Coinbase’s no-good, very bad summer

It's been a minute since I checked in on our friends at Coinbase, and so when I saw Reuters noting that a class action suit would be going ahead, I thought perhaps we should all reflect together on Coinbase's cruel summer.

The company's shares have fallen by more than a third in the last 6 months, to $147.95 as of this writing, from $238.55 on March 6th. On the company's first day of trading, in April 2021, its closing price was $328.28.

Quite a turn of fortune! Certainly some price fluctuation can be chalked up to the vagaries of the cryptocurrency market - Coinbase was trading at $153.98 at the start of this year, before a Bitcoin ETF got approved. When Bitcoin began a run in February, Coinbase also started trading up. Still, there have been some fairly obvious bits of bad news, such as yesterday's ruling.

The class action, briefly put, is about whether Coinbase adequately told its investors about the business's risks from bankruptcy and regulatory agencies. On Sept. 5th, a judge rejected Coinbase's motion to dismiss the suit.

It's also an election year, and crypto money has gotten heavily involved in politics. Given the existential risk the SEC case against Coinbase poses, this strikes me as entirely understandable. Crypto-friendly regulation could short-circuit that risk. But there's been infighting in crypto super PACs, with donor Ron Conway writing an angry memo about being left out of donation decisions.

In that memo, Conway writes, "There is an 'elephant in the room. We have two factions: a moderate faction and a Donald Trump faction (Brian and Marc)." The Brian here is Coinbase's CEO, Brian Armstrong. (The Marc is Marc Andreessen of Andreessen Horowitz.)

Backing Donald Trump maybe looked like a better idea when he was running against President Joe Biden. But now that Vice President Kamala Harris has whipped up enthusiasm from both donors and voters, that decision might be something of an albatross for Coinbase. Perhaps that's why Alesia Haas, Coinbase's CFO, has gone out of her way to say Harris's official super PAC is accepting donations through Coinbase itself. A perception of Coinbase as a Republican company isn't going to give it much leverage in a Harris administration, after all.