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, 2023
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 001-40289

Coinbase Global, Inc.

(Exact name of registrant as specified in its charter)

Delaware	46-4707224
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.00001 par value per share	COIN	The Nasdaq Stock Market LLC

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 July 27, 2023, the number of shares of the registrant's Class A common stock outstanding was 189,950,252 and the number of shares of the registrant's Class B common stock outstanding was 47,225,992.

(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
Part I - Financial Information
Item 1. Financial Statements	6
Condensed Consolidated Balance Sheets	6
Condensed Consolidated Statements of Operations	7
Condensed Consolidated Statements of Comprehensive Loss	8
Condensed Consolidated Statements of Changes in Stockholders' Equity	9
Condensed Consolidated Statements of Cash Flows	11
Notes to Condensed Consolidated Financial Statements	13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	52
Item 3. Quantitative and Qualitative Disclosures About Market Risk	69
Item 4. Controls and Procedures	71
Part II - Other Information
Item 1. Legal Proceedings	73
Item 1A. Risk Factors	74
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	151
Item 3. Defaults Upon Senior Securities	151
Item 4. Mine Safety Disclosures	151
Item 5. Other Information	151
Item 6. Exhibits	152
Signatures	153

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. In some cases, forward-looking statements may be identified by words such as “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” or the negative of these terms or other similar expressions.

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, web3, the price and market capitalization of crypto assets 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 given the highly evolving and uncertain regulatory landscape;

•general macroeconomic conditions, including interest rates, inflation, instability in the global banking system and economic downturns;

•economic and industry trends, projected growth, or trend analysis;

•trends in revenue;

•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;

2

•increased expenses associated with being a public company; and

•other statements regarding our future operations, financial condition, and prospects and business strategies.

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 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, including 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;

3

•Our net revenue may be concentrated in a limited number of areas. Within transaction revenue and subscription and services revenue, a meaningful concentration is from transactions in Bitcoin and Ethereum and interest income in connection with USDC, respectively. If revenue from these areas declines and is not replaced by new demand for crypto assets or other products and services, our business, operating results, and financial condition could be adversely affected;

•We have in the past, and may in the future, enter into partnerships, collaborations, joint ventures, or strategic alliances with third parties. If we are unsuccessful in establishing or maintaining strategic relationships with these third parties or if these third parties fail to deliver certain operational services, our business, operating results, and financial condition could be adversely affected;

•Interest rate fluctuations could negatively impact us;

•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;

•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, highly-evolving and uncertain 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 investigations and enforcement actions by regulators and governmental authorities. These matters are often expensive and time consuming, and, if resolved adversely, could harm our business, financial condition, and operating results;

•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, product or service’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 or product offering, we may be subject to regulatory scrutiny, inquiries, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition;

4

•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 and 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.

5

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,
	2023		2022
Assets
Current assets:
Cash and cash equivalents	$	5,166,733	$	4,425,021
Restricted cash	20,697		25,873
Customer custodial funds	3,848,078		5,041,119
Customer crypto assets(1)	124,243,587		75,413,188
USDC	315,508		861,149
Accounts and loans receivable, net of allowance	427,210		404,376
Income tax receivable	64,759		60,441
Prepaid expenses and other current assets	175,399		217,048
Total current assets	134,261,971		86,448,215
Crypto assets held	485,347		424,393
Lease right-of-use assets	18,210		69,357
Property and equipment, net	186,046		171,853
Goodwill	1,139,670		1,073,906
Intangible assets, net	108,134		135,429
Other non-current assets	1,451,197		1,401,720
Total assets	$	137,650,575	$	89,724,873
Liabilities and Stockholders’ Equity
Current liabilities:
Customer custodial cash liabilities	$	3,848,078	$	4,829,587
Customer crypto liabilities(2)	124,243,587		75,413,188
Accounts payable	27,983		56,043
Accrued expenses and other current liabilities	262,251		331,236
Crypto asset borrowings	144,503		151,505
Lease liabilities, current	12,350		33,734
Total current liabilities	128,538,752		80,815,293
Lease liabilities, non-current	8,611		42,044
Long-term debt	3,334,257		3,393,448
Other non-current liabilities	14,252		19,531
Total liabilities	131,895,872		84,270,316
Commitments and contingencies (Note 19)
Stockholders’ equity:
Class A common stock, $0.00001 par value; 10,000,000 shares authorized at June 30, 2023 and December 31, 2022; 189,498 and 182,796 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	2		2
Class B common stock, $0.00001 par value; 500,000 shares authorized at June 30, 2023 and December 31, 2022; 47,390 and 48,070 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	—		—
Additional paid-in capital	4,239,319		3,767,686
Accumulated other comprehensive loss	(33,792)		(38,606)
Retained earnings	1,549,174		1,725,475
Total stockholders’ equity	5,754,703		5,454,557
Total liabilities and stockholders’ equity	$	137,650,575	$	89,724,873

__________________

(1)Safeguarding assets

(2)Safeguarding liabilities

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

6

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,
	2023		2022		2023		2022
Revenue:
Net revenue	$	662,500	$	802,603	$	1,398,898	$	1,967,494
Other revenue	45,411		5,722		81,542		7,267
Total revenue	707,911		808,325		1,480,440		1,974,761
Operating expenses:
Transaction expense	108,200		167,187		204,569		445,013
Technology and development	320,667		609,249		678,698		1,179,913
Sales and marketing	83,853		140,894		147,829		341,098
General and administrative	258,988		470,169		507,749		883,747
Restructuring	(1,035)		42,453		143,454		42,453
Other operating expense (income), net	10,813		422,762		(4,409)		681,389
Total operating expenses	781,486		1,852,714		1,677,890		3,573,613
Operating loss	(73,575)		(1,044,389)		(197,450)		(1,598,852)
Interest expense	21,672		23,656		43,208		45,794
Other (income) expense, net	(16,564)		172,524		3,701		205,368
Loss before income taxes	(78,683)		(1,240,569)		(244,359)		(1,850,014)
Provision for (benefit from) income taxes	18,722		(146,915)		(68,058)		(326,701)
Net loss	$	(97,405)	$	(1,093,654)	$	(176,301)	$	(1,523,313)
Net loss attributable to common stockholders:
Basic	$	(97,405)	$	(1,093,654)	$	(176,301)	$	(1,523,313)
Diluted	$	(97,601)	$	(1,099,838)	$	(176,497)	$	(1,529,497)
Net loss per share attributable to common stockholders:
Basic	$	(0.42)	$	(4.95)	$	(0.76)	$	(6.95)
Diluted	$	(0.42)	$	(4.98)	$	(0.76)	$	(6.97)
Weighted-average shares of common stock used to compute net loss per share attributable to common stockholders:
Basic	234,614		220,988		233,060		219,240
Diluted	234,641		221,034		233,087		219,286

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

7

Coinbase Global, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net loss	$	(97,405)	$	(1,093,654)	$	(176,301)	$	(1,523,313)
Other comprehensive (loss) income:
Translation adjustment, net of tax	(5,383)		(14,293)		4,814		(14,788)
Comprehensive loss	$	(102,788)	$	(1,107,947)	$	(171,487)	$	(1,538,101)

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

8

Coinbase Global, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(In thousands)

(unaudited)

	Three Months Ended June 30,
				Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings
	Common Stock
	Shares	Amount								Total
Balance at April 1, 2023	234,495	$	2	$	4,056,774	$	(28,409)	$	1,646,579	$	5,674,946
Issuance of common stock upon exercise of stock options, net of repurchases	467	—		8,435		—		—		8,435
Stock-based compensation expense	—	—		214,624		—		—		214,624
Issuance of common stock upon settlement of Restricted Stock Units ("RSUs") and restricted common stock, net of shares withheld	1,672	—		(52,895)		—		—		(52,895)
Issuance of common stock under the Employee Stock Purchase Plan (the “ESPP”)	254	—		12,381		—		—		12,381
Comprehensive loss	—	—		—		(5,383)		—		(5,383)
Net loss	—	—		—		—		(97,405)		(97,405)
Balance at June 30, 2023	236,888	$	2	$	4,239,319	$	(33,792)	$	1,549,174	$	5,754,703
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 RSUs and restricted common stock, net of shares withheld	1,803	—		(71,301)		—		—		(71,301)
Issuance of common stock under the ESPP	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

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

9

Coinbase Global, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(In thousands)

(unaudited)

	Six Months Ended June 30,
				Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings
	Common Stock
	Shares	Amount								Total
Balance at January 1, 2023	230,866	$	2	$	3,767,686	$	(38,606)	$	1,725,475	$	5,454,557
Issuance of common stock upon exercise of stock options, net of repurchases	1,180	—		18,001		—		—		18,001
Stock-based compensation expense	—	—		427,606		—		—		427,606
Issuance of equity instruments as consideration for business combination	961	—		44,995		—		—		44,995
Issuance of common stock upon settlement of RSUs and restricted common stock, net of shares withheld	3,627	—		(115,392)		—		—		(115,392)
Issuance of common stock under the ESPP	254	—		12,381		—		—		12,381
Stock-based compensation expense recognized in relation to restructuring	—	—		84,042		—		—		84,042
Comprehensive income	—	—		—		4,814		—		4,814
Net loss	—	—		—		—		(176,301)		(176,301)
Balance at June 30, 2023	236,888	$	2	$	4,239,319	$	(33,792)	$	1,549,174	$	5,754,703
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 ESPP	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

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,
	2023		2022
Cash flows from operating activities
Net loss	$	(176,301)	$	(1,523,313)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	78,190		73,607
Investment impairment expense	8,226		69,289
Other impairment expense	8,113		7,949
Stock-based compensation expense	398,632		743,637
Restructuring stock-based compensation expense	84,042		—
Provision for transaction losses and doubtful accounts	1,809		(9,016)
Loss on disposal of property and equipment	7,734		—
Deferred income taxes	(71,435)		(337,520)
Unrealized loss on foreign exchange	16,435		115,072
Non-cash lease expense	34,173		14,451
Change in fair value of contingent consideration	(262)		(8,223)
Loss on investments	23		1,830
Fair value (gain) loss on derivatives	(13,930)		952
Amortization of debt discount and issuance costs	4,403		4,838
Gain on extinguishment of long-term debt, net	(17,855)		—
Realized loss on crypto futures contract	43,339		—
Crypto asset impairment expense	54,333		663,159
Crypto assets received as revenue	(211,923)		(290,209)
Crypto asset payments for expenses	135,002		265,816
Realized gain on crypto assets	(95,390)		(19,121)
Changes in operating assets and liabilities:
USDC	508,752		(287,984)
Accounts and loans receivable	(36,579)		7,359
Deposits in transit	(88,680)		36,333
Income taxes, net	(7,012)		4,058
Other current and non-current assets	31,003		(663)
Accounts payable	(28,495)		659
Lease liabilities	(32,361)		(4,033)
Other current and non-current liabilities	(19,784)		28,585
Net cash provided by (used in) operating activities	614,202		(442,488)
Cash flows from investing activities
Purchase of property and equipment	(379)		(3,741)
Proceeds from sale of property and equipment	103		—
Capitalized internal-use software development costs	(30,587)		(32,088)
Business combinations, net of cash acquired	(30,730)		(186,150)
Purchase of investments	(4,808)		(46,902)
Proceeds from settlement of investments	1,133		1,497
Loans originated	(144,283)		(166,648)
Proceeds from repayment of loans	109,630		259,104
Assets pledged as collateral	(839)		—
Assets pledged as collateral returned	42,383		—
Settlement of crypto futures contract	(43,339)		—
Purchase of crypto assets held	(99,064)		(1,204,918)
Disposal of crypto assets held	188,026		761,226
Net cash used in investing activities	(12,754)		(618,620)

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

11

Coinbase Global, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

	Six Months Ended June 30,
	2023		2022
Cash flows from financing activities
Issuance of common stock upon exercise of stock options, net of repurchases	16,649		31,866
Taxes paid related to net share settlement of equity awards	(115,392)		(213,133)
Proceeds received under the ESPP	8,985		12,031
Other financing activities	—		3,679
Customer custodial cash liabilities	(987,957)		(3,421,287)
Repurchases of 2026 Convertible Notes	(45,469)		—
Assets received as collateral	5,169		—
Assets received as collateral returned	(3,766)		—
Proceeds from short-term borrowings	31,640		149,400
Repayments of short-term borrowings	(52,122)		(170,000)
Net cash used in financing activities	(1,142,263)		(3,607,444)
Net decrease in cash, cash equivalents, and restricted cash	(540,815)		(4,668,552)
Effect of exchange rates on cash, cash equivalents, and restricted cash	(4,370)		(119,932)
Cash, cash equivalents, and restricted cash, beginning of period	9,429,646		17,680,662
Cash, cash equivalents, and restricted cash, end of period	$	8,884,461	$	12,892,178
Cash, cash equivalents, and restricted cash consisted of the following:
Cash and cash equivalents	$	5,166,733	$	5,682,068
Restricted cash	20,697		28,962
Customer custodial cash	3,697,031		7,181,148
Total cash, cash equivalents, and restricted cash	$	8,884,461	$	12,892,178
Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	38,684	$	43,630
Cash paid during the period for income taxes	10,669		10,002
Operating cash outflows for amounts included in the measurement of operating lease liabilities	7,559		7,020
Supplemental schedule of non-cash investing and financing activities
Unsettled purchases of property and equipment	$	—	$	283
Right-of-use assets obtained in exchange for operating lease obligations	135		3,240
Non-cash consideration paid for business combinations	51,494		324,925
Purchase of crypto assets and investments with non-cash consideration	9,330		17,096
Disposal of crypto assets for non-cash consideration	7,283		—
Crypto assets borrowed	272,590		505,176
Crypto assets borrowed repaid with crypto assets	304,433		935,792
Realized gain on crypto assets held as investments	48,491		—
Non-cash assets pledged as collateral	63,460		—
Non-cash assets pledged as collateral returned	42,514		—
Non-cash assets received as collateral	59,516		—
Non-cash assets received as collateral returned	86,390		—

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

12

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 consumers 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 developers 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 the 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, 2023 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, 2022 filed with the Securities and Exchange Commission (the “SEC”) on February 21, 2023 (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 loss.

