U.S.-based crypto exchange Coinbase has announced plans to raise $2 billion via a private offering of convertible senior notes. The proposed fundraise includes $1.0 billion aggregate principal amount of Convertible Senior Notes, due in 2029 and $1.0 billion aggregate principal amount of Convertible Senior Notes, due in 2032.
As per the official announcement, Coinbase will use the proceeds to cover for capped call transactions and to fund other general purpose expenses like operational capital expenditures, as well as acquisitions of products, technologies, and companies.
“The notes will be senior, unsecured obligations of Coinbase and will accrue interest payable semi-annually in arrears,” the firm said in its SEC filing. Additionally, the exchange is also planning to grant this round’s participants an access to $300 million principal amount of the 2023 and 2032 notes.
Coinbase Following Strategy’s Move
Coinbase’s latest fundraising move follows a similar approach from the legacy Bitcoin firm Strategy, which has raised over $8.14 billion through convertible notes.
A convertible note is a debt instrument that carries the potential to be converted into equity at a later date. This kind of offering often includes a discount rate in acquiring ownership in the firm and a valuation cap to entice investors.
Weak Q2 Results for Coinbase
The fundraising comes after the exchange’s mixed Q2 results, where its revenue increased by 3.4% year-over-year to $1.5 billion, but non-GAAP diluted EPS dropped significantly to $0.12. Although adjusted EBITDA declined, non-recurring gains from Coinbase’s Circle stake and crypto portfolio were notable.
Moreover, transaction revenue—which is a core business area of the exchange—saw a decline due to subdued market volatility and reduced trading activity. In addition, the firm’s operating expenses also rose significantly.
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