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Coinbase continues M&A streak with Distributed Systems deal

Coinbase’s acquisition of the digital identity startup is the latest move in the attempt by cryptocurrency’s first unicorn to diversify its platform through a boost in M&A activity.

Coinbase has acquired digital identity startup Distributed Systems, as the cryptocurrency trading platform takes another step deeper into digital identity protection. The acqui-hire of the San Francisco-based company (fka Pavlov) will help Coinbase develop a decentralized identity login protocol meant to work a bit like accessing a third-party website using one’s Facebook account.

The deal is the latest in an impressive acquisition streak this year for Coinbase. In March, cryptocurrency’s first unicorn hired Emilie Choi as VP of corporate and business development, with a promise of more M&A activity in the future. The move followed Choi’s eight-year tenure as VP and head of corporate development at LinkedIn—a period that coincided with its $26.2 billion acquisition by Microsoft in 2016.

For fans of all things M&A, Choi has hardly disappointed in her new role, and Coinbase has worked to deliver on its pledge to boost its dealmaking. The company has completed eight acquisitions since its founding in 2012, per the PitchBook Platform, but just two came before 2018. Last quarter alone, Coinbase put a bow on five of those deals, as it works to take more significant steps toward diversifying its platform beyond the buying and selling of bitcoin, as the cryptocurrency’s value has plunged from the dizzying heights achieved late last year.

The Distributed Systems deal is the latest example of this strategy. Andrew Gold, Alex Kern, Nikhil Srinivasan, Jackson Callaway and Rohith Varanasi founded the company in 2015 with the goal of creating identity protection protocols for users of decentralized apps, or “dApps,” the programs that operate on a blockchain’s underlying computer network. The startup raised roughly $1.5 million in a seed round the following year at a valuation of $5 million.

For Coinbase, Gold, Callaway and Varanasi will reportedly work on Toshi, now relaunched as Coinbase Wallet, a dApp browser that represents an attempt to ease the use of Coinbase’s decentralized products in conjunction with other programs operating on the Ethereum blockchain. Meanwhile, co-founders Srinivasan and Kern will run a new team tasked with realizing Coinbase’s aspirations for a secure login product that can follow users across networks.

Coinbase’s latest move has a lot in common with its most recent deals, deploying an M&A strategy that combines a buy with a build model for product development based on talent acquisition. With that in mind, let’s recap the deals that Coinbase has wrapped up since Choi joined the company:

Cipher Browser

Coinbase picked up Cipher Browser in April. The deal put founder Peter Jihoon Kim on Coinbase’s team as head of engineering for Toshi, ensuring that the development of a decentralized browser remained a top concern for the platform.

With a transaction value of $120 million, the purchase of (fka 21) is officially Coinbase’s biggest pickup to date. The deal allows Coinbase users to get paid in digital currency for receiving email messages. The April acqui-hire tapped founder and CEO of, Balaji Srinivasan, as Coinbase’s first CTO.


In May, Coinbase purchased Paradex, the creator of a relay platform that allows users to trade different types of cryptocurrency, in a bid to expand the range of tokens that users are able to access on its own platform. Although the new platform will initially be available only to customers outside the US, Coinbase has said it’s working to gain regulatory clearance.

Digital Wealth and Venovate

Coinbase took a few big strides down the path to listing SEC-regulated crypto securities with the purchases in June of both Digital Wealth and Venovate. The deals form an integral part of the platform’s bid to offer blockchain-based securities with SEC oversight. The purchases also coincided with the acquisition of broker-dealer Keystone Capital, along with the financial services firm’s alternative trading system license and registered investment advisor license.

  • adam-headshot-15-kbh-637x518.jpg
    Written by Adam Putz

    Adam writes about M&A at PitchBook. Originally from Minnesota, Adam studied philosophy and journalism before earning a PhD in English from the University of Warwick. He is the author of The Celtic Revival in Shakespeare’s Wake (Palgrave Macmillan, 2013). When he’s not covering the latest deal or financial news out of Europe, Adam likes to write about environmental issues. In his free time, Adam enjoys hiking and canoeing, reading and traveling.

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