Coinbase Global (COIN) risk factors, 2025 10-K

Other

1. 01Our operating results have and will significantly fluctuate, including due to the highly volatile nature of crypto
2. 02Our total revenue is substantially dependent on the prices of crypto assets and volume of transactions conducted on our platform. If such price or volume declines, our business, operating results, and financial condition would be adversely affected and the price of our Class A common stock could decline
3. 03Interest rate fluctuations could negatively impact us
4. 04The future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect, our business, operating results, and financial condition could be adversely affected
5. 05Cyberattacks and security breaches of our platform, or those impacting our customers or third parties, could adversely affect our brand, reputation, business, operating results, and financial condition
6. 06For example, in 2021, third parties independently obtained login credentials and personal information for at least 6,000 customers and used those credentials to exploit a vulnerability that previously existed in the account recovery process. We reimbursed impacted customers approximately $25.1 million
7. 07We are subject to an extensive, highly-evolving and uncertain regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition
8. 08We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition could be adversely affected if we are unable to compete effectively
9. 09We compete against a growing number of decentralized and noncustodial platforms and our business, operating results, and financial condition could be adversely affected if we fail to compete effectively
10. 10If we cannot keep pace with rapid industry changes to provide new and innovative products and services, the use of our products and services, and consequently our net revenue, could decline, which could adversely affect our business, operating results, and financial condition
11. 11We currently rely on third-party service providers for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our ability to support our customers
12. 12Loss of a critical banking or insurance relationship could adversely affect our business, operating results, and financial condition
13. 13Any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in a loss of customers or funds and adversely affect our brand, reputation, business, operating results, and financial condition
14. 14and costly for us to address. Problems with the reliability or security of our systems would harm our reputation and the cost of remedying these problems could negatively affect our business, operating results, and financial condition
15. 15Our failure to securely store and manage our and our customers’ fiat currencies and crypto assets could adversely affect our business, operating results, and financial condition
16. 16If we fail to retain existing customers or add new customers, or if our customers decrease their level of engagement with our products, services and platform, our business, operating results, and financial condition may be significantly harmed
17. 17If we do not effectively manage our growth, including by maintaining and improving our systems and processes, our business, operating results, and financial condition could be adversely affected
18. 18Our strategy and focus on delivering high-quality, compliant, easy-to-use, and secure crypto-related financial services may not maximize short-term or medium-term financial results
19. 19A significant amount of the Trading Volume on our platform is derived from a relatively small number of users, and the loss of these users, or a reduction in their Trading Volume, could have an adverse effect on our business, operating results, and financial condition
20. 20Due to our limited operating history, it may be difficult to evaluate our business and future prospects, and we may not be able to achieve or maintain profitability in any given period
21. 21Because our long-term success depends, in part, on our ability to expand our sales to customers outside the United States, our business is susceptible to risks associated with international operations
22. 22Disputes with our customers could adversely affect our brand, reputation, business, operating results, and financial condition
23. 23We may suffer losses due to staking, delegating, and other related services we provide to our customers
24. 24We may not be able to generate sufficient cash to service our debt and other obligations, including our obligations under the 2026 Convertible Notes, 2030 Convertible Notes, and Senior Notes
25. 25We have a substantial amount of indebtedness and other obligations, which could adversely affect our financial position and prevent us from fulfilling our obligations under the 2026 Convertible Notes, 2030 Convertible Notes, and Senior Notes
26. 26We provide secured loans to our customers, which exposes us to credit risks and may cause us to incur financial or reputational harm
27. 27We are exposed to transaction losses due to chargebacks, refunds, or returns as a result of fraud or uncollectability that could adversely affect our business, operating results, and financial condition
28. 28We route orders through third-party trading venues in connection with our Coinbase Prime trading service. The loss or failure of any such trading venues could adversely affect our business, operating results, and financial condition
29. 29Any acquisitions and investments that we make could require significant management attention, disrupt our business, result in dilution to our stockholders, and could adversely affect our business, operating results, and financial condition
30. 30If we fail to develop, maintain, and enhance our brand and reputation, our business, operating results, and financial condition could be adversely affected
31. 31Key business metrics and other estimates are subject to inherent challenges in measurement and change as our business evolves, and our business, operating results, and financial condition could be adversely affected by real or perceived inaccuracies in those metrics or any changes in metrics we disclose
32. 32Our platform may be exploited to facilitate illegal activity such as fraud, money laundering, gambling, tax evasion, and scams. If our platform is used to further such illegal activities, our business, operating results, and financial condition could be adversely affected
33. 33Our compliance and risk management methods might not be effective and may result in outcomes that could adversely affect our reputation, operating results, and financial condition
34. 34We hold certain investments in DeFi protocols and may suffer losses if they do not function as expected
35. 35We may suffer losses due to abrupt and erratic market movements

