Main individual shareholders comprise co-founders Brian Armstrong (59.5% voting power), Frederick Ernest Ehrsam (26.1% voting power), and other individual investors such as Surojit Chatterjee (current CPO “poached” from Google), Paul Grewal (former magistrate who joined Coinbase as Chief Legal Officer), and venture capitalists who early on invested on Coinbase, like Marc Andreessen (founder of a16z) and Fred Wilson (founder of Union Square Ventures), together with venture capital firms like Andreessen Horowitz, Paradigm, Ribbit Capital and Union Square Ventures.
From the ashes of Mt. Gox
It is worth exploring, in a nutshell, the story of Mt. Gox.
When Jed McCaleb, back in 2010, had read about Bitcoin on a PR release over Slashdot, he was convinced that an exchange would have helped Bitcoin grow, so he set it up on a website he had bought years before for an online magic game called “Magic: The Gathering Online” which would be reused as the domain for Mt. Gox.
Once set up, the exchange quickly picked up, and it became the most successful Bitcoin exchange platform in a short time frame.
However, it has been shown since the beginning one of the significant drawbacks of exchange platforms: is security, where the Blockchain protocol had been designed for security and privacy.
Once people started to exchange Bitcoins via Mt. Gox, two issues came up quickly: one, the identity of Bitcoin holders that, through the Blockchain, was kept private, would be quickly revealed via Mt. Gox.
Second, as more people referred to Mt. Gox to store their Bitcoins, security problems became a major issue. Indeed, by 2014 Mt. Gox had to file for bankruptcy as a massive number of Bitcoin had been stolen by hackers, thus exposing Mt. Gox to substantial financial liability.
That lesson, costly for Mt. Gox, would become a valuable lesson for all the other crypto platforms that survived.
Coinbase’s services have been modeled around the main customers. Perhaps, retail users can trade multiple crypto assets.
While institutional clients have access to an advanced platform for both trading and securing crypto assets.
Customer Composition
- Retail users: Coinbase offers a “safe, trusted, and easy-to-use platform to invest, store, spend, earn, and use crypto assets.”
- Institutions: Coinbase offers a “one-stop shop for accessing crypto markets through advanced trading and custody technology, built on top of a robust security infrastructure.”
- Ecosystem partners: developers, and merchants can build applications on top of the platform, and participate actively in the protocols part of the Coinbase offering.
Ownership Structure of Coinbase
The ownership of Coinbase is mainly concentrated among its co-founders and other individual investors, along with support from prominent venture capitalists and venture capital firms.
Main Individual Shareholders
- Brian Armstrong: As a co-founder of Coinbase, Brian Armstrong holds significant voting power in the company, with 59.5% of the voting rights.
- Frederick Ernest Ehrsam: Another co-founder, Frederick Ernest Ehrsam, also holds a substantial portion of the voting power, accounting for 26.1% of the total.
- Surojit Chatterjee: Surojit Chatterjee, the current Chief Product Officer, was “poached” from Google and is a notable individual investor in Coinbase.
- Paul Grewal: Paul Grewal, former magistrate who joined Coinbase as Chief Legal Officer, is also a key individual investor.
Venture Capital Investors
Coinbase has garnered support from renowned venture capitalists and venture capital firms in the crypto and tech industry:
- Marc Andreessen: Marc Andreessen, the founder of a16z (Andreessen Horowitz), is an early investor in Coinbase.
- Fred Wilson: Fred Wilson, founder of Union Square Ventures, also participated as an early investor in Coinbase.
- Andreessen Horowitz: The venture capital firm Andreessen Horowitz is a significant investor in Coinbase.
- Paradigm: Paradigm, another venture capital firm, has invested in Coinbase.
- Ribbit Capital: Ribbit Capital is also among the venture capital firms that support Coinbase.
- Union Square Ventures: In addition to Fred Wilson’s individual investment, Union Square Ventures, the venture capital firm itself, is also an investor in Coinbase.
From the Ashes of Mt. Gox
The story of Coinbase is linked to the infamous Mt. Gox, a Bitcoin exchange platform that faced security issues and eventually filed for bankruptcy in 2014. The lessons learned from Mt. Gox’s security breaches became valuable insights for Coinbase and other surviving crypto platforms.
Coinbase’s Customer Composition
Coinbase caters to a diverse customer base, providing tailored services for different segments:
- Retail Users: Coinbase offers a safe, trusted, and user-friendly platform for retail investors to invest, store, spend, earn, and use various crypto assets.
- Institutional Clients: Institutional investors have access to an advanced platform for both trading and securing crypto assets, built on a robust security infrastructure.
- Ecosystem Partners: Developers and merchants can build applications on top of the Coinbase platform and actively participate in the protocols offered by Coinbase.
The ownership structure of Coinbase reflects a strong backing from its co-founders and early individual investors, along with support from prominent venture capitalists and venture capital firms, solidifying its position as a leading player in the crypto industry.
Key Highlights
- Coinbase’s Leadership and Investors:
- Paul Grewal joined Coinbase as Chief Legal Officer.
- Notable venture capitalists invested early in Coinbase: Marc Andreessen (founder of a16z) and Fred Wilson (founder of Union Square Ventures).
- Major venture capital firms supporting Coinbase: Andreessen Horowitz, Paradigm, Ribbit Capital, and Union Square Ventures.
- The Mt. Gox Saga:
- Founded by Jed McCaleb in 2010 after learning about Bitcoin.
- Initially set up on a website previously used for “Magic: The Gathering Online”.
- Quickly became a leading Bitcoin exchange but faced security challenges.
- By 2014, Mt. Gox filed for bankruptcy due to a large-scale Bitcoin theft.
- Coinbase’s Services:
- Ownership Structure:
- Concentrated among co-founders, individual investors, and venture capital firms.
- Brian Armstrong: Co-founder with 59.5% of voting rights.
- Frederick Ernest Ehrsam: Co-founder with 26.1% of voting rights.
- Surojit Chatterjee: Notable individual investor and the current Chief Product Officer.
- Paul Grewal: Key individual investor and Chief Legal Officer.
- Venture Capital Backing: Notable firms include Andreessen Horowitz, Paradigm, Ribbit Capital, and Union Square Ventures.
- Lessons from Mt. Gox:
- The security failures of Mt. Gox served as important lessons for Coinbase and other crypto platforms.
- Diverse Customer Base:
- Coinbase caters to retail users, institutional clients, and ecosystem partners with tailored services.
- Coinbase’s Position:
- Backed by influential co-founders, individual investors, and prominent venture capital firms, making it a dominant force in the crypto world.
Visual Stats Related to Coinbase
Coinbase Trading Volume by Investor
Coinbase Trading Volume by Crypto Asset
Connected Business Models
Related Tech Ownership Case Studies
Read More:
