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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from     to     .

Commission file number 001-04321
Coinbase Global, Inc.
(Exact name of registrant as specified in its charter)
Delaware46-4707224
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
Not Applicable(1)
Not Applicable(1)
(Address of Principal Executive Offices)(Zip Code)
Not Applicable(1)
Registrant's telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.00001 par value per shareCOINNasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes     No   ☐  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes     No   ☐ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐Accelerated filer
 ☐
Non-accelerated filer   ☒Smaller reporting company 
Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes        No   ☒

As of August 2, 2022, the number of shares of the registrant's Class A common stock outstanding was 176,833,689 and the number of shares of the registrant's Class B common stock outstanding was 48,310,752.
(1) We are a remote-first company. Accordingly, we do not maintain a headquarters. For purposes of compliance with applicable requirements of the Securities Act of 1933, as amended, and Securities Exchange Act of 1934, as amended, stockholder communications required to be sent to our principal executive offices may be directed to the email address set forth in our proxy materials and/or identified on our investor relations website.



TABLE OF CONTENTS
Page



1


SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements.
Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our future financial performance, including our expectations regarding our net revenue, operating expenses, and our ability to achieve and maintain future profitability;
our business plan and our ability to effectively manage any growth;
anticipated trends, growth rates, and challenges in our business, the cryptoeconomy, and in the markets in which we operate;
market acceptance of our products and services;
beliefs and objectives for future operations;
our ability to maintain, expand, and further penetrate our existing customer base;
our ability to develop new products and services and grow our business in response to changing technologies, customer demand, and competitive pressures;
our expectations concerning relationships with third parties;
our ability to maintain, protect, and enhance our intellectual property;
our ability to continue to expand internationally;
the effects of increased competition in our markets and our ability to compete effectively;
future acquisitions of or investments in complementary companies, products, services, or technologies and our ability to successfully integrate such companies or assets;
our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally;
economic and industry trends, projected growth, or trend analysis;
trends in revenue, cost of revenue, and gross margin;
trends in operating expenses, including Technology and development expenses, Sales and marketing expenses, and General and administrative expenses, and expectations regarding these expenses as a percentage of revenue;
our key business metrics used to evaluate our business, measure our performance, identify trends affecting our business, and make strategic decisions;
increased expenses associated with being a public company; and
other statements regarding our future operations, financial condition, and prospects and business strategies.
2


We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors, including those described in the section titled Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on any forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in such forward-looking statements.
Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, restructurings, joint ventures, partnerships, or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Risk Factors Summary
Consistent with the foregoing, our business is subject to a number of risks and uncertainties, including those risks discussed at length below. These risks include, among others, the following, which we consider our most material risks:
our operating results have and will significantly fluctuate due to the highly volatile nature of crypto;
our total revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our business, operating results, and financial condition would be adversely affected;
our net revenue is primarily from transactions in Bitcoin and Ethereum. If demand for either of these crypto assets declines and is not replaced by new demand for other supported crypto assets, our business, operating results, and financial condition could be adversely affected;
the future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect, our business, operating results, and financial condition could be adversely affected;
3


cyberattacks and security breaches of our platform, or those impacting our customers or third parties, could adversely impact our brand and reputation and our business, operating results, and financial condition;
we are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition;
we operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively;
we compete against a growing number of decentralized and noncustodial platforms and our business may be adversely affected if we fail to compete effectively against them;
as we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will increase and we may be subject to inquiries, investigations and enforcement actions by U.S. and non-U.S. regulators and governmental authorities, including those related to sanctions, export control, and anti-money laundering;
we are and may continue to be subject to material litigation, including individual and class action lawsuits, as well as inquiries, investigations and enforcement actions by regulators and governmental authorities;
if we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our net revenue, could decline, which could adversely impact our business, operating results, and financial condition;
a particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, inquiries, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition;
we currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our ability to support our customers;
loss of a critical banking or insurance relationship could adversely impact our business, operating results, and financial condition;
any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in a loss of customers or funds and adversely impact our brand and reputation and our business, operating results, and financial condition;
our failure to safeguard and manage our customers’ fiat currencies and crypto assets could adversely impact our business, operating results, and financial condition; and
the theft, loss or destruction of private keys required to access any crypto assets held in custody for our own account or for our customers may be irreversible. If we are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any crypto assets, it could cause regulatory scrutiny, reputational harm, and other losses.

