A major bitcoin exchange just got a $100 million investment
Coinbase Inc., the digital currency exchange that in the past two months suffered a trading crash and upset customers over how it handled the bitcoin split, received a $100 million investment from a group led by IVP.
Spark Capital, Greylock Partners, Battery Ventures, Section 32 and Draper Associates also participated, according to a statement Thursday. Coinbase plans to use the money to expand its engineering and customer support staff, open a New York office for its professional trading platform GDAX and grow Toshi, “a mobile browser for the ethereum network that provides universal access to financial services,” said Megan Hernbroth, a spokeswoman.
Founded in 2012, San Francisco-based Coinbase said it has seen “unprecedented growth” over the last year as it helped customers buy and sell more than $25 billion worth of digital currencies such as bitcoin and ether. Cryptocurrencies have seen enormous price gains — bitcoin is up 250 percent year to date — trouncing other asset classes amid an explosion of attention, but there are growing pains.
On June 21, ether crashed to 10 cents from $317.81 on Coinbase’s GDAX exchange. The cause was a single $12.5 million trade — one of the biggest ever — that triggered further selling. It all happened in just 45 milliseconds, after which computer algorithms started buying, driving prices back up to $300 within 10 seconds. “We have reimbursed all customers affected,” Hernbroth said. To help prevent a repeat of the ether crash, Coinbase is considering developing circuit breakers that would pause trading to prevent accidents after consulting with industry experts including the New York Stock Exchange, which has an investment in the company.
Earlier this month, the bitcoin community updated the software it runs to increase the amount of transactions the network can process. In so doing, it created a new digital currency known as bitcoin cash. Initially, Coinbase said it wouldn’t support access to bitcoin cash for its customers, which angered many and led to threats of lawsuits, according to Fortune magazine. Coinbase has subsequently said it would allow customers to access their bitcoin cash by Jan. 1.
Hernbroth said they’ll hit the Jan. 1 deadline “assuming no additional risks emerge.”
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