Risks Related to Crypto Assets

1. 36Due to unfamiliarity and some negative publicity associated with crypto asset platforms, confidence or interest in crypto asset platforms may decline
2. 37Depositing and withdrawing crypto assets into and from our platforms involve risks, which could result in loss of customer assets, customer disputes and other liabilities, which could adversely affect our business, operating results, and financial condition
3. 38A temporary or permanent blockchain “fork” to any supported crypto asset could adversely affect our business, operating results, and financial condition
4. 39existence of two parallel versions of the Bitcoin, Ethereum, or other blockchain protocol network, as applicable, running simultaneously, but with each split network’s crypto asset lacking interchangeability
5. 40We currently support, and expect to continue to support, certain smart contract-based crypto assets. If the underlying smart contracts for these crypto assets do not operate as expected, they could lose value and our business, operating results, and financial condition could be adversely affected
6. 41negative publicity, be exposed to security vulnerabilities, decline significantly in value, and lose liquidity over a short period of time
7. 42From time to time, we may encounter technical issues in connection with the integration of supported crypto assets and changes and upgrades to their underlying networks, which could adversely affect our business, operating results, and financial condition
8. 43If miners or validators of any supported crypto asset demand high transaction fees, our business, operating results, and financial condition could be adversely affected
9. 44Future developments regarding the treatment of crypto assets for U.S. and foreign tax purposes could adversely affect our business, operating results, and financial condition
10. 45Our tax information reporting obligations with respect to crypto transactions may be subject to further scrutiny in light of changes made to the U.S. and global broker reporting regime for tax reporting
11. 46The nature of our business requires the application of complex financial accounting rules, and there is limited guidance from accounting standard setting bodies on certain topics. If financial accounting standards undergo significant changes, our operating results could fluctuate

Risks Related to Government Regulation and Privacy Matters

1. 47Our Consolidated Balance Sheets may not contain sufficient amounts or types of regulatory capital to meet the changing requirements of our various regulators worldwide, which could adversely affect our business, operating results, and financial condition
2. 48Many of the crypto assets in which we facilitate trading are subject to regulatory authority by the CFTC. Any fraudulent or manipulative activity in a crypto asset occurring on our platform could subject us to increased regulatory scrutiny, regulatory enforcement, and litigation
3. 49appropriate registrations, as well as recent enforcement settled orders against developers of decentralized platforms
4. 50We obtain and process a large amount of sensitive customer data. Any real or perceived improper use of, disclosure of, or access to such data could harm our reputation, as well as adversely affect our business, operating results, and financial condition
5. 51Issues relating to the development and use of AI in our business could result in reputational harm, competitive harm, and legal liability, and could adversely affect our business, operating results, and financial condition

Risks Related to Third Parties

1. 52Our current and future services are dependent on payment networks and acquiring processors, and any changes to their rules or practices could adversely affect our business, operating results, and financial condition
2. 53to be charged. If we are unable to accept cards or are limited in our ability to do so, our business, operating results, and financial condition could be adversely affected

Risks Related to Intellectual Property

1. 54Our intellectual property rights are valuable, and any inability to protect them could adversely affect our business, operating results, and financial condition
2. 55We have been, and in the future may be, sued by third parties for alleged infringement of their proprietary rights
3. 56Our platform contains third-party open source software components, and failure to comply with the terms of the underlying open source software licenses could harm our business
4. 57advantages. Alternatively, to avoid the public release of the affected portions of our source code, we could be required to expend substantial time and resources to re-engineer some or all of our software

Risks Related to Our Employees and Other Service Providers

1. 58The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could adversely affect our business, operating results, and financial condition
2. 59Our culture emphasizes innovation, and if we cannot maintain this culture, our business, operating results, and financial condition could be adversely affected
3. 60In the event of employee or service provider misconduct or error, our business, operating results, and financial condition could be adversely affected
4. 61Our officers, directors, employees, and large stockholders may encounter potential conflicts of interests with respect to their positions or interests in certain crypto assets, entities, and other initiatives, which could adversely affect our business and reputation
5. 62Adverse economic conditions could adversely affect our business
6. 63Environmental, social, and governance factors may impose additional costs and expose us to new risks
7. 64Changes in U.S. and foreign tax laws, as well as the application of such laws, could adversely affect our business, operating results, and financial condition
8. 65developed technology or intercompany arrangements, which could impact our worldwide effective tax rate and harm our financial position and operating results
9. 66Our ability to use our deferred tax assets may be subject to certain limitations under U.S. or foreign law
10. 67We are exposed to fluctuations in currency exchange rates
11. 68If our estimates or judgment relating to our critical accounting estimates prove to be incorrect, our operating results could be adversely affected
12. 69We may be adversely affected by natural disasters, pandemics, and other catastrophic events, and by man-made problems such as terrorism, that could disrupt our business operations, and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster
13. 70If we fail to maintain an effective system of disclosure controls and procedures and internal control over our financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
14. 71We may require additional capital to support business growth, and this capital might not be available

Risks Related to Ownership of Our Class A Common Stock

1. 72The market price of our Class A common stock may be volatile, and could decline significantly and rapidly. Market volatility may affect the value of an investment in our Class A common stock and could subject us to litigation
2. 73The dual class structure of our common stock may adversely affect the trading market for our Class A common stock
3. 74Sales or distribution of substantial amounts of our Class A common stock, or the perception that such sales or distributions might occur, could cause the market price of our Class A common stock to decline
4. 75If securities or industry analysts do not publish or cease publishing research, or publish inaccurate or unfavorable research, about our business, the price of our Class A common stock and its liquidity could decline
5. 76We cannot guarantee that the Share Repurchase Program will be fully consummated or that such program will enhance the long-term value of our Class A common stock price
6. 77Moreover, Section 203 of the Delaware General Corporation Law (the “DGCL”) may discourage, delay, or prevent a change of control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between holders of 15% or more of our common stock and us
7. 78Our restated certificate of incorporation contains an exclusive forum provision for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees