**Coinbase to Repurchase Junk Bonds Worth $150 Million**
Coinbase, the largest U.S.-based crypto exchange, is looking to repurchase a significant portion of its corporate debt, with an offer to redeem its bonds worth up to $150 million. The move comes as the company faces scrutiny from federal regulators. Investors who had purchased the company’s bonds at a 3.625% interest rate with a maturation date of 2031 have been given the opportunity to redeem those notes. The offer, which expires on September 1, will enable bondholders to receive between $615 and $645 per $1,000 of each bond’s principal. A spokesperson for Coinbase declined to comment when contacted by Fortune.
**Coinbase’s Q2 Earnings Report**
Coinbase’s decision to repurchase its junk bonds follows a positive earnings report for the company’s second quarter. Despite posting a net loss of $97 million, the company’s sixth consecutive quarterly loss in the past two years, the report exceeded expectations. Additionally, the crypto market has been experiencing a period of stability, with the price of Bitcoin hovering near $30,000, nearly double its value at the start of 2023. As Coinbase shares closely mirror the price action of Bitcoin, they have also seen significant gains and are currently trading at approximately $88.
**Fluctuation in Market Valuation of Coinbase’s Junk Bonds**
The market valuation of Coinbase’s junk bonds, which represent corporate debt with a higher risk of default, has been influenced by the overall health of the crypto market. Following the collapse of FTX, a bankrupt crypto exchange, investor confidence in Coinbase’s debt was severely impacted. The bonds were traded at 51 cents on the dollar, reflecting the turmoil in the larger market and the decline in Bitcoin’s price. In January, S&P Global Ratings downgraded Coinbase from a BB to a BB-, citing the cryptocurrency market’s volatility and decreased trading volume.
**Legal Challenges and Bond Devaluation**
In June, the Securities and Exchange Commission (SEC) sued Coinbase, accusing the exchange of selling unregistered securities. This legal action resulted in a devaluation of Coinbase’s bonds, as investors quickly devalued them from about 64 cents on the dollar to 59 cents. The SEC’s lawsuit added to the lingering concerns about the regulatory environment surrounding cryptocurrencies.
Despite facing regulatory challenges and posting consecutive quarterly losses, Coinbase remains optimistic about its future prospects. By repurchasing its debt, the company aims to demonstrate its commitment to managing its financial obligations. The offer to redeem its junk bonds reflects Coinbase’s confidence in its ability to navigate the evolving crypto landscape. As the crypto market continues to mature and regulatory uncertainties are addressed, Coinbase is positioning itself for long-term success.