SecProbe.io

United States securities and exchange commission logo
September 22, 2023
Brian Armstrong
Chief Executive Officer
Coinbase Global, Inc.
c/o The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
Re:Coinbase Global, Inc.
Form 10-K for the year ended December 31, 2022
Filed February 21, 2023
Form 10-Q for the period ended June 30, 2023
Filed August 3, 2023
Form 8-K filed January 10, 2023
Form 8-K filed May 4, 2023
File No. 001-40289
Dear Brian Armstrong:
            We have reviewed your filings 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 these comments within ten business days by providing proposed
disclosure in response to our comments or advise us as soon as possible when you will
respond.  If you do not believe our comments apply to your facts and circumstances, please tell
us why in your response.
            After reviewing your response to these comments, we may have additional comments.
Form 10-K for the year ended December 31, 2022
General
1.We note that you have recently entered into a new agreement with Circle Internet
Financial.  Please file that agreement as a material contract or explain why you are not
required to do so.

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Brian Armstrong
Coinbase Global, Inc.
September 22, 2023
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Cover Page
2.Please revise your filing to provide the address of your principal executive offices.
Part I
Item 1. Business, page 7
3.Please provide greater details regarding your users and describe the use of digital
engagement practices in connection with your platform, including, as examples, only,
behavioral prompts, differential marketing, game-like features and other design elements
or features designed to engage with retail investors.  Please also address the following,
without limitation:
•Specifically describe the analytical and technological tools and methods you use in
connection with such practices and your use of technology to develop and provide
investment education tools;
•Clarify whether any of such practices encourage retail investors to invest in different
products or change investment strategies;
•Clarify whether you use any optimization functions (e.g., to increase platform
revenues, data collection and customer engagement);
•To the extent your use of any optimization functions may lead to potential conflicts
between your platform and investors, please add related risk factor disclosure; and
•Describe in greater detail your data collection practices or those of your third-party
service providers.
Please include a separate risk factor discussing the current and potential future regulatory
risks associated with your use of digital engagement practices.  In that regard, please
consider the SEC's request for information and public comment on matters related to the
use of such practices made on August 27, 2021.
Our Business, page 7
4.We note your disclosure that your customers are represented in over 100 countries, with
the largest concentration in the United States of roughly 40%, followed by the UK/Europe
of roughly 25%.  We also note from your disclosure of revenue by geographic location on
page 157, that revenues from customers domiciled in the United States has increased from
approximately 75% in 2020 to 80% in 2021 to 84% in 2022.  In order to provide investors
with how your customer base is developing and driving your business results, please
enhance your disclosure to present, for the periods presented, customers by type
and country in a table format, disaggregating for 10% or more individually and disclose in
a footnote the countries combined in "Other." Provide us with your proposed disclosure.
Coinbase Overview, page 7
5.Please substantiate or revise your disclosure that your products and services are “safe” and
“trusted.”

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6.Please provide support in a footnote to your BTC Price chart explaining where the data
comes from or how it was derived.
Consumers
Coinbase App, page 8
7.Please revise to disclose material terms of your staking program, including, but not limited
to:
•Which crypto assets are used for staking;
•The size of staked crypto assets;
•How staking rewards are calculated;
•Whether staked crypto assets can be used or allocated, and if so how;
•Whether you take custody of or hold staked crypto assets; and
•Any risks associated with staking and the impact of those risks to investors.
In responding to this comment, please include a materially complete description of the
program.
8.We note that in addition to operating staking nodes, upon customers’ instructions, you
may delegate your customers’ assets to third-party service providers.  Please disclose the
material terms of your agreements with the third-party service providers you reference and
identify them.  In addition, please separately disclose any revenue from users of your
platform staking and delegating their crypto assets to your validator nodes, and, as
applicable, to third-party validators.
9.Please revise to include a comprehensive breakeven analysis for your validator operations
that compares the cost to earn one crypto asset with the value of the crypto asset.
Coinbase Wallet, page 9
10.We note that you offer both a custodial solution with the Coinbase application and self-
custodied solution with Coinbase Wallet. We also note that your web3 wallet “shares the
responsibility of knowing and storing the customer’s security key between the consumer
and Coinbase,” while your Coinbase Wallet gives consumers sole control over their
private keys and seed phrase. We further note your disclosures on pages 12, 47, 64 and
102 regarding your custodial practices, including that you hold customer custodial funds
and cash and cash equivalents at certain third-party banks. Please revise to further
describe your custodial practices for crypto assets, including the items below:
•Discuss the risks and benefits associated with your web3 wallet versus the Coinbase
Wallet;
•Discuss what portion of the crypto assets are held in hot wallets and cold wallets,
respectively, and whether there are differential storage practices with regard to
Coinbase's own crypto asset holdings versus customers’;
•Disclose the geographic location where the crypto assets are held in cold wallets and
how the private keys are located;
•Identify any custodians and discuss the material terms of any agreements you have