4



PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Coinbase Global, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value data)
(unaudited)
June 30,December 31,
20222021
Assets
Current assets:
Cash and cash equivalents$5,682,068 $7,123,478 
Restricted cash28,962 30,951 
Customer custodial cash7,181,148 10,526,233 
Customer crypto assets(1)
88,453,873 — 
USDC361,714 100,096 
Accounts and loans receivable, net of allowance245,616 396,025 
Income tax receivable62,406 61,231 
Prepaid expenses and other current assets146,463 135,849 
Total current assets102,162,250 18,373,863 
Non-current assets:
Crypto assets held539,683 988,193 
Lease right-of-use assets85,972 98,385 
Property and equipment, net142,209 59,230 
Goodwill1,073,906 625,758 
Intangible assets, net189,508 176,689 
Other non-current assets1,274,715 952,307 
Total assets$105,468,243 $21,274,425 
Liabilities, Convertible Preferred Stock and Stockholders’ Equity
Current liabilities:
Customer custodial cash liabilities$7,071,557 $10,480,612 
Customer crypto liabilities(2)
88,453,873 — 
Accounts payable40,745 39,833 
Accrued expenses and other current liabilities457,399 439,559 
Crypto asset borrowings136,548 426,665 
Lease liabilities, current34,174 32,366 
Total current liabilities96,194,296 11,419,035 
Lease liabilities, non-current59,317 74,078 
Long-term debt3,389,033 3,384,795 
Other non-current liabilities12,208 14,828 
Total liabilities99,654,854 14,892,736 
Commitments and contingencies (Note 18)
Stockholders’ equity:
Class A common stock, $0.00001 par value; 10,000,000 shares authorized at June 30, 2022 and December 31, 2021; 176,087 and 168,807 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
2 2 
Class B common stock, $0.00001 par value; 500,000 shares authorized at June 30, 2022 and December 31, 2021; 48,311 and 48,310 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
  
Additional paid-in capital3,004,459 2,034,658 
Accumulated other comprehensive loss(18,183)(3,395)
Retained earnings2,827,111 4,350,424 
Total stockholders’ equity5,813,389 6,381,689 
Total liabilities, convertible preferred stock and stockholders’ equity$105,468,243 $21,274,425 
__________________
(1)Safeguarding assets
(2)Safeguarding liabilities
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

Coinbase Global, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Revenue:
Net revenue$802,603 $2,033,011 1,967,494 3,629,991 
Other revenue5,722 194,951 7,267 399,082 
Total revenue808,325 2,227,962 1,974,761 4,029,073 
Operating expenses:
Transaction expense167,187 335,426 445,013 569,492 
Technology and development609,249 291,461 1,179,913 475,686 
Sales and marketing140,894 195,733 341,098 313,722 
General and administrative470,169 248,195 883,747 369,426 
Restructuring42,453  42,453  
Other operating expense, net422,762 282,422 681,389 438,309 
Total operating expenses1,852,714 1,353,237 3,573,613 2,166,635 
Operating (loss) income(1,044,389)874,725 (1,598,852)1,862,438 
Interest expense23,656 748 45,794 748 
Other expense (income), net172,524 5,096 205,368 (3,857)
(Loss) income before income taxes(1,240,569)868,881 (1,850,014)1,865,547 
Benefit from income taxes (146,915)(737,468)(326,701)(512,265)
Net (loss) income$(1,093,654)$1,606,349 $(1,523,313)$2,377,812 
Net (loss) income attributable to common stockholders:
Basic$(1,093,654)$1,589,713 $(1,523,313)$1,677,909 
Diluted$(1,099,838)$1,593,150 $(1,529,497)$1,804,860 
Net (loss) income per share attributable to common stockholders:
Basic$(4.95)$7.77 $(6.95)$11.78 
Diluted$(4.98)$6.42 $(6.97)$9.60 
Weighted-average shares of common stock used to compute net (loss) income per share attributable to common stockholders:
Basic220,988 204,728 219,240 142,397 
Diluted221,034 248,147 219,286 187,918 
    
The accompanying notes are an integral part of these condensed consolidated financial statements.
6

Coinbase Global, Inc.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(In thousands)
(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net (loss) income$(1,093,654)$1,606,349 (1,523,313)2,377,812 
Other comprehensive (loss) income:
Translation adjustment, net of tax(14,293)656 (14,788)(3,482)
Comprehensive (loss) income$(1,107,947)$1,607,005 $(1,538,101)$2,374,330 

