United States securities and exchange commission logo
February 5, 2021
Brian Armstrong
Chief Executive Officer
Coinbase Global, Inc.
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
Re: Coinbase Global,
Inc.
Amendment No. 1 to
Draft Registration
Statement on Form S-1
Submitted December
21, 2020
CIK No. 0001679788
Dear Mr. Armstrong:
We have reviewed your amended registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Unless we note
otherwise, our references to prior comments are to comments in our
December 7, 2020 letter.
Draft Registration Statement submitted December 21, 2020
General
1. Please refer to your
response to comment 4. With respect to the risk-based scoring model,
please tell us in
greater detail the purpose of assigning weights to the various inputs,
explain the methodology
used to determine specific weighting, and how qualitative factors
are accounted for by
the model. Please also address the utility of a weighted scoring
system given that
public guidance reference non-exhaustive and non-weighted factors.
Lastly, discuss the
role of the score in a particular determination, for instance, would a
higher score result in
more fact gathering or intensive analysis.
Brian Armstrong
FirstName LastNameBrian Armstrong
Coinbase Global, Inc.
Comapany5,NameCoinbase
February 2021 Global, Inc.
February
Page 2 5, 2021 Page 2
FirstName LastName
2. Please refer to your response to comment 5. We note your statement
that [i]n discussions
with the Staff on August 20, 2020, the Company shared the Company s
legal analysis
concluding that these Staking 2.0 services should not be viewed as an
investment contract
or securities brokerage, and are also therefore outside the scope of
the U.S. federal
securities laws. Please acknowledge that the Staff neither agreed
nor disagreed with the
legal analysis presented in the August 20, 2020 meeting. In addition,
please revise the
regulatory risk factor beginning on page 20 of the prospectus to note
that there is
regulatory uncertainty regarding the status of your staking activities
under the federal
securities laws.
3. Please refer to your response to comment 6. You state that you may
participate in one or
more investor day presentations and/or post presentation(s) which
may be made available
through your website or other broadly-available means. Please
tell us whether and in
what regard the post presentations are similar or different from an
investor day or investor
education meeting. Please also disclose the other
broadly-identified means. In addition,
you state that during the restricted period you may, among other
things, issue press
releases in fulfillment of your obligations as a reporting company.
Please tell us the
nature, contents, and timing of these required press releases.
4. We note the disclosure in the prospectus summary that you are a
regulated financial
technology provider and a regulated marketplace, as well as
similar disclosure as to
your business and operations being regulated throughout the risk
factors. While it
appears that certain aspects of your activities may be subject to
regulation or regulatory
license, it is not clear the extent to which the material aspects of
your business and
operations are actually subject to such regulation or regulatory
license. Please revise to
provide more balanced disclosure by including disclosure of the extent
to which the
material aspects of your business and operations are not regulated.
For example, your
trading platform operations do not appear to be subject to regulation
in a similar manner
as other regulated trading platforms, such as national securities
exchanges or designated
contract markets.
Cover Page
5. Please refer to your response to comment 9. Please confirm our
understanding that by
notifying Nasdaq that the shares are ready to trade Goldman
Sachs is simultaneously
approving proceeding at such Current Reference Price (Opening
Price) or advise. In
this regard, please also confirm, if true, that Goldman Sachs (as
designated financial
advisor) is not obligated to notify Nasdaq that the shares are
ready to trade until Nasdaq
has calculated the Current Reference Price (Opening Price) and
displayed it to Goldman
Sachs.
6. Please refer to your response to comment 10. You state that the
financial advisors may be
available to consult with Nasdaq, including about pre-listing
selling and buying interest
and other factors that would not be available to Nasdaq through other
sources. Please
describe the nature of this information. Please also describe the
nature and timing of input
Brian Armstrong
FirstName LastNameBrian Armstrong
Coinbase Global, Inc.
Comapany5,NameCoinbase
February 2021 Global, Inc.
February
Page 3 5, 2021 Page 3
FirstName LastName
from the financial advisors and other market participants Nasdaq may
consider in
performing price validation checks.
7. Please refer to your response to comment 10. You state Nasdaq may
consult with more
than one financial advisor in connection with determining the price
that Nasdaq enters
during the system setup for use by the system in determining the
pricing/opening of a
direct listing as described in the paragraph above at the time of
commencement of
trading. Please tell us the specific Nasdaq rule you are relying on
and provide your
analysis in support of this statement. In your response, please
clarify at what point in time
system setup occurs with respect to the price discovery process
for the direct listing.
A particular crypto asset s status as a security , page 26
8. Please refer to the last two paragraphs. Please place this risk factor
in context by
disclosing that you have removed XRP from trading on your platform.
Risks Related to Crypto Assets
A temporary or permanent blockchain fork to any supported crypto asset
could adversely
affect our business, page 42
9. We note your response to comment 18. You state that the Company
recognizes crypto
assets received through airdrops or forks if the crypto asset is
expected to generate
probable future benefit and the Company is able to support the
trading, custody, or
withdrawal of these assets. You further state that the Company records
the crypto assets
received through airdrops or forks at their cost. Please provide us
with the following
additional information:
Explain why, under GAAP, your ability to support the crypto
assets has any bearing
on whether those assets should be recognized;
Explain how the value of a crypto asset when acquired is an
indicator of probable
future benefit; and
Tell us what you mean when you state that the company records
the crypto assets it
receives at their cost.
10. Please elaborate on your policy for supporting forked and airdropped
crypto assets.
Specifically, please clarify for us whether upon determining you will
support a specific
fork or airdrop, customers that hold the source digital asset on your
platform (e.g. bitcoin)
automatically receive the resulting forked or airdropped asset.
Trading Volume, page 90
11. We note your volume of trading and revenue generated from Other Crypto
assets have
increased significantly during 2020. Please revise to provide a
further breakout of the
component that make up the Other Crypto assets and discuss the
reasons for period over
period fluctuations by crypto asset. Further ensure your MD&A includes
discussion of
known material events and uncertainties that would cause reported
financial information
Brian Armstrong
Coinbase Global, Inc.
February 5, 2021
Page 4
not to be necessarily indicative of future operating performance or of
future financial
condition. For example, specify and discuss any changes in the
availability and/or trading
volume of other crypto assets that would impact these trends or
future operating
performance. Refer to Instruction 3 to Item 303(a) of Regulation S-K and
SEC Release
No. 33-8350 for more information.
Welcome to the Cryptoeconomy, page 110
12. Please refer to your response to comment 34. Please describe here the
criteria you use in
determining whether to support forked or airdropped crypto assets.
Retail, page 121
13. We note your revised disclosure regarding the "Save" product. Please
clarify for us how
this product works and whether the activities undertaken in connection
with the product
constitute a security or otherwise are subject to regulation.
Plan of Distribution, page 176
14. Please refer to your response to comment 48. In light of your description
of the scope and
timing of activities by the various financial advisors and active market
makers, please tell
us how you will ensure an independent price discovery process for this
direct listing, and
how registered stockholders will be able to effect ordinary brokerage
transactions into an
independent market on Nasdaq (i.e., one not dominated or controlled
by the Company,
the financial advisors, or any of their affiliated purchasers, and
without the use of any
special selling efforts or selling methods).
Note 4. Acquisitions
Xapo, page F-20
15. Please refer to comment 53. We note the guidance you reference in ASC
815-40-15-5
applies to freestanding financial instruments. Please tell us how you
determined the
contingent consideration provision was a freestanding financial
instrument.
You may contact John Spitz, Staff Accountant, at (202) 551-3484 or
Michael Volley,
Staff Accountant, at (202) 551-3437 if you have questions regarding comments on
the financial
statements and related matters. Please contact J. Nolan McWilliams,
Attorney-Advisor, at (202)
551-3217 or Dietrich King, Attorney-Advisor, at (202) 551-8071 with any other
questions.
Sincerely,
FirstName LastNameBrian Armstrong
Division of
Corporation Finance
Comapany NameCoinbase Global, Inc.
Office of Finance
February 5, 2021 Page 4
cc: Michael A. Brown, Esq.
FirstName LastName