Coinbase

Coinbase was founded in June 2012 by Brian Armstrong, a former Airbnb engineer, and Fred Ehrsam, a former Goldman Sachs trader.[6][7][8] Blockchain.info co-founder Ben Reeves was part of the original founding team but later parted ways with Armstrong due to their different stands on how the Coinbase wallet should operate.[9] The remaining founding team enrolled in the Summer 2012 Y Combinator startup incubator program. In October 2012, the company launched the services to buy and sell bitcoins through bank transfers.[10] In May 2013, the company received a US$5 million Series A investment led by Fred Wilson from the venture capital firm Union Square Ventures.[11] In December the same year, the company received a US$25 million investment, from the venture capital firms Andreessen Horowitz, Union Square Ventures (USV), and Ribbit Capital.[12]

In 2014, the company grew to one million users, acquired the blockchain explorer service Blockr and the web bookmarking company Kippt, secured insurance covering the value of bitcoin stored on their servers, and launched the vault system for secure bitcoin storage.[13][14][15] Throughout 2014, the company also partnered with Overstock, Dell, Expedia, Dish Network, and Time Inc. allowing those firms to accept bitcoin payments.[16][17][18][19] The company also added bitcoin payment processing capabilities to the traditional payment companies Stripe, Braintree, and PayPal.[20]

In January 2015, the company received a US$75 million investment, led by Draper Fisher Jurvetson, the New York Stock Exchange, USAA, and several banks.[21] Later in January, the company launched a U.S.-based bitcoin exchange for professional traders called Coinbase Exchange.[22] Coinbase began to offer services in Canada in 2015,[23] but in July 2016, Coinbase announced it would halt services in August after the closure of their Canadian online payments service provider Vogogo.[24]

In May 2016, the company rebranded the Coinbase Exchange, changing the name to Global Digital Asset Exchange (GDAX).[25] In July 2016, they added retail support for Ether.[26]

In January and then March 2017, Coinbase obtained the BitLicense and licensed to trade in Ethereum and Litecoin from the New York State Department of Financial Services (DFS).[27][28] In November 2017, Coinbase was ordered by the US Internal Revenue Service to report any users who had at least $20,000 in transactions in a year.[29]

Coinbase listed Bitcoin Cash on December 19, 2017 and the Coinbase platform experienced price abnormalities that led to an insider trading investigation.[30]

On February 23, 2018, Coinbase told approximately 13,000 affected customers that the company would be providing their taxpayer ID, name, birth date, address, and historical transaction records from 2013 to 2015 to the IRS within 21 days. On April 5, 2018, Coinbase announced that it had formed an early-stage venture fund, Coinbase Ventures, focusing on investment into blockchain- and cryptocurrency-related companies.[31][32] On May 16, 2018, Coinbase Ventures announced its first investment in Compound Labs,[33] a start-up building Ethereum smart contracts similar to money markets. Later that year in August, Amazon cloud executive Tim Wagner joined Coinbase as vice president of engineering.[34]

On May 23, 2018, GDAX was rebranded as Coinbase Pro.[35]

In January 2019 Coinbase stopped all trading on Ethereum Classic due to a suspicion of an attack on the network.[36] In February 2019, Coinbase announced that it had acquired "blockchain intelligence platform" Neutrino, an Italy-based startup, for an undisclosed price.[37] The acquisition raised concern among some Coinbase users[38] based on Neutrino founders' connection to the Hacking Team, which has been accused of providing internet surveillance technology to governments with poor human rights records.[39] On March 4, 2019, Coinbase CEO Brian Armstrong said his company "did not properly evaluate" the deal from a due diligence perspective and thus any Neutrino staff who previously worked at Hacking Team "will transition out of Coinbase."[40] In April 2019, a UK corporate filing stated that Coinbase's non-U.S. revenue grew 20% to €153 million (U.S.$173 million) in 2018 resulting in a net profit of €6.6 million.[41] Coinbase UK CEO Zeeshan Feroz said the company's non-U.S. operations accounted for nearly one-third of the company's overall revenue and Reuters estimated that the company's global revenue totaled "around $520 million" in 2018.[42] In August 2019, Coinbase announced that it was targeted by a sophisticated hacking attack attempt in mid-June. This reported attack used spear-phishing and social engineering tactics (including sending fake e-mails from compromised email accounts and created a landing page at the University of Cambridge) and two Firefox browser zero-day vulnerabilities. One of the Firefox vulnerabilities could allow an attacker to escalate privileges from JavaScript on a browser page (CVE-2019–11707) and the second one could allow the attacker to escape the browser sandbox and execute code on the host computer (CVE-2019–11708). Coinbase's security team detected and blocked the attack, the network was not compromised, and no cryptocurrency was stolen.[43][44][45]

In June 2020, Coinbase received internal backlash after CEO Brian Armstrong initially refused to make a statement about Black Lives Matter, citing the company's apolitical culture, but Armstrong later reverted his course on Twitter.[46] In September 2020, Armstrong published a blog post emphasizing that Coinbase would not engage in social activism, citing that such activism had hurt other technology firms such as Google and Facebook, and offered a severance package for those who disagreed with this direction.[46][47] The company also faced complaints by employees saying they were treated unfairly due to their race or gender.

The New York Times reported in December 2020 that based upon data up to 2018 (already two years old as of date of publication) women at Coinbase were paid an average of 8% less than men at comparable jobs and ranks within the company, and Black employees were paid 7% less than those in similar roles.[48]

In October 2020, Coinbase announced the launch of its Visa debit card program.[49]

Coinbase has two core products: a Global Digital Asset Exchange (GDAX) for trading a variety of digital assets on its professional asset trading platform, and a user-facing retail broker of Bitcoin, Bitcoin Cash, Ether, Ethereum Classic, and Litecoin for fiat currency.[26] It also offers an API for developers and merchants to build applications and accept payments in both digital currencies. As of 2018, the company offered buy/sell trading functionality in 32 countries,[50] while the cryptocurrency wallet was available in 190 countries worldwide.[51] On March 26, 2018, Coinbase announced their intention to add support for ERC-20 tokens.[52]

On February 16, 2018, Coinbase admitted that some customers were overcharged in error for credit and debit purchases of cryptocurrencies. The problem was initiated when banks and card issuers changed the merchant category code (MCC) for cryptocurrency purchases earlier this month. This meant that cryptocurrency payments would now be processed as "cash advances", meaning that banks and credit card issuers could begin charging customers cash-advance fees for cryptocurrency purchases. Any customers who purchased cryptocurrency on their exchange between January 22 and February 11, 2018 could have been affected. At first, Visa blamed Coinbase, telling the Financial Times on February 16 that it had "not made any systems changes that would result in the duplicate transactions cardholders are reporting." However, the latest statement from Visa and Worldpay on the Coinbase blog clarifies: "This issue was not caused by Coinbase."[53]

In March 2018, Quartz reported that the number of monthly customer complaints against Coinbase jumped more than 100% in January of that year, to 889, citing official Consumer Financial Protection Bureau data, with more than 400 of those categorized as "money was not available when promised".[54]

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