Circle’s Suitors! 😲 Will Coinbase Win? 💰

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Ah, the delicate dance of finance! It seems Circle, the issuer of USDC, is considering abandoning its dreams of an initial public offering. One must wonder if they are merely waiting for a wealthy suitor, perhaps Coinbase or Ripple, to sweep them off their feet. 💃

  • It has come to my attention that Coinbase may be the most favourably positioned to acquire Circle, according to a report from Fortune. A most intriguing development! 🤔
  • One hears that Ripple’s earlier offer, a sum of no less than $4 billion to $5 billion, was, rather shockingly, rejected by Circle. One can only speculate as to the reasons! 🤨

Circle, you see, was allegedly hoping for at least $5 billion, a figure they deemed suitable for their IPO. One can hardly blame them for having high expectations! 😇

In a move that some might find surprising, the firm reportedly turned down a similar bid from Ripple earlier in the month. Indeed, some insiders whisper that Ripple is prepared to offer an even more extravagant sum. The audacity! 🤑

Coinbase’s Leverage

However, it appears that Coinbase possesses a certain advantage in this affair, according to Mr. Jeff Roberts, a crypto editor at Fortune Magazine. As Mr. Roberts so eloquently put it:

“Banker sources say Coinbase is in talks to buy Circle—a likely outcome IMO given the contract between them. That contract gives COIN sweet terms like veto rights over 3rd party deals.”

This contract, you see, dates back to 2018, when Circle and Coinbase joined forces to launch the Centre Consortium, a collaborative effort to issue the USDC stablecoin. A partnership of convenience, perhaps? 🤝

The report further revealed that Coinbase acquired an equity stake in Circle when this arrangement concluded in 2023. Such entanglements! 🕸️

Moreover, a new distribution agreement for USDC entitles Coinbase to a staggering 50% of Circle’s USDC reserve revenues, as detailed in an S-1/A filing with the SEC (page 101). A most generous arrangement, one must admit! 🎁

“After deducting amounts payable to other approved participants in the USDC ecosystem, Coinbase receives 50% of the remaining payment base.”

In the years 2024, 2023, and 2022, Coinbase amassed a fortune of $907 million, $691 million, and $248 million, respectively, from this very contract. One might say they were quite handsomely rewarded! 💰

Indeed, it seems that Coinbase was receiving the lion’s share of Circle’s operations. The nerve! 🦁

Notably, in 2024, Circle’s revenue reached $1.6 billion, but their net income was a mere $155 million, nearly six times lower than the payment to Coinbase. A rather lopsided arrangement, wouldn’t you agree? 🤔

The report further suggests that the current Coinbase deal extends beyond mere revenue, granting them control over Circle’s intellectual property and barring third-party partnerships. How very possessive! 🧐

“This includes a provision that Circle can’t form any new third-party partnership agreements that affect Coinbase’s USDC revenue without the latter’s consent, and another that gives Coinbase partial control over its intellectual property in the event of insolvency.”

To some, this underscores the exchange’s advantageous position in the likely buyout. A cunning plan, indeed! 😈

That said, certain members of the crypto community have criticized Circle founder Jeremy Allaire for failing to transform the second-largest stablecoin issuer. For the sake of comparison, Tether, the issuer of USDT and Circle’s rival, reported a net profit of $13 billion in 2024. A rather stark contrast, wouldn’t you say? 😮‍💨

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2025-05-20 19:12