\n<\/p>\n
It\u2019s been a minute since I checked in on our friends at Coinbase, and so when I saw Reuters noting that a class action suit would be going ahead<\/a>, I thought perhaps we should all reflect together on Coinbase\u2019s cruel summer.<\/p>\n<\/div>\n The company\u2019s shares have fallen by more than a third in the last 6 months, to $147.95 as of this writing, from $238.55 on March 6th. On the company\u2019s first day of trading<\/a>, in April 2021, its closing price was $328.28.<\/p>\n<\/div>\n Quite a turn of fortune! Certainly some price fluctuation can be chalked up to the vagaries of the cryptocurrency market \u2014\u00a0Coinbase was trading at $153.98 at the start of this year, before a Bitcoin ETF got approved<\/a>. When Bitcoin began a run in February, Coinbase also started trading up. Still, there have been some fairly obvious bits of bad news, such as yesterday\u2019s ruling.<\/p>\n<\/div>\n The class action, briefly put, is about whether Coinbase adequately told its investors about the business\u2019s risks from bankruptcy and regulatory agencies<\/a>. On Sept. 5th, a judge rejected Coinbase\u2019s motion to dismiss the suit.<\/p>\n<\/div>\n Backing Donald Trump maybe looked like a better idea when he was running against President Joe Biden<\/p>\n<\/div>\n<\/div>\n It\u2019s also an election year, and crypto money has gotten heavily involved <\/a>in politics. Given the existential risk the SEC case against Coinbase poses, this strikes me as entirely understandable. Crypto-friendly regulation could short-circuit that risk. But there\u2019s been infighting in crypto super PACs, with donor Ron Conway writing an angry memo<\/a> about being left out of donation decisions.<\/p>\n<\/div>\n In that memo, Conway writes, \u201cThere is an \u2018elephant in the room. We have two factions: a moderate faction and a Donald Trump faction (Brian and Marc).\u201d The Brian here is Coinbase\u2019s CEO, Brian Armstrong. (The Marc is Marc Andreessen of Andreessen Horowitz<\/a>.)<\/p>\n<\/div>\n Backing Donald Trump maybe looked like a better idea when he was running against President Joe Biden. But now that Vice President Kamala Harris has whipped up enthusiasm from both donors<\/a> and voters<\/a>, that decision might be something of an albatross for Coinbase. Perhaps that\u2019s why Alesia Haas, Coinbase\u2019s CFO, has gone out of her way to say Harris\u2019s official super PAC is accepting donations<\/a> through Coinbase itself. A perception of Coinbase as a Republican company isn\u2019t going to give it much leverage in a Harris administration, after all.<\/p>\n<\/div>\n There\u2019s one more problem with Coinbase\u2019s lobbying efforts: a Federal Elections Commission complaint. Crypto critic Molly White <\/a>and Public Citizen filed a formal complaint<\/a> that alleged Coinbase violated campaign finance laws. According to the complaint, Coinbase made donations to crypto super PAC Fairshake and to the Congressional Leadership Fund, a PAC meant to elect Republicans to the House, when it should not have been making donations. (Coinbase was, at the time, in negotiations with the United States Marshals Service. The complaint says that federal laws expressly prohibit making donations while negotiating such a contract.) Coinbase has vigorously denied these allegations<\/a>.<\/p>\n<\/div>\n When the hits keep coming like this, I generally get my opera glasses out. Sure, it\u2019s possible that Coinbase will win its SEC suit, its shareholder suit, and dodge the campaign finance complaint,\u00a0as well as manage to navigate the new political landscape of whoever winds up in power after the election. But this seems like a lot of expensive distractions, and an awful lot of uncertainty. Coinbase\u2019s top lawyer, Paul Grewal, says he expects a more crypto-friendly Congress<\/a>. I imagine their shareholders sure hope he\u2019s right.<\/p>\n<\/div>\n