After San Francisco-based exchange Coinbase announced that it is registering with the US Securities and Exchange Commission (SEC) for an initial public offering (IPO), FTX Exchange CEO Sam Bankman-Fried said the company will launch pre-IPO futures. On December 21, Bankman-Fried announced that the launch was in progress, and Coinbase’s pre-IPO futures contracts are now exchanged at a price of US$235 per unit.
One can place a bet on Coinbase’s initial public offering (IPO) by using Coinbase’s pre-IPO futures contract on the crypto trading platform FTX Exchange. FTX is known for launching the futures market with interesting things, such as the recent 2020 election results and Airbnb’s pre-IPO contract.
After explaining in detail that FTX may issue pre-IPO futures products for Coinbase IPO, FTX Exchange CEO Sam Bankman-Fried announced the offering on Twitter.
“Well, we did it,” Bankman Fried Tweet. The CEO of FTX added: “The spot margin is up to 5 times.”
According to the contract specifications, “CB Pre-IPO Contract” refers to a futures contract whose value is linked to the market value of Coinbase Inc. at the end of the first trading day.
These contracts are settled by exchanging cryptocurrency assets, and because they are futures products, the FTC CB pre-IPO contract “does not have the right to deliver basic rights or shareholder rights.” So far, the new FTX Coinbase futures market has a huge trading volume. In the past 24 hours, the transaction volume reached $2.2 million.
At the time of the issuance, the trading price of the Coinbase contract before the IPO was US$235 per unit to US dollars. In addition, members of the decentralized finance (defi) community have also created an unofficial Coinbase futures IOU, which has been exchanged on decentralized exchange (dex) platforms such as Uniswap and Sushiswap.
Since the company announced its listing, cryptocurrency advocates have been discussing the first ever public listing on a cryptocurrency exchange.
“When I traded on a large seller’s counter, it is now causing a major repercussion in Amazon’s initial public offering in the 1990s.” Tweet. He added: “It feels very similar in some respects, including industry background and public sentiment, the latter of which includes a lot of suspicion and contempt.”
There is a lot of speculation about the value of Coinbase after the initial public offering, and some estimates believe it may exceed “$28 billion.” The San Francisco Exchange has grown rapidly, with 35 million users in more than 100 countries.
Coinbase has raised $500 million in equity financing from companies such as Greylock Partners, Andreessen Horowitz, MUFG, Tiger Capital Management and others. In 2018, Coinbase raised US$300 million in Series E financing, which is estimated to be worth about US$8 billion.
What do you think of the pre-IPO futures contract for Coinbase’s IPO? Let us know your thoughts on this topic in the comments section below.
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