Coinbase's $2.9B Power Move 🧿
Happy Sunday dispatchers!
In one week, they've orchestrated the largest acquisition in crypto history, revealed they've been quietly accumulating Bitcoin, helped solve a murder case, and faced scrutiny over $45 million in customer losses—all while their quarterly revenue dipped.
Are these the calculated risks of a company positioning for a trillion-dollar future, or the desperate gambits of an exchange feeling the squeeze?
CEO Brian Armstrong appears to be building something far more ambitious than a mere exchange — something that could potentially transform Coinbase from a retail-focused trading platform into the financial infrastructure underpinning global crypto markets.
But to understand what's really happening, we need to look beyond the headline figures and examine the larger game being played.
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The Derivatives Gambit
When Coinbase announced its agreement to acquire Deribit for $2.9 billion — $700 million in cash and 11 million shares of Coinbase stock — most analysis focused on the price tag.
The deal gives Coinbase immediate access to:
$30 billion in current open interest
Over $1 trillion in trading volume from last year
The dominant platform for Bitcoin and Ethereum options
Options trading is typically more resilient to market downturns than spot trading, as traders use options to manage risk in both bull and bear markets.
"We believe crypto options are on the cusp of significant expansion, similar to the equity options boom of the 1990s," noted Greg Tusar, Coinbase's VP of institutional products. "This acquisition positions Coinbase to lead this growth."
Just a week earlier, rival exchange Kraken finalised its acquisition of futures trading platform NinjaTrader for $1.5 billion. The parallel moves suggest a recognition across the industry that derivatives — not spot trading — will be the next major battleground.
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By acquiring Deribit, which operates outside the US, Coinbase gains immediate access to the lucrative segment that is derivatives trading, while potentially positioning itself for regulatory developments that could eventually open these markets within the United States.
"This might be the best 'value' deal in crypto I've ever seen," remarked Jeff Park, Bitwise's head of alpha strategies, calling the acquisition "a coup for Coinbase."
Matt Hougan, Bitwise's Chief Investment Officer, went further: “Coinbase is going to be a $1 trillion company someday."
Given Coinbase's current market capitalisation of approximately $50 billion, that represents an ambitious twentyfold increase.
Profit, Safety, and Mixed Signals
While the Deribit acquisition grabbed headlines, Coinbase's quarterly earnings report revealed a more complex picture of a company navigating turbulent waters.
Total revenue fell 10% quarter-over-quarter to $2 billion, missing industry estimates as trading activity slowed across the market. More dramatically, net income plummeted 95% from a near-company record $1.29 billion in Q4 to just $66 million in Q1.
This precipitous drop was largely due to a $596 million paper loss on Coinbase's crypto holdings as market prices declined. Transaction revenue fell 18.9% to $1.26 billion, with trading volumes dipping 10.5% to $393 billion.
Yet beneath these topline figures, a more nuanced story emerges. Subscription and services revenue actually rose 8.9% to $698.1 million, with stablecoin revenue as the standout contributor. This growing revenue diversification suggests Coinbase is steadily reducing its dependence on volatile trading fees.
Simultaneously, Coinbase revealed it had purchased another $153 million worth of crypto assets, primarily Bitcoin, bringing its long-term investment portfolio to $1.3 billion — approximately 25% of its net cash.
"To be clear, we're an operating company," CFO Alesia Haas emphasised on the earnings call. "But we do invest alongside the space."
This statement followed revelations that Coinbase had considered adopting a Bitcoin-heavy treasury strategy similar to Strategy's Michael Saylor on multiple occasions, but ultimately decided against it.
"There were definitely moments over the last 12 years where we thought, man, should we put 80% of our balance sheet into crypto — into Bitcoin specifically," Armstrong told Bloomberg. "We made a conscious choice about risk."
Unlike firms that explicitly tie their corporate identity to holding Bitcoin, Coinbase is taking a more measured approach, allocating profits from operations back into crypto assets as a sector-aligned capital recycling strategy rather than a treasury transformation.
The Darker Side of Growth
As Coinbase expands its institutional offerings, it continues to grapple with significant security challenges that threaten to undermine user trust.
On May 2, on-chain sleuth ZachXBT identified approximately $45 million in funds stolen from Coinbase users through social engineering scams in just seven days. More alarmingly, he claimed Coinbase users have lost "nine figures" to similar scams over the past few months, an issue he described as unique to Coinbase among major exchanges.
