	4,295,055
Exercised	(3,901)	20.45
Forfeited and cancelled	(71)	57.74
Balance at September 30, 2024	24,725	$	25.63	5.5	$	3,788,857

Exercisable at September 30, 2024	18,591	$	26.35	5.3	$	2,839,868
Vested and expected to vest at September 30, 2024	18,591	$	26.35	5.3	$	2,839,868

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

As of September 30, 2024, there was total unrecognized compensation cost of $32.4 million related to unvested stock options, which cost is expected to be recognized over a weighted-average period of 2.6 years.

Other awards

A summary of restricted stock unit, performance restricted stock unit, and restricted common stock (“Other Awards”) activity is as follows (in thousands, except per share data):


	Restricted Stock Units			Performance Restricted Stock Units			Restricted Common Stock
	Number of Shares	Fair Value(1)		Number of Shares	Fair Value(1)		Number of Shares	Fair Value(1)
Balance at January 1, 2024	3,016	$	108.07	804	$	55.42	543	$	114.22
Granted	5,340	145.46		—	—		—	—
Vested	(4,710)	134.85		(80)	55.42		(199)	138.05
Forfeited and cancelled	(601)	130.24		—	—		(4)	267.48
Balance at September 30, 2024	3,045	$	127.85	724	$	55.42	340	$	98.49

(1)Represents the weighted-average grant date fair value per share.

As of September 30, 2024, there was unrecognized compensation cost related to Other Awards as follows (in thousands, except years data):


	Unrecognized Compensation		Weighted-Average Recognition Period (Years)
Restricted stock units	$	328,688	1.2
Performance restricted stock units	$	11,223	1.2
Restricted common stock	$	13,458	1.0

Stock-based compensation

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Statements of Operations
Technology and development	$	155,411	$	130,776	$	428,863	$	376,941
Sales and marketing	18,720		16,556		52,034		45,695
General and administrative	74,285		70,821		209,957		194,149
Restructuring	—		—		—		84,042
Total stock-based compensation expense	$	248,416	$	218,153	$	690,854	$	700,827

Balance Sheets
Other non-current assets(1)	$	11,276	$	15,745	$	34,776	$	44,725

(1)Represents capitalized stock-based compensation that is recorded in Software and equipment, net within this financial statement line item. See Note 10. Other Condensed Consolidated Balance Sheets Details for additional details.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

15. OTHER INCOME, NET

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Losses (gains) on strategic investments, net	$	478	$	(48,488)	$	15,141	$	(38,330)
(Gains) losses on foreign exchange, net	(4,848)		382		(3,518)		10,916
Gain on extinguishment of long-term debt, net	—		(81,591)		—		(99,446)
Other	(35,735)		(5,610)		(33,506)		(4,746)
Total other income, net	$	(40,105)	$	(135,307)	$	(21,883)	$	(131,606)

16. INCOME TAXES

For the nine months ended September 30, 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 (“ETR”), 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 September 30, 2024 and 2023 was (10.1)% and 106.5%, respectively. The effective tax rate of (10.1)% for the three months ended September 30, 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. The Company’s ETR for the nine months ended September 30, 2024 and 2023 was 10.9% and 14.9%, respectively. The ETR of 10.9% for the nine months ended September 30, 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 September 30, 2024, the Company had a net deferred tax asset balance of $1.0 billion, 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 Company’s adoption of ASU 2023-08 and the deferred tax provision of $61.1 million recorded on pretax earnings and other comprehensive income (loss) during the nine months ended September 30, 2024. 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. Management determined that there is sufficient positive evidence to conclude that it is more likely than not that the Company’s net deferred tax asset will be fully realized.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

17. NET INCOME (LOSS) PER SHARE

The computation of Net income (loss) per share, including the weighted average shares outstanding used in the computation (“WASO”), is as follows (in thousands, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Numerators
Net income (loss)	$	75,495	$	(2,265)	$	1,287,890	$	(178,566)
Less: Income allocated to participating shares	(40)		—		(784)		—
Net income (loss) attributable to common stockholders, basic	$	75,455	$	(2,265)	$	1,287,106	$	(178,566)

Net income (loss)	$	75,495	$	(2,265)	$	1,287,890	$	(178,566)
Add: Interest on the Convertible Notes, net of tax	—		—		9,773		—
Less: Income allocated to participating shares	(36)		—		(714)		—
Net income (loss) attributable to common stockholders, diluted	$	75,459	$	(2,265)	$	1,296,949	$	(178,566)

Denominators
WASO - basic	248,834		237,270		245,986		234,479
Weighted-average effect of potentially dilutive shares:
Stock options	16,241		—		17,342		—
Convertible Notes	—		—		6,205		—
Restricted stock units	1,720		—		2,073		—
Performance restricted stock units	384		—		357		—
Restricted common stock	261		—		276		—

WASO - diluted	267,440		237,270		272,239		234,479

Net income (loss) per share attributable to common stockholders:
Basic	$	0.30	$	(0.01)	$	5.23	$	(0.76)
Diluted	$	0.28	$	(0.01)	$	4.76	$	(0.76)

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.