13

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 funds and customer custodial cash liabilities

Customer custodial funds represent restricted cash and cash equivalents maintained in segregated Company bank accounts that are held for the exclusive benefit of customers and deposits in transit from payment processors and financial institutions. Under GAAP, the balance in these accounts that exceeds customer custodial cash liabilities is presented within cash and cash equivalents. Customer custodial cash liabilities represent the obligation to return cash deposits held by customers in their fiat wallets and unsettled fiat deposits and withdrawals. Deposits in transit represent settlements from third-party payment processors and banks for customer transactions. Deposits in transit are typically received within five business days of the transaction date. The Company establishes withdrawal-based limits in order to mitigate potential losses by preventing customers from withdrawing the crypto asset to an external blockchain address until the deposit settles. In certain jurisdictions, deposits in transit qualify as eligible liquid assets to meet regulatory requirements to fulfill the Company’s direct obligations under customer custodial cash liabilities. The Company restricts the use of the assets underlying the customer custodial funds to meet regulatory requirements and classifies the assets as current based on their purpose and availability to fulfill the Company’s 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 funds, and certain other customer receivables. As of June 30, 2023 and December 31, 2022, the Company’s eligible liquid assets were greater than the aggregate amount of customer custodial cash liabilities.

14

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Concentration of credit risk

The Company’s cash and cash equivalents, restricted cash, customer custodial funds, and accounts and loans receivable are potentially subject to concentration of credit risk. Cash and cash equivalents, restricted cash, and customer custodial funds are primarily placed with financial institutions which are of high credit quality. The Company invests cash and cash equivalents, and customer custodial funds primarily in highly liquid, highly rated instruments which are uninsured. The Company may also have corporate deposit balances with financial institutions which exceed the Federal Deposit Insurance Corporation insurance limit of $250,000. The Company has not experienced losses on these accounts and does not believe it is exposed to any significant credit risk with respect to these accounts. 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 $315.5 million and $861.1 million of USDC as of June 30, 2023 and December 31, 2022, respectively. The issuer of USDC reported that, as of June 30, 2023, underlying reserves were held in cash, short-duration U.S. Treasuries, and overnight U.S. Treasury repurchase agreements within segregated accounts for the benefit of USDC holders.

As of June 30, 2023 and December 31, 2022, the Company had one counterparty who accounted for more than 10% of the Company’s accounts and loans receivable, net.

During the three and six months ended June 30, 2023 and June 30, 2022, one and no counterparty accounted for more than 10% of total revenue, respectively.

Recent accounting pronouncements

Accounting pronouncements pending adoption

On March 28, 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2023-01, Leases (Topic 842): Common Control Arrangements (“ASU 2023-01”). The amendments in ASU 2023-01 improve current GAAP by clarifying the accounting for leasehold improvements associated with common control leases, thereby reducing diversity in practice. Additionally, the amendments provide investors and other allocators of capital with financial information that better reflects the economics of those transactions. 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.

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.

15

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

3.    RESTRUCTURING

2023 Restructuring

In January 2023, the Company announced and completed a restructuring impacting approximately 21% of the Company’s headcount as of December 31, 2022 (the “2023 Restructuring”). The 2023 Restructuring was intended to manage the Company’s operating expenses in response to the ongoing market conditions impacting the cryptoeconomy and ongoing business prioritization efforts. As a result, approximately 950 employees in various departments and locations were terminated. As part of their termination, they were given separation pay and other personnel benefits.

The Company does not expect to incur any additional charges in connection with the 2023 Restructuring and the cash payments associated with this restructuring were substantially completed during the second quarter of 2023 with the remainder expected to be paid out by December 31, 2023. The following expenses were recognized within restructuring expenses in the condensed consolidated statements of operations for the three and six months ended June 30, 2023 (in thousands):

	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Separation pay(1)	$	(152)	$	57,593
Stock-based compensation(2)	—		84,042
Other personnel costs(1)	(883)		1,819
Total	$	(1,035)	$	143,454

__________________

(1)The negative adjustment of $0.2 million and $0.9 million during the three months ended June 30, 2023 is due to the release of accruals for certain separation pay expenses and other personnel costs, respectively, recorded as of March 31, 2023 which were not utilized.

(2)Represents stock-based compensation expenditures for the six months ended June 30, 2023 relating to the acceleration of the vesting of outstanding equity awards in accordance with the terms of such awards.

The following table summarizes the balance of the 2023 Restructuring reserve and the changes in the reserve as of and for the six months ended June 30, 2023 (in thousands):

	Expenses Incurred(1)		Payments		Adjustments		Accrued Balance as of June 30, 2023
Separation pay	$	57,745	$	(56,180)	$	(152)	$	1,413
Other personnel costs	2,702		(1,620)		(883)		199
Total	$	60,447	$	(57,800)	$	(1,035)	$	1,612

_________________

(1)Excludes stock-based compensation as it was not reflected in the Company’s restructuring reserve on the condensed consolidated balance sheets.

2022 Restructuring

In June 2022, the Company announced and completed a restructuring impacting approximately 18% of the Company’s headcount as of June 10, 2022 (the “2022 Restructuring”). 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 personnel benefits. The Company did not incur any additional charges related to the 2022 Restructuring. The cash payments associated with the 2022 Restructuring were substantially completed during the third quarter of 2022 and the remaining balance was fully paid out during the year ended December 31, 2022.

16

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

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):

	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Separation pay	$	39,259	$	39,259
Other personnel costs	3,194		3,194
Total	$	42,453	$	42,453

The following table summarizes the balance of the 2022 Restructuring reserve and the changes in the reserve as of and for the six months ended June 30, 2022 (in thousands). The associated liability that remained outstanding as of June 30, 2022 was recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets:

	Expenses Incurred		Payments		Adjustments		Accrued Balance as of June 30, 2022
Separation pay	$	39,259	$	—	$	—	$	39,259
Other personnel costs	3,194		—		—		3,194
Total	$	42,453	$	—	$	—	$	42,453

4.    ACQUISITIONS

2023 acquisitions

One River Digital Asset Management, LLC

On March 3, 2023, the Company completed the acquisition of One River Digital Asset Management, LLC. (“ORDAM”) by acquiring all issued and outstanding membership units of ORDAM. ORDAM is an institutional digital asset manager which is registered as an investment adviser with the SEC. The Company believes the acquisition aligns with the Company’s long-term strategy to unlock further opportunities for institutions to participate in the cryptoeconomy.

Prior to the acquisition, the Company held a minority ownership stake in ORDAM, which was accounted for as a cost method investment. In accordance with ASC 805, Business Combinations, the acquisition was accounted for as a business combination achieved in stages under the acquisition method. Accordingly, the cost method investment was remeasured to fair value as of the acquisition date. As the fair value of the cost method investment was equal to its carrying value, no gain or loss on remeasurement was recorded on the acquisition date.

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. The goodwill balance is primarily attributed to the assembled workforce, market presence, synergies, and time-to-market advantages. 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.

17

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The total consideration transferred in the acquisition was $96.8 million, consisting of the following (in thousands):

Cash	$	30,830
Cash payable	1,005
Previously-held interest on acquisition date	20,000
Class A common stock of the Company	44,995
Total purchase consideration	$	96,830

Included in the purchase consideration are $6.0 million in cash and 119,991 shares of the Company’s Class A common stock that are subject to an indemnity holdback. The cash and shares subject to the indemnity holdback will be released 18 months after the closing date of the transaction.

The results of operations and the provisional fair values of the assets acquired and liabilities assumed have been included in the condensed consolidated financial statements as of 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	$	100
Accounts and loans receivable, net of allowance	425
Prepaid expenses and other current assets	134
Goodwill	65,764
Intangible assets, net	21,100
Other non-current assets	9,911
Total assets	97,434
Accounts payable	604
Total liabilities	604
Net assets acquired	$	96,830

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 Value		Useful Life at Acquisition (in years)
Licenses	$	1,100	Indefinite
Customer relationships	17,100		6
In-process research and development ("IPR&D")	2,900		N/A

Customer relationships will be amortized on a straight-line basis over their respective useful lives to general and administrative expense. The licenses have an indefinite useful life and will not be amortized. Management applied significant judgment in determining the fair value of intangible assets, which involved the use of estimates and assumptions with respect to forecasted revenues and expenses, and costs to recreate the IPR&D and obtain the licenses.

Total acquisition costs of $2.6 million were incurred related to the acquisition, which were recognized as an expense and included in general and administrative expenses in the condensed consolidated statements of operations.

18

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The impact of this acquisition was not considered material to the Company’s condensed consolidated financial statements for the periods presented and pro forma financial information has not been provided.

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 year ended December 31, 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 payable	126
Class A common stock of the Company	103,977
RSUs for shares of the Company’s Class A common stock	2,457
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. The cash and shares subject to the indemnity holdback will be released 18 months after the closing date of the transaction.

19

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 cash	573
Accounts and loans receivable, net of allowance	4,981
Prepaid expenses and other current assets	4,182
Lease right-of-use assets	1,059
Property and equipment, net	1,248
Goodwill	222,732
Intangible assets, net	28,500
Other non-current assets	3,476
Total assets	277,311
Accounts payable	719
Accrued expenses and other current liabilities	11,325
Lease liabilities	1,059
Other non-current liabilities	6,224
Total liabilities	19,327
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 Value		Useful Life at Acquisition (in Years)
Developed technology	$	15,700	1 - 5
IPR&D	2,500		N/A
Customer relationships	10,300		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 material to the Company’s condensed consolidated financial statements for the periods presented and pro forma financial information has not been provided.

20

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 consumers 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 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 year ended December 31, 2022, a measurement period adjustment associated with deferred tax assets was recorded, resulting in an increase in other non-current assets of $0.3 million and a corresponding reduction in goodwill.

The total consideration transferred in the acquisition was $275.1 million, consisting of the following (in thousands):

Cash	$	56,726
Cash payable	10,442
Class A common stock of the Company - issued	174,229
Class A common stock of the Company - to be issued	33,693
Total purchase consideration	$	275,090

The aggregate purchase consideration includes 170,397 shares of the Company’s Class A common stock to be issued after the acquisition date. The fair value of these shares on the acquisition date is included in additional paid-in capital. Additionally, included in the purchase consideration are $4.7 million in cash and 83,035 shares of the Company’s Class A common stock that are subject to an indemnity holdback. The cash and shares remain subject to an indemnity holdback.

21

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	$	10,867
Accounts and loans receivable, net of allowance	411
Prepaid expenses and other current assets	20
Intangible assets, net	41,000
Goodwill	231,685
Other non-current assets	8,295
Total assets	292,278
Accounts payable	472
Accrued expenses and other current liabilities	5,796
Other non-current liabilities	10,920
Total liabilities	17,188
Net assets acquired	$	275,090

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 Value		Useful Life at Acquisition (in Years)
DCM License	$	26,900	Indefinite
Developed technology	10,700		5
Trading relationships	3,400		3

The developed technology and trading relationships 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 for trading relationships. The DCM license has an indefinite useful life and will not be amortized. Management applied significant judgment in determining the fair value of intangible assets, which involved the use of estimates and assumptions with respect to forecasted revenues and expenses, development costs and profit, costs to recreate trading relationships, market participation profit, and opportunity cost.

Total acquisition costs of $1.1 million were incurred related 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 material to the Company’s condensed consolidated financial statements for the periods presented and pro forma financial information has not been provided.

22

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

5.    REVENUE

Revenue recognition

The Company determines revenue recognition from contracts with customers through the following steps:

•identification of the contract, or contracts, with the customer;

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

•recognition of the revenue when, or as, the Company satisfies a performance obligation.

Revenue is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company primarily generates revenue through transaction fees charged on the platform.

The following table presents revenue of the Company disaggregated by revenue source (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net revenue
Transaction revenue
Consumer, net	$	310,037	$	616,212	$	662,439	$	1,582,054
Institutional, net	17,061		39,001		39,372		86,196
Total transaction revenue	327,098		655,213		701,811		1,668,250
Subscription and services revenue
Blockchain rewards	87,613		68,410		161,363		150,305
Custodial fee revenue	16,992		22,178		34,034		53,872
Interest income	201,364		32,514		442,186		42,968
Other subscription and services revenue	29,433		24,288		59,504		52,099
Total subscription and services revenue	335,402		147,390		697,087		299,244
Total net revenue	662,500		802,603		1,398,898		1,967,494
Other revenue
Crypto asset sales revenue	—		48		—		617
Corporate interest and other income	45,411		5,674		81,542		6,650
Total other revenue	45,411		5,722		81,542		7,267
Total revenue	$	707,911	$	808,325	$	1,480,440	$	1,974,761

Transaction revenue

Consumer transaction revenue represents transaction fees earned from customers that are primarily individuals, while institutional transaction revenue represents transaction fees earned from institutional customers, such as hedge funds, family offices, principal trading firms, and financial institutions.

23

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The Company’s service is comprised of a single performance obligation to provide a crypto asset matching service when customers buy, sell or convert crypto assets, or trade derivatives. That is, the Company is an agent in transactions between customers and presents revenue for the fees earned on a net basis.

Judgment is required in determining whether the Company is the principal or the agent in transactions between customers. The Company evaluates the presentation of revenue on a gross or net basis based on whether it controls the crypto asset provided before it is transferred to the customer (gross) or whether it acts as an agent by arranging for other customers to provide the crypto asset to the customer (net). The Company does not control the crypto asset being provided before it is transferred to the buyer, does not have inventory risk related to the crypto asset, and is not responsible for the fulfillment of the crypto asset. The Company also does not set the price for the crypto asset as the price is a market rate established by users of the platform. As a result, the Company acts as an agent in facilitating the ability for a customer to purchase crypto assets from another customer.

The Company considers its performance obligation satisfied, and recognizes revenue, at the point in time the transaction is processed. Contracts with customers are usually open-ended and can be terminated by either party without a termination penalty. Therefore, contracts are defined at the transaction level and do not extend beyond the service already provided.

The Company charges a fee at the transaction level. The transaction price, represented by the transaction fee, is calculated based on volume and varies depending on payment type and the value of the transaction. Crypto asset purchase or sale transactions executed by a customer on the Company’s platform is based on tiered pricing that is driven primarily by transaction volume processed for a specific historical period. The Company has concluded that this volume-based pricing approach does not constitute a future material right since the discount is within a range typically offered to a class of customers with similar volume. The transaction fee is collected from the customer at the time the transaction is executed. In certain instances, the transaction fee can be collected in crypto assets, with revenue measured based on the amount of crypto assets received and the fair value of the crypto assets at the time of the transaction.

The transaction price includes estimates for reductions in revenue from transaction fee reversals that may not be recovered from customers. Such reversals occur when the customer disputes a transaction processed on their credit card or their bank account for a variety of reasons and seeks to have the charge reversed after the Company has processed the transaction. These amounts are estimated based upon the most likely amount of consideration to which the Company will be entitled. All estimates are based on historical experience and the Company’s best judgment at the time to the extent it is probable that a significant reversal of revenue recognized will not occur. All estimates of variable consideration are reassessed periodically. The total transaction price is allocated to the single performance obligation. While the Company recognizes transaction fee reversals as a reduction of net revenue, crypto asset losses related to those same transaction reversals are included in transaction expense.

24

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Blockchain rewards

Blockchain rewards are primarily comprised of staking revenue, in which the Company participates in networks with proof-of-stake consensus algorithms through creating or validating blocks on the network using the staking validators that it controls. Blockchain protocols, or the participants that form the protocol networks, reward users for performing various activities on the blockchain. The most common form today is participating in proof-of-stake networks, however, there are other consensus algorithms. The Company considers itself the principal in transactions with the blockchain networks, and therefore presents such blockchain rewards earned on a gross basis. In exchange for participating in the consensus mechanism of these networks, the Company recognizes revenue in the form of the native token of the network. Each block creation or validation is a performance obligation. Revenue is recognized at the point when the block creation or validation is complete and the rewards are transferred into a digital wallet that the Company controls. Revenue is measured based on the number of tokens received and the fair value of the token at contract inception. Blockchain services offered as part of Coinbase Cloud’s blockchain infrastructure solutions are included in other subscription and services revenue. The Company’s staking revenue is included within blockchain rewards.

Custodial fee revenue

The Company provides a dedicated secure cold storage solution to customers and earns a fee, which is based on a contractual percentage of the daily value of assets under custody. The fee is collected on a monthly basis. These contracts typically have one performance obligation which is provided and satisfied over the term of the contracts as customers simultaneously receive and consume the benefits of the services. The contract may be terminated by a customer at any time, without incurring a penalty. Customers are billed on the last day of the month during which services were provided, with the amounts generally being due within thirty days of receipt of the invoice. Accounts receivable from customers for custodial fee revenue, net of allowance, were $13.6 million and $7.8 million as of June 30, 2023 and December 31, 2022, respectively. The allowance recognized against these fees was not material for any of the periods presented.

Interest income and corporate interest and other income

The Company earns income on fiat funds under a revenue sharing arrangement with the issuer of USDC pursuant to which the Company shares any interest income generated from USDC reserves pro rata based on (i) the amount of USDC distributed by each respective party and (ii) the amount of USDC held on each respective party’s platform. The Company’s income is dependent on the balance of such fiat funds and the prevailing interest rate environment. The Company also earns interest income on loans issued to its consumers and institutional users. Additionally, the Company holds customer custodial funds and cash and cash equivalents at certain third-party banks which earn interest. Interest income earned from customer custodial funds, cash and cash equivalents and loans is calculated using the interest method and is not within the scope of Topic 606 – Revenue from Contracts with Customers. Interest earned on revenue sharing, customer custodial funds, and loans is included in interest income within subscription and services revenue. Interest earned on cash and cash equivalents is included in corporate interest and other income, within other revenue.

Other subscription and services revenue

Other subscription and services revenue primarily includes subscription revenue from Coinbase One, revenue from Coinbase Cloud, which includes staking application, delegation, and infrastructure services, Learning Rewards (formerly “Earn”) campaign revenue, and revenue from other subscription licenses. Generally, revenue from other subscription and services contains one performance obligation, may have variable and non-cash consideration, and is recognized at a point in time or over the period that services are provided.

25

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Related party transactions

Certain of the Company’s directors, executive officers, and principal owners, including immediate family members, are users of the Company’s platform. The Company recognized revenue from related party customers of $4.0 million and $2.6 million for the three months ended June 30, 2023 and June 30, 2022, respectively, and $7.1 million and $7.6 million for the six months ended June 30, 2023 and June 30, 2022, respectively. As of June 30, 2023 and December 31, 2022, amounts receivable from related party customers were $1.4 million and $1.3 million, respectively.

Revenue by geographic location

In the table below are the revenues disaggregated by geography, based on domicile of the customers or booking location, as applicable (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
United States	$	637,861	$	667,214	$	1,324,630	$	1,623,047
Rest of the World(1)	70,050		141,111		155,810		351,714
Total revenue	$	707,911	$	808,325	$	1,480,440	$	1,974,761

__________________

(1)No other individual country accounted for more than 10% of total revenue.

6.    ACCOUNTS AND LOANS RECEIVABLE, NET OF ALLOWANCE

Accounts and loans receivable, net of allowance consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022
Interest receivable	$	216,035	$	181,647
Custodial fee revenue receivable	15,014		8,434
Loans receivable(1)	132,856		98,203
Crypto asset loans receivable	37,694		85,826
Other receivables(2)	38,920		41,766
Allowance for doubtful accounts(3)	(13,309)		(11,500)
Total accounts and loans receivable, net of allowance	$	427,210	$	404,376

__________________

(1)Loans receivable does not include $40.6 million and $2.8 million of receivables denominated in USDC as of June 30, 2023 and December 31, 2022, respectively, as these financial assets did not meet the criteria for derecognition. These amounts are included in USDC in the condensed consolidated balance sheets.

(2)Includes accounts receivables denominated in crypto assets of $5.4 million and $6.9 million as of June 30, 2023 and December 31, 2022, respectively. See Note 13. Derivatives for additional details.

(3)Includes provision for transaction losses of $2.9 million and $3.2 million as of June 30, 2023 and December 31, 2022, respectively.

Loans receivable

The Company issues fiat loans to consumers and institutions. As of May 10, 2023, the Company stopped issuing new loans to consumers and existing consumer borrowers will have until November 20, 2023 to pay back their loans. As of June 30, 2023 and December 31, 2022, the Company had issued loans with an outstanding balance of $132.9 million and $98.2 million, respectively. The related interest receivable on the loans as of June 30, 2023 and December 31, 2022, was $0.9 million and $0.7 million, respectively.

26

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The amounts loaned are collateralized with crypto assets which are either held by the borrower in their crypto asset wallet on the Company’s platform or held directly by the Company. The Company generally does not have the right to use such collateral unless the borrower defaults on the loans. Due to the collateral requirements the Company applies to such loans, the Company's process for collateral maintenance, and collateral held on platform, the Company’s credit exposure is significantly limited and no allowance, write-offs or recoveries were recorded against these loans receivable. The loans are measured at amortized cost. The carrying value of the loans approximates their fair value due to their short-term duration of less than 12 months. As of June 30, 2023 and December 31, 2022, there were no loans receivable past due. See Note 11. Collateral, for additional details regarding the Company’s obligation to return collateral.

Crypto asset loans receivable

The Company enters into transactions where it lends crypto assets to institutional customers. The Company evaluates the crypto asset loans receivable for credit loss. Due to the collateral requirements the Company applies to such loans, the Company's process for collateral maintenance, and collateral held on platform, the Company’s credit exposure is significantly limited and no allowance, write-offs or recoveries were recorded against these crypto asset loans receivable. As of June 30, 2023 and December 31, 2022, there were no crypto asset loans receivable past due.

The Company requires that borrowers pledge assets as collateral for these loans. See Note 11. Collateral, for additional details regarding the Company’s obligation to return collateral.

7.    GOODWILL, INTANGIBLE ASSETS, NET AND CRYPTO ASSETS HELD

Goodwill

The following table reflects the changes in the carrying amount of goodwill (in thousands):

	Six Months Ended June 30, 2023		Year Ended December 31, 2022
Balance, beginning of period	$	1,073,906	$	625,758
Additions due to business combinations	65,764		454,417
Measurement period adjustments(1)	—		(6,269)
Balance, end of period	$	1,139,670	$	1,073,906

__________________

(1)The measurement period adjustments during the year ended December 31, 2022 consisted of $4.1 million, $0.3 million and $1.9 million related to the Unbound acquisition, FairX acquisition and certain other acquisitions that were material when aggregated, respectively, and which were associated with the changes in deferred tax assets as a result of changes in estimates. There were no measurement period adjustments during the three and six months ended June 30, 2023.

There was no impairment recognized against goodwill at the beginning or end of the periods presented.

27

Coinbase Global, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Intangible assets, net

Intangible assets, net consisted of the following (in thousands, except years data):

As of June 30, 2023 Gross Carrying Amount