These claims place the total amount lost by Coinbase users to social engineering scams at potentially $330 million annually, reflecting sophisticated attack strategies targeting crypto holders.
Yet Coinbase has also leveraged its security expertise to assist law enforcement in solving serious crimes. Chief Legal Officer Paul Grewal revealed on May 6 that the company's blockchain forensics team played a crucial role in a criminal investigation that led to multiple murder convictions in New York City.
The case involved a series of violent robberies where victims — often from the LGBTQ+ community — were drugged outside Manhattan bars and clubs, their phones stolen, and financial and crypto accounts emptied. Several victims were found dead from fentanyl-laced substances, with over $250,000 stolen across multiple platforms, including Coinbase.
"Our blockchain analysis tied multiple wallets to the same crew, helped recover evidence across fiat and crypto rails, and supported convictions on 24 counts, including second-degree murder," Grewal explained. "The case shows crypto isn't the risk — it's the trail of proof that put violent criminals behind bars."
This duality — being both a target for scammers and a valuable tool for law enforcement — highlights the complex position Coinbase occupies as it scales its operations.
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The Institutional Chess Game
Looking at these developments together, a clearer picture of Coinbase's strategy emerges.
The acquisition of Deribit represents the latest move in a series of strategic acquisitions that have systematically expanded Coinbase's institutional capabilities:
Xapo (2019) led to Coinbase Custody
Tagomi (2020) led to Coinbase Prime
FairX (2022) led to Coinbase Derivatives Exchange
One River Digital (2023) led to Coinbase Asset Management
Deribit (2025) establishing Coinbase as the premier global platform for crypto derivatives
Each acquisition has filled a specific gap in Coinbase's institutional offering, creating what might eventually become a comprehensive, integrated financial infrastructure for crypto.
This institutional infrastructure push aligns with reports that Coinbase is considering applying for a US banking licence, potentially following Circle and BitGo in seeking to bridge the gap between crypto and traditional finance through formal banking credentials.
Read: From Exile to Empire Builders 🏦
The goal appears to be building a platform where sophisticated traders can access spot, futures, perpetual futures, and options trading — all in one seamless, capital-efficient environment. This would position Coinbase not just as a retail on-ramp to crypto, but as the backbone of institutional crypto trading globally.
Meanwhile, Coinbase's measured approach to holding crypto on its balance sheet suggests a company balancing its crypto-native identity with the responsibilities of being a publicly traded company.
Token Dispatch View 🔍
When crypto enthusiasts spoke of "institutional adoption" in previous cycles, they typically imagined BlackRock and Goldman Sachs buying Bitcoin for their treasuries or offering crypto to their clients. While that has partially materialised with Bitcoin ETFs, a different kind of institutional infrastructure has been quietly forming.
Coinbase's Deribit acquisition marks a pivotal moment in this evolution. Rather than traditional institutions adopting crypto, we're witnessing crypto-native companies transforming themselves into institutions.
The reports that Coinbase is actively considering a US banking licence solidify this transformation from outsider to insider — a remarkable reversal for a company that just a few years ago couldn't maintain basic banking relationships for many of its executives.
This creates an interesting dynamic. Coinbase began as a retail-focused exchange simplifying Bitcoin purchases for everyday users. Today, it's morphing into something that resembles a traditional financial powerhouse — complete with prime brokerage, custody, asset management, and now, sophisticated derivatives trading.
Yet unlike conventional financial institutions, Coinbase maintains its crypto-native DNA. It holds Bitcoin on its balance sheet, provides blockchain forensics to law enforcement, and remains committed to crypto's potential to reshape finance.
This hybrid identity may prove to be Coinbase's greatest strength or its most significant vulnerability. Traditional financial firms are bound by decades of regulation that both constrains and protects them. Crypto-native institutions are creating new models with fewer precedents to follow and fewer safeguards against unknown risks.
The future of crypto likely depends on how successfully companies like Coinbase can bridge this gap — maintaining crypto's innovative potential while developing institutional-grade security and compliance. Their success or failure will determine whether crypto fulfils its promise of financial transformation or remains perpetually on the periphery.
Week That Was 📆
Thursday: The Crypto Bills’ Chaos 📃
Wednesday: The App Store Liberation 🍎
Tuesday: Washington’s Crypto Moves Face Political Roadblocks 🚧
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