The accompanying notes are an integral part of these condensed consolidated financial statements.
7

Coinbase Global, Inc.
Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity
(In thousands)
(unaudited)

Three Months Ended June 30,
Convertible Preferred StockAdditional Paid-In Capital Accumulated Other Comprehensive (Loss) IncomeRetained Earnings
Common Stock
SharesAmountShares Amount Total
Balance at April 1, 2022 $ 221,325 $2 $2,579,216 $(3,890)$3,920,765 $6,496,093 
Issuance of common stock upon exercise of stock options, net of repurchases— — 1,115 — 16,446 — — 16,446 
Stock-based compensation expense— — — — 461,556 — — 461,556 
Issuance of common stock upon settlement of Restricted Stock Units ("RSUs") and restricted common stock, net of shares withheld— — 1,803 — (71,301)— — (71,301)
Issuance of common stock under the Employee Stock Purchase Plan— — 155 — 14,863 — — 14,863 
Other— — — — 3,679 — — 3,679 
Comprehensive loss— — — — — (14,293)— (14,293)
Net loss— — — — — — (1,093,654)(1,093,654)
Balance at June 30, 2022 $ 224,398 $2 $3,004,459 $(18,183)$2,827,111 $5,813,389 
Balance at April 1, 2021112,407 $552,037 85,666 $ $804,523 $2,118 $1,497,767 $2,304,408 
Issuance of common stock upon exercise of stock options— — 11,383 — 98,223 — — 98,223 
Stock-based compensation expense— — — — 189,335 — — 189,335 
Issuance of equity instruments as consideration for business combination— — 96 — 14,218 — — 14,218 
Conversion of preferred stock(112,407)(552,037)112,407 2 552,035 — — 552,037 
Issuance of common stock upon settlement of RSUs, net of shares withheld— — 324 — (51,670)— — (51,670)
Purchase of capped calls— — — — (90,131)— — (90,131)
Comprehensive Income— — — — — 656 — 656 
Net income— — — — — — 1,606,349 1,606,349 
Balance at June 30, 2021 $ 209,876 $2 $1,516,533 $2,774 $3,104,116 $4,623,425 
The accompanying notes are an integral part of these condensed consolidated financial statements.
8

Coinbase Global, Inc.
Condensed Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity
(In thousands)
(unaudited)

Six Months Ended June 30,
Convertible Preferred StockAdditional Paid-In Capital Accumulated Other Comprehensive (Loss) IncomeRetained Earnings
Common Stock
SharesAmountShares Amount Total
Balance at January 1, 2022 $ 217,117 $2 $2,034,658 $(3,395)$4,350,424 $6,381,689 
Issuance of common stock upon exercise of stock options, net of repurchases— — 2,240 — 34,942 — — 34,942 
Stock-based compensation expense— — — — 815,094 — — 815,094 
Issuance of equity instruments as consideration for business combinations— — 1,663 — 314,356 — — 314,356 
Issuance of common stock upon settlement of RSUs and restricted common stock, net of shares withheld— — 3,223 — (213,133)— — (213,133)
Issuance of common stock under the Employee Stock Purchase Plan— — 155 — 14,863 — — 14,863 
Other— — — — 3,679 — — 3,679 
Comprehensive loss— — — — — (14,788)— (14,788)
Net loss— — — — — — (1,523,313)(1,523,313)
Balance at June 30, 2022 $ 224,398 $2 $3,004,459 $(18,183)$2,827,111 $5,813,389 
Balance at January 1, 2021112,878 $562,467 73,108 $ $231,024 $6,256 $726,304 $963,584 
Issuance of common stock upon exercise of stock options, net of repurchases— — 19,293 — 137,804 — — 137,804 
Stock-based compensation expense— — — — 294,711 — — 294,711 
Issuance of equity instruments as consideration for business combinations— — 3,680 — 431,897 — — 431,897 
Conversion of preferred stock(112,878)(562,467)112,878 2 562,465 — — 562,467 
Issuance of shares from exercise of warrants— — 412 — 433 — — 433 
Issuance of common stock upon settlement of RSUs, net of shares withheld— — 505 — (51,670)— — (51,670)
Purchase of capped calls— — — — (90,131)— — (90,131)
Comprehensive loss— — — — — (3,482)— (3,482)
Net income— — — — — — 2,377,812 2,377,812 
Balance at June 30, 2021 $ 209,876 $2 $1,516,533 $2,774 $3,104,116 $4,623,425 
The accompanying notes are an integral part of these condensed consolidated financial statements.
9

Coinbase Global, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Six Months Ended June 30,
20222021
Cash flows from operating activities
Net (loss) income$(1,523,313)$2,377,812 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities
Depreciation and amortization73,607 23,534 
Crypto asset impairment expense663,159 175,636 
Investment impairment expense69,289  
Other impairment expense7,949  
Stock-based compensation expense743,637 293,963 
Provision for transaction losses and doubtful accounts(9,016)9,797 
Loss on disposal of property and equipment 11 
Deferred income taxes(337,520)(93,328)
Unrealized loss on foreign exchange115,072 2,392 
Non-cash lease expense14,451 19,338 
Change in fair value of contingent consideration(8,223) 
Realized gain on crypto assets(19,121)(95,454)
Crypto assets received as revenue(290,209)(418,871)
Crypto asset payments for expenses265,816 364,772 
Fair value loss (gain) on derivatives952 (25,215)
Amortization of debt discount and issuance costs4,838 748 
Loss (gain) on investments1,830 (10,271)
Changes in operating assets and liabilities:
USDC(287,984)(118,156)
Accounts and loans receivable43,692 83,754 
Income taxes, net4,058 (437,287)
Other current and non-current assets(663)(126,772)
Customer custodial cash liabilities(3,421,287)5,101,293 
Accounts payable659 23,952 
Lease liabilities(4,033)(18,350)
Other current and non-current liabilities28,585 261,366 
Net cash (used in) provided by operating activities(3,863,775)7,394,664 
Cash flows from investing activities
Purchase of property and equipment(3,741)(235)
Proceeds from sale of property and equipment 31 
Capitalized internal-use software development costs(32,088)(9,787)
Business combinations, net of cash acquired(186,150)(32,992)
Purchase of investments(46,902)(38,631)
Purchase of assembled workforce (24,000)
Proceeds from settlement of investments1,497  
Purchase of crypto assets held(1,204,918)(1,100,865)
Disposal of crypto assets held761,226 937,472 
Loans originated(166,648)(107,596)
Proceeds from repayment of loans259,104 38,855 
Net cash used in investing activities(618,620)(337,748)
The accompanying notes are an integral part of these condensed consolidated financial statements.
10

Coinbase Global, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Six Months Ended June 30,
20222021
Cash flows from financing activities
Issuance of common stock upon exercise of stock options, net of repurchases31,866 149,865 
Taxes paid related to net share settlement of equity awards(213,133)(51,670)
Proceeds received under the Employee Stock Purchase Plan12,031  
Other financing activities3,679  
Issuance of shares from exercise of warrants 433 
Issuance of convertible senior notes, net 1,406,179 
Purchase of capped calls (90,131)
Proceeds from short-term borrowings149,400 20,000 
Repayment of short-term borrowings(170,000) 
Net cash (used in) provided by financing activities(186,157)1,434,676 
Net (decrease) increase in cash, cash equivalents, and restricted cash(4,668,552)8,491,592 
Effect of exchange rates on cash, cash equivalents, and restricted cash(119,932)11,015 
Cash, cash equivalents, and restricted cash, beginning of period17,680,662 4,856,029 
Cash, cash equivalents, and restricted cash, end of period$12,892,178 $13,358,636 
Cash, cash equivalents, and restricted cash consisted of the following:
Cash and cash equivalents$5,682,068 $4,365,982 
Restricted cash28,962 30,842 
Customer custodial cash7,181,148 8,961,812 
Total cash, cash equivalents, and restricted cash$12,892,178 $13,358,636 
Supplemental disclosure of cash flow information
Cash paid during the period for interest$43,630 $ 
Cash paid during the period for income taxes10,002 51,504 
Operating cash outflows for amounts included in the measurement of operating lease liabilities7,020 13,413 
Supplemental schedule of non-cash investing and financing activities
Unsettled purchases of property and equipment$283 $533 
Right-of-use assets obtained in exchange for operating lease obligations3,240 18,460 
Non-cash consideration paid for business combinations324,925 442,760 
Purchase of crypto assets and investments with non-cash consideration17,096 2,090 
Crypto assets borrowed505,176 290,449 
Crypto assets borrowed repaid with crypto assets935,792 59,348 
The accompanying notes are an integral part of these condensed consolidated financial statements.
11

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”).
The Company operates globally and is a leading provider of end-to-end financial infrastructure and technology for the cryptoeconomy. The Company offers retail users the primary financial account for the cryptoeconomy, institutions a state of the art marketplace with a deep pool of liquidity for transacting in crypto assets, and ecosystem partners technology and services that enable them to build crypto-based applications and securely accept crypto assets as payment.
The Company is a remote-first company. Accordingly, the Company does not maintain a headquarters.
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”).
2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and principles of consolidation
The accompanying condensed consolidated financial statements of the Company are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”), on the same basis as the audited consolidated financial statements, and in management’s opinion, reflect all adjustments, consisting only of normal, recurring adjustments, that are necessary for the fair statement of the Company’s condensed consolidated financial statements for the periods presented. The unaudited condensed consolidated results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the full year or any other period.
These condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on February 25, 2022 (the “Annual Report”).
These condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The Company’s subsidiaries are entities in which the Company holds, directly or indirectly, more than 50% of the voting rights or where it exercises control. Certain subsidiaries of the Company have a basis of presentation different from GAAP. For the purposes of these unaudited condensed consolidated financial statements, the basis of presentation of such subsidiaries is converted to GAAP. All intercompany accounts and transactions have been eliminated in consolidation.
There were no changes to the 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.
Reclassifications
Certain prior period amounts have been reclassified in order to conform with the current period presentation. These reclassifications have no impact on the Company’s previously reported consolidated net income.
12

Coinbase Global, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Use of estimates
The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions in the Company’s condensed consolidated financial statements and notes thereto.
Significant estimates and assumptions include the determination of the recognition, measurement, and valuation of current and deferred income taxes; the fair value of stock-based awards issued; the useful lives of long-lived assets; the impairment of long-lived assets; the valuation of privately-held strategic investments, including impairments; the Company’s incremental borrowing rate; the fair value of Customer crypto assets and liabilities; the fair value of assets acquired and liabilities assumed in business combinations, including contingent consideration arrangements; the fair value of derivatives and related hedges; the fair value of long-term debt; assessing the likelihood of adverse outcomes from claims and disputes; and loss provisions.
Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties. To the extent that there are material differences between these estimates and actual results, the Company’s condensed consolidated financial statements will be affected. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the result of which forms the basis for making judgments about the carrying values of assets and liabilities.
Customer custodial cash and Customer custodial cash liabilities
Customer custodial cash represents restricted cash and cash equivalents maintained in segregated Company bank accounts that are held for the exclusive benefit of customers. Customer custodial cash liabilities represent cash deposits held by customers in their fiat wallets and unsettled deposits and withdrawals. The Company restricts the use of the assets underlying the Customer custodial cash to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill its direct obligation under Customer custodial cash liabilities.
Certain jurisdictions where the Company operates require the Company to hold eligible liquid assets, as defined by applicable regulatory requirements and commercial law in these jurisdictions, equal to at least 100% of the aggregate amount of all Customer custodial cash liabilities. Depending on the jurisdiction, eligible liquid assets can include Cash and cash equivalents, Customer custodial cash, and In-transit funds receivable. As of June 30, 2022 and December 31, 2021, the Company’s eligible liquid assets were greater than the aggregate amount of Customer custodial cash liabilities.
Concentration of credit risk
The Company’s Cash and cash equivalents, Restricted cash, Customer custodial cash, and Accounts and loans receivable are potentially subject to concentration of credit risk. Cash and cash equivalents, Restricted cash, and Customer custodial cash are placed with financial institutions which are of high credit quality. The Company invests Cash and cash equivalents, and Customer custodial accounts primarily in highly liquid, highly rated instruments which are uninsured. The Company may also have deposit balances with financial institutions which exceed the Federal Deposit Insurance Corporation insurance limit of $250,000. The Company also holds cash at crypto trading venues and performs a regular assessment of these crypto trading venues as part of its risk management process.
The Company held $361.7 million and $100.1 million of USD Coin (“USDC”) as of June 30, 2022 and December 31, 2021, respectively. In July 2022, the issuer of USDC stated that, as of June 30, 2022, underlying reserves were held in cash and 3-month U.S. Treasuries within segregated accounts for the benefit of USDC holders.
13

Coinbase Global, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
As of June 30, 2022 and December 31, 2021, the Company had no customers who accounted for more than 10% of the Company’s Accounts and loans receivable, net. As of June 30, 2022 and December 31, 2021, the Company had no payment processors or bank partners representing more than 10% of Accounts and loans receivable, net.
During the three and six months ended June 30, 2022 and June 30, 2021, no customer accounted for more than 10% of total revenue.
Derivative contracts
Derivative contracts derive their value from underlying asset prices, other inputs or a combination of these factors. Derivative contracts are recognized as either assets or liabilities in the condensed consolidated balance sheets at fair value, with changes in fair value recognized in Other operating expense, net.
The Company enters into arrangements that result in obtaining the right to receive or obligation to deliver a fixed amount of crypto assets in the future. These are hybrid instruments, consisting of a debt host contract that is initially measured at the fair value of the underlying crypto assets and is subsequently carried at amortized cost, and an embedded forward feature based on the changes in the fair value of the underlying crypto asset. The embedded forward is bifurcated from the host contract, and is subsequently measured at fair value.
Derivatives designated as hedges
The Company applies hedge accounting to certain derivatives executed for risk management purposes. To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. The Company uses fair value hedges primarily to hedge the fair value exposure of crypto asset prices. For qualifying fair value hedges, the changes in the fair value of the derivative and the fair value of the hedged item, the crypto assets, are recognized in current-period earnings in Other operating expense, net in the condensed consolidated statements of operations. Derivative amounts affecting earnings are recognized in the same line item as the earnings effect of the hedged item.
Customer crypto assets and liabilities
Customer crypto assets and liabilities represent the Company’s obligation to safeguard customers’ crypto assets in digital wallets on the Company’s platform. The Company safeguards these assets for customers and is obligated to safeguard them from loss, theft, or other misuse. The Company recognizes Customer crypto liabilities and corresponding Customer crypto assets, on initial recognition and at each reporting date, at fair value of the crypto assets. Any loss, theft, or other misuse would impact the measurement of Customer crypto assets.
Recent accounting pronouncements
Recently adopted accounting pronouncements
On October 28, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 amends Accounting Standards Codification 805 (“ASC 805”) to require acquiring entities to apply Topic 606 - Revenue from Contracts with Customers to recognize and measure contract assets and contract liabilities in a business combination. The Company early adopted the standard on January 1, 2022. The adoption of the standard did not have a material impact on the Company’s condensed consolidated financial statements.
14

Coinbase Global, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
On March 31, 2022, the SEC issued Staff Accounting Bulletin No. 121 (“SAB 121”). SAB 121 sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard crypto assets that an entity holds for its customers. Safeguarding is defined as taking actions to secure customer crypto assets and the associated cryptographic key information and protecting them from loss, theft, or other misuse. The guidance requires an entity to recognize a liability for the obligation to safeguard the users’ assets, and recognize an associated asset for the crypto assets safeguarded. Both the liability and asset should be measured initially and subsequently at the fair value of the crypto assets being safeguarded. The guidance also requires additional disclosures related to the nature and amount of crypto assets that the entity is responsible for holding for its customers, with separate disclosure for each significant crypto asset, and the vulnerabilities the entity has due to any concentration in such activities. The Company has adopted this guidance as of June 30, 2022 with retrospective application as of January 1, 2022. The balances as of January 1, 2022 for the Customer crypto assets and Customer crypto liabilities were both $267.6 billion.
Accounting pronouncements pending adoption
On June 30, 2022, FASB issued Accounting Standards Update No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies that a contractual sale restriction prohibiting the sale of an equity security is a characteristic of the reporting entity holding the equity security and is not included in the equity security's unit of account. The standard requires specific disclosures related to equity securities that are subject to contractual sale restrictions, including (1) the fair value of such equity securities reflected in the balance sheet, (2) the nature and remaining duration of the corresponding restrictions, and (3) any circumstances that could cause a lapse in the restrictions. The new standard is effective for the Company for its fiscal year beginning January 1, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting the standard.
3.    RESTRUCTURING
In June 2022, the Company announced and completed a restructuring impacting approximately 18% of the Company’s headcount, effective immediately. This strategic reduction of the existing global workforce was intended to manage the Company’s operating expenses in response to market conditions and ongoing business prioritization efforts. As a result, approximately 1,100 employees in various departments and locations were terminated. As part of their termination, they were given separation pay and other post-employment benefits. The Company does not expect to incur any additional charges and the cash payments associated with this restructuring are expected to be substantially completed by the third quarter of 2022.
The following expenses were recognized within Restructuring expenses in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 (in thousands), and the associated liability remains outstanding as of June 30, 2022 and is recorded in Accrued expenses and other current liabilities in the condensed consolidated balance sheets:
Separation pay$39,259 
Post-employment benefits3,194 
Total$42,453 