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with them;
•Identify the person(s) that have access to the crypto assets and whether any persons
(e.g., auditors, etc.) are responsible for verifying the existence thereof. Also clarify
whether any insurance providers have inspection rights associated with the crypto
assets held in storage;
•Identify the person(s) that have the authority to release the proceeds from your
wallets; and
•Discuss how the existence, exclusive ownership and software functionality of private
digital keys and other ownership records are validated by the relevant parties.
Institutions
Coinbase Prime, page 9
11.We note your disclosure that you “may seek to provide advanced risk management
services where Coinbase acts principally to facilitate transactions.” Please revise to
describe the services that you refer to.
Trusted Crypto Platform, page 11
12.We note your disclosure on page 8 that your consumers are represented in over 100
countries, and your statement in this section that you have “robust know-your-customer
and anti-money laundering programs.” Please revise to disclose:
•Whether all Coinbase products and services are available to all customers regardless
of jurisdiction, or any limitations on offerings in certain jurisdictions;
•More detailed description of your KYC and AML programs;
•How Coinbase ensures compliance with laws and regulations in the various
jurisdictions in which it operates or offers products and services;
•Any material risks you face from unauthorized or impermissible customer access to
your products and services outside of those jurisdictions; and
•Any material risks you face related to the assertion of jurisdiction by U.S. and foreign
regulators and other government entities over crypto assets and crypto asset markets.
Part II
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations, page 98
13.Please enhance your Management's Discussion and Analysis of Financial Condition and
Results of Operations to provide a more fulsome discussion of the underlying drivers,
correlations between drivers and impact to trends and changes thereof, that impact your
financial condition, results of operations and cash flows.  For example, we note the
following:
•Consumer transactions were approximately 95% of net revenue in both 2022 and
2021 but only 20% of trading volume in 2022 compared 32% in 2021.
•Institutional trading volume declined less than consumer trading despite the decrease
in crypto asset volatility of 32% for the year ended December 31, 2022, and no

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significant change in the mix of trading volume or transaction revenue by crypto asset
type.
•Your discussion does not address how and if consumer and institutional products, as
discussed on pages 8 thru 10 impact operating metrics and results.
•Your discussion does not address how and if the more than 100 countries in which
customers participate impact operating metrics and results.
•You disclose that the decline in transaction revenue is attributable to declines in
trading volume, crypto market capitalization, average crypto prices and volatility
which appear to be correlated but do not discuss the reason and or cause for the
related declines.
•You disclose a number of factors that contribute to changes in crypto asset prices and
crypto asset volatility, including, but not limited to, changes in the supply and
demand for a particular crypto asset, crypto market sentiment, macroeconomic
factors, utility of a particular crypto asset, and idiosyncratic events, but you do not
address the impact to operating metrics and results.
•Your quantitative disclosure of revenue is on a total combined basis whereas your
key business metrics discussion is disaggregated between consumer and institutional.
•Interest income increased from $26 million in 2021 to $327 million and 10% of total
revenue in 2022 but your discussion does not address the impact to future (interest
income) trends.
Results of Operations, Comparison of the years ended December 31, 2022 and 2021
Operating Expenses, page 108
14.Please enhance your disclosures to further disaggregate transaction expense, technology
and development, general and administrative and other operating expenses net to provide
investors with a quantified understanding of significant underlying components of these
line items that are material to your operations.  Your current disclosures only provide an
explanation of the year-over-year change and the nature of and drivers of current year
activity are unclear.  Further, enhance your disclosures to clarify the impact of material
changes on future operating trends. Refer to Item 303(b)(2) of Regulation S-K and Section
III.D of SEC Release No. 33-6835.  Provide us with your proposed disclosure.
Non-GAAP Financial Measure, page 111
15.We note your non-GAAP measure of Adjusted EBITDA which you disclose you use
to evaluate your ongoing operations and for internal planning and forecasting purposes,
including that you believe that Adjusted EBITDA may be helpful to investors because it
provides consistency and comparability with past financial performance.  We also note
that Adjusted EBITDA is calculated as net loss or income, adjusted to exclude provision
for or benefit from income taxes, depreciation and amortization, interest expense, crypto
asset borrowing costs, stock-based compensation expense, crypto asset impairment, net,
impairment on investments, net, other impairment, non-recurring Direct Listing expenses,
restructuring, change in unrealized foreign exchange, fair value gain or loss on

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derivatives, non-recurring legal reserves and related costs, and other adjustments, net.
Please address the following:
•Please tell us how your adjustment for crypto asset impairment, net, in your non-
GAAP measure Adjusted EBITDA is a non-recurring charge as the volatility of your
crypto assets appear to be triggering frequent impairment charges for these ASC 350
intangible assets. In your response, tell us your consideration of the following:oYour disclosure on page 69 (and page 123 of your 10-Q for the quarter ended
June 30, 2023) that you may continue to record impairment charges on the
crypto assets you hold due to the high volatility in crypto asset prices and the
crypto economy.
oYour disclosure of the recurrence of these impairment charges on page 162 as
gross impairment charges of $757.3 million, $329.2 million and $8.4 million
during the years ended December 31, 2022, 2021 and 2020 respectively, due to
the observed market price of crypto assets decreasing below the carrying value
during the respective periods.
oThe high likelihood that these crypto impairment charges will recur due to
volatility in relation to Rule 100(b) of Regulation G, and Question 100.01 of the
Non-GAAP Financial Measures Compliance and Disclosure Interpretations.
•Also tell us how your non-GAAP adjustments to Adjusted EBITDA for crypto asset
borrowing costs, impairment on investments, fair value gain or loss on
derivatives, and other adjustments, net, are consistent with Questions 100.01 of the
Non-GAAP Financial Measures C&DI and Item 10(e)(1)(i) of Regulation S-K,
including how they are not indicative of your financial performance considering
purchase of investments, including crypto, are recurring, and that you are the
principal in the sale of crypto assets as an accommodation to customer transactions.
Liquidity and Capital Resources
Crypto Assets, page 113
16.You disclose in the third footnote to the table of crypo assets disaggregated by cost and
fair value on page 114 that your price exposure on Bitcoin and Ethereum held as
investments was hedged with futures contracts in the fourth quarter of 2022. Please tell us
how you accounted for the fair value changes in Bitcoin held with cost of $89.9 million
and fair value of $85.8 million, whereas Ethereum held had cost of $43.7 million and fair
value of $50.8 million at December 31, 2022. Also tell us if these are the Nano Bitcoin
Futures and Nano Ethereum Futures on your Coinbase Derivatives Exchange, as disclosed
on page 10, and how these crypto asset futures are accounted for in your Derivatives
designated as hedges accounting policy on page 140.
Cash Flows, page 117
17.Your disclosure of net cash provided by/used in operating, investing and financing
activities appears to repeat information already provided in the statement of cash flows.
Please provide us with a quantitative and qualitative analysis of the drivers of the change

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in cash flows between periods and impact to future trends to provide a sufficien