Coinbase uses privately held stock to acquire a new startup

  • Ali Raza
  • 28th May, 09:27
Coinbase uses privately held stock to acquire a new startup
  • Coinbase recently acquired a firm called Tagomi — a crypto trading startup targeting institutional clients.
  • The acquired firm is young, but it attracted attention due to its executive team.
  • Coinbase paid the acquisition in privately owned stock, price was close to $100 million.

Coinbase crypto exchange, the largest cryptocurrency exchange in the US, recently announced the acquisition of a crypto trading startup, Tagomi. The announcement came yesterday, May 27th, explaining that this is a trading firm that offers its services to institutional clients.

So far, neither of the firms revealed the price that Coinbase paid for the acquisition. However, an unnamed source revealed that the exchange paid entirely with the exchange’s privately held stock.

The same source addressed the price tag that some reports estimated last November, putting it at $150 million. The source stated that this is significantly more than the actual value of the acquisition.

At the same time, another source — this one being familiar with Tagomi — revealed that the price of the deal was near $100 million. This source also explained that the price went this high because Coinbase was not the only one after Tagomi, and the US exchange actually had to outbid Binance exchange to get the deal.

Who is Tagomi and why are these exchanges after it?

Tagomi is a crypto trading firm from New York, and one that entered the crypto industry rather recently, given the sector’s 11-year-old history. The company launched in December 2018, but despite the fact that it was not around for long, it quickly started attracting attention.

It has a professional team of executives at the helm, many of which are veterans of the traditional financial world. Some of the names include Goldman Sachs’ Greg Tusar, Union Square Ventures partner and hedge fund veteran, Jennifer Campbell, as well as billionaire tech mogul, Peter Thiel.

Targeting institutional investors

According to Tusar, the team launched the exchange because it detected a void in the crypto market — no one provided electronic trading services to institutions at the time. Institutional traders were always the goal of the crypto industry, but without enough interest from the institutions’ side, no one was launching a dedicated business.

The best that deep-pocket investors had were OTC desks. Meanwhile, Tusar and the others noticed that the crypto trading infrastructure was evolving, and fast. More than that, they realized that it is following the same pattern as commodities and equities trading, so the team knew what to expect.

Coinbase’s COO, Emilie Choi, also commented on the deal, stating that this is a part of a larger plan, involving strategic acquisitions. For now, Tagomi will remain a standalone brand. However, in time, it will likely become a part of Coinbase Pro, according to Choi.

By Ali Raza
A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications. Raza is the co-founder of 5Gist.com, too, a site dedicated to educating people on 5G technology.
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