The largest U.S.-based crypto exchange, even while in the crosshairs of federal regulators, is seeking to repurchase a significant portion of its corporate debt—as much as $150 million.
Coinbase is offering investors who bought company bonds at a 3.625% interest rate with a maturation date of 2031 a chance to redeem those notes, according to Bloomberg. Those who accept the offer, which expires Sept. 1, will receive between $615 and $645 per $1,000 of each bond’s principal.
A spokesperson for Coinbase declined to comment when contacted by Fortune.
The crypto exchange’s bond buyback follows a rosier-than-expected earnings report for the firm’s second quarter—even though the company still posted a net loss of $97 million, its sixth consecutive quarterly loss in the past two years. It also comes amid a high plateau in the crypto market as the price of Bitcoin, currently hovering near $30,000, is almost double what it was at the start of 2023.
Coinbase shares, which roughly correspond to the price action of Bitcoin, are almost triple what they were in January, trading at approximately $88 at the time of publication.
The market’s valuation of Coinbase’s junk bonds, a term for corporate debt where the issuer has a higher risk of default than more stable firms, has fluctuated with the perceived health of the crypto market writ large.
Following the collapse of the now-bankrupt crypto exchange FTX, investors severely downgraded Coinbase’s debt, and it traded at 51 cents on the dollar, as the larger market was in turmoil and Bitcoin’s price nosedived.
In January, S&P Global Ratings, the largest debt evaluator worldwide, downgraded Coinbase from a BB to a BB-, citing crypto market turmoil and the corresponding decrease in trading volume.
“We believe FTX’s bankruptcy in November has severely hit the crypto industry’s perceived credibility, causing a lack of retail engagement,” S&P said. “As a result, trading volumes across exchanges, including Coinbase, have declined sharply.”
The price at which Coinbase’s debt was traded rose in the first half of 2023, but in June, the Securities and Exchange Commission sued the exchange, alleging that Coinbase sold unregistered securities. Investors quickly devalued the exchange’s bonds, as they went from about 64 cents on the dollar prior to the lawsuit to then 59 cents.