15

Coinbase Global, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
4.    ACQUISITIONS
2022 Acquisitions
Unbound Security, Inc.
On January 4, 2022, the Company completed the acquisition of Unbound Security, Inc. (“Unbound”) by acquiring all issued and outstanding shares of capital stock and stock options of Unbound. Unbound is a pioneer in a number of cryptographic security technologies, which the Company believes will play a key role in the Company’s product and security roadmap.
In accordance with ASC 805, Business Combinations, the acquisition was accounted for as a business combination under the acquisition method. 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, none of which is expected to be deductible for tax purposes. The goodwill balance is primarily attributed to the assembled workforce, synergies, and the use of purchased technology to develop future products and technologies. The final allocation of purchase consideration to assets and liabilities remains in process as the Company continues to evaluate certain balances, estimates, and assumptions during the measurement period (up to one year from the acquisition date). Any changes in the fair value of the assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. During the three and six months ended June 30, 2022, a measurement period adjustment associated with deferred tax assets was recorded, resulting in an increase in Other non-current assets of $4.1 million and a corresponding reduction in Goodwill.
The total consideration transferred in the acquisition was $258.0 million, consisting of the following (in thousands):
Cash$151,424 
Cash payable126 
Class A common stock of the Company103,977 
RSUs for shares of the Company’s Class A common stock2,457 
Total purchase consideration$257,984 
Included in the purchase consideration are $21.7 million in cash and 85,324 shares of the Company’s Class A common stock that are subject to an indemnity holdback. These cash amounts and shares will be released 18 months after the closing date of the transaction.
16

Coinbase Global, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The results of operations and the fair values of the assets acquired and liabilities assumed have been included in the condensed consolidated financial statements from the date of acquisition. The following table summarizes the preliminary fair values of assets acquired and liabilities assumed as of the date of acquisition (in thousands):
Cash and cash equivalents$10,560 
Restricted cash573 
Accounts and loans receivable, net of allowance4,981 
Prepaid expenses and other current assets4,182 
Lease right-of-use assets1,059 
Property and equipment, net1,248 
Goodwill222,732 
Intangible assets28,500 
Other non-current assets3,476 
Total assets277,311 
Accounts payable719 
Accrued expenses and other current liabilities11,325 
Lease liabilities1,059 
Other non-current liabilities6,224 
Total liabilities19,327 
Net assets acquired$257,984 
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 ValueUseful Life at Acquisition (in years)
Developed technology$15,700 
1 - 5
In-process research and development ("IPR&D")2,500 N/A
Customer relationships10,300 2
The intangible assets will be amortized on a straight-line basis over their respective useful lives to Technology and development expenses for developed technology and General and administrative expenses for customer relationships. Amortization of the IPR&D will be recognized in Technology and development expenses once the research and development is placed into service as internally developed software. Management applied significant judgment in determining the fair value of intangible assets, which involved the use of estimates and assumptions with respect to development costs and profit, costs to recreate customer relationships, market participation profit, and opportunity cost.
Total acquisition costs of $3.0 million were incurred in relation to the acquisition, which were recognized as an expense and included in General and administrative expenses in the condensed consolidated statements of operations.
The impact of this acquisition was not considered significant to the Company’s condensed consolidated financial statements for the current period presented and pro forma financial information has not been provided.
17

Coinbase Global, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
FairXchange, Inc.
On February 1, 2022, the Company completed the acquisition of FairXchange, Inc. (“FairX”) by acquiring all issued and outstanding shares of capital stock, stock options and warrants of FairX. FairX is a derivatives exchange which is registered with the U.S. Commodity Futures Trading Commission as a designated contract market (“DCM”) and the Company believes it has been a key stepping stone on the Company’s path to offer crypto derivatives to retail and institutional customers in the United States.
In accordance with ASC 805, Business Combinations, the acquisition was accounted for as a business combination under the acquisition method. 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, none of which is expected to be deductible for tax purposes. The goodwill balance is primarily attributed to the assembled workforce, market presence, synergies, and the use of purchased technology to develop future products and technologies. The final allocation of purcha