US cryptocurrency trading platform Coinbase brokered MicroStrategy's $ 425M bitcoin purchase earlier this year, the exchange said.
The revelation in a Coinbase announcement
In an announcement Tuesday, Coinbase revealed that MicroStrategy's initial $ 250M investment in August was brokered by Coinbase Prime, the crypto brokerage arm of the exchange formed after the acquisition of Tagomi in May.
This first investment was followed in September by an additional $ 175M investment from the Virginia-based business intelligence firm, bringing MicroStrategy's total investment to $ 425M in bitcoin (quotation BTC).
MicroStrategy became the first publicly traded company to acquire a large chunk of bitcoin to hold on its balance sheet as a primary treasury reserve asset. In retrospect, the chain data suggests that Coinbase was transacting with a large customer in the months leading up to MicroStrategy's August announcement.
A series of large amounts of bitcoins - nearly 80.000 in total - started coming out of Coinbase Pro's stock starting in the middle of the year, ending in the fall. “Those flows went to Coinbase Custody wallets (interoperated with over-the-counter wallets), not to exchange wallets,” explained Ki Young Ju, CEO of analytics firm CryptoQuant.
The strategy aims to maximize long-term shareholder value while reflecting the use of cryptocurrency as a store of value with a greater "potential for appreciation than holding cash."
A win in Coinbase's PR after the NYT scandal article
In Tuesday's announcement, Coinbase outlined three reasons MicroStrategy chose the San Francisco-based exchange: the company's intelligent order routing, trading algorithms, and white glove service.
Coinbase also said it was involved in several pre-trade calls with the company during the onboarding process and was asked to conduct a small "test trade".
The test trade evaluated data collected by Coinbase and was analyzed by the exchange's OTC and Coverage teams. After the positive outcome of the test, Coinbase received the green light from MicroStrategy to proceed with the investment.
After the test, Coinbase executed trades in real time using the time-weighted average price algorithm, a strategy that takes into account the average price of an asset over a specified time period to minimize the impact on the market. .
The revelation is a notable PR victory for Coinbase CEO Brian Armstrong following a recent New York Times (NYT) article claiming the mistreatment of black employees and several service outages during the market crisis.
Armstrong's exchange can now claim bragging rights as having facilitated a publicly traded company to take a nine-figure leap of faith on bitcoin as a reserve asset.