The rights, including the liquidation and dividend rights, of the holders of Class A 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 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):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Stock-based compensation awards(1)	7,416	38,063	7,416	38,063
Convertible Notes	7,229	3,706	—	3,706
Total	14,645	41,769	7,416	41,769

(1)Includes shares under the ESPP.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

18. 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 and certain of their advisors; 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.

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.

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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. On June 27, 2024, defendants filed an answer to the amended complaint, and on July 29, 2024, the defendants filed a Motion for Judgment on the Pleadings requesting the District Court dismiss the remaining claims. 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.

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 completed an agreed additional investment of $50.0 million in its compliance function as of the quarter ended June 30, 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, and another settlement offer was made and rejected in May 2024. On July 30, 2024, the Court of Chancery of the State of Delaware issued an opinion determining the fair value of FairX to be the deal price ascribed by the parties at the time of the transaction, plus both pre- and post-judgment interest. On October 29, 2024, final judgment was entered reflecting this fair value, and the appeal period will expire on December 2, 2024. Should either party appeal, the Company cannot reasonably estimate the potential impact beyond the amounts recorded.

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

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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 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, including 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

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

condition and results of operations, and accordingly, the related impact on the Company’s financial condition and results of operations is not estimable.

19. RELATED PARTY TRANSACTIONS

Revenue and Accounts receivable, net

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 $5.1 million and $3.4 million during the three months ended September 30, 2024 and 2023, respectively, and $18.7 million and $11.6 million during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, Accounts receivable, net from related party customers were $2.5 million and $3.4 million, respectively.

Customer assets and liabilities

Safeguarding customer crypto assets and safeguarding customer crypto liabilities for related parties as of September 30, 2024 and December 31, 2023 were $8.3 billion and $8.8 billion, respectively. Customer custodial funds and Customer custodial cash liabilities for related parties as of September 30, 2024 and December 31, 2023 were $5.5 million and $348.0 million, respectively.

Other assets

The Company made strategic investments of an aggregate of $3.5 million and an immaterial amount for the three months ended September 30, 2024 and 2023, respectively, and $6.8 million and $1.9 million for the nine months ended September 30, 2024 and 2023, 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 September 30, 2024 and 2023, the Company incurred $0.2 million and $0.4 million, respectively, and during the nine months ended September 30, 2024 and 2023, $1.6 million and $1.0 million, respectively, for professional and consulting services provided by entities affiliated with related parties. As of September 30, 2024 and December 31, 2023, Accounts payable to related party parties were immaterial.

20. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

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


	Nine Months Ended September 30,
	2024		2023
USDC	$	(294,104)	$	464,728
Accounts receivable, net	(37,759)		81,317
Customer custodial funds in transit	4,039		(28,055)
Income taxes, net	(19,341)		(157)
Other current and non-current assets	(7,106)		21,244
Other current and non-current liabilities	31,655		(24,527)
Net changes in operating assets and liabilities	$	(322,616)	$	514,550

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following is a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents (in thousands):


	September 30,
	2024		2023
Cash and cash equivalents	$	7,723,806	$	5,100,799
Restricted cash and cash equivalents	31,881		26,319
Customer custodial cash and cash equivalents	3,861,326		3,384,067
Total cash, cash equivalents, and restricted cash and cash equivalents	$	11,617,013	$	8,511,185

The following is a supplemental schedule of non-cash investing and financing activities (in thousands):


	Nine Months Ended September 30,
	2024		2023
Crypto asset loan receivables originated	$	1,244,113	$	409,027
Crypto asset loan receivables repaid	1,230,544		446,095
Cumulative-effect adjustment due to the adoption of ASU 2023-08	561,489		—
Non-cash assets received as collateral returned	495,574		237,681
Non-cash assets received as collateral	465,063		242,883
Crypto assets borrowed	353,325		399,460
Crypto assets borrowed repaid with crypto assets	176,990		437,254
Non-cash assets pledged as collateral	75,893		128,587
Non-cash assets pledged as collateral returned	69,245		140,818






Non-cash consideration paid for business combinations	—		51,494
Crypto assets received on settlement of futures contract	—		48,491

21. SUBSEQUENT EVENTS

In October 2024, the Company’s board of directors authorized a share repurchase program of up to $1.0 billion of the Company’s Class A common stock without expiration (the “Share Repurchase Program”). Repurchases may be made at management’s discretion from time to time on the open market (including through trading plans intended to qualify under Rule 10b5-1 under the Exchange Act), through privately negotiated transactions, or by other methods in accordance with applicable securities laws and other restrictions. The timing and amount of any repurchases will depend on market conditions and other considerations. The Share Repurchase Program does not obligate the Company to repurchase any dollar amount or number of shares of the Company’s Class A common stock, and the program may be modified, suspended, or discontinued at any time.

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