Coinbase Launches Crypto Index Fund to Soften Lawsuit Blow


It seems like every day, we read about some kind of scam, mining hack, or law enforcement agency cracking down on unruly crypto companies. But it’s not every day that we hear that it is Coinbase, the number 1 U.S. exchange and, at $1.6 billion, the most valuable company in the crypto industry, that is getting sued. Last Thursday, Coinbase was hit by a class action lawsuit. The plaintiffs? A group of investors led by Jeffrey Berk. Their case? Coinbase or some of its employees engaged in insider trading when the exchange listed Bitcoin Cash back in December. BCH was launched on December 20, a bit earlier than the planned date (January 1). Since BCH prices spiked just before the announcement was made, many believe that some traders were tipped off. Although Coinbase issued a formal statement already on January 10, saying that the BCH hiccups at launch were caused by massive buyer demand, news of the lawsuit has already cost Coinbase millions of dollars.

You know what they say, when it rains, it pours? Well, for Coinbase, that is hardly the case. Only one bad Coinbase-related thing happened this time. The exchange is often referred to as the Goldman Sachs of cryptocurrency exchanges. On Tuesday, in an interview for CNBC’s Fast Money, Coinbase COO Asiff Hirji announced that the Goldman Sachs of crypto was launching a weighted index fund – the industry’s Dow Jones, if you will. Just like the Dow Jones Industrial Average lists the stocks of the top 30 U.S. companies, so will the Coinbase Index Fund list all assets available for trading on GDAX, the company’s exchange. After the index fund, Coinbase plans to launch an exchange-traded fund, for investing in cryptocurrencies available on Coinbase and GDAX. At the moment, Coinbase set the bar pretty high for prospective investors. The minimum investment is $10,000, plus the fact it will only be available to U.S. investors, or those who earn at least $200,000 or have a minimum of $1 million in the bank. The exchange-traded/retail fund would have no requirements when it comes to wealth, making it available for everyone.

There are several other steps Coinbase has been taking in an effort to solidify its top spot. On Monday, the exchange was strengthened by a prominent new member. Emilie Choi, who had previously worked for LinkedIn, overseeing more than 40 acquisitions, including Lynda for $1.5 billion, is Coinbase’s new vice president of corporate and business development. After Circle acquired Poloniex a week ago, many see this as Coinbase laying down the groundwork for a series of mergers and acquisitions. According to Choi, the Coinbase team feels that the current atmosphere, especially when it comes to startups, is very much like the atmosphere 14 years ago, when Google really became the giant we know today after buying a bunch of promising new startups, such as the precursor to Google Maps. This time, Coinbase wants to be the company which recognizes the next big thing and uses that potential to reach new heights.