Coinbase Pre-IPO Tokens Hit $296 Shortly After FTX Launch

The Coinbase pre-IPO tokens or CBSE that were launched today by FTX exchange, have reached $296 shortly after the launch so let’s read more about it in today’s Coinbase news.

The tokenized shares are a speculative bet on the upcoming IPO by Coinbase and the traders are now gobbling them up. Crypto exchange FTX launched the coinbase Pre-IPO tokens this morning as a part of the Tokenized Stocks products line as the company said in an announcement. The tokens saw about $2 million traded in the past few hours and are now traded for $231. The tokens were brought up by the traders that were looking to bet on a high valuation of the upcoming IPO.

ok guys we did ithttps://t.co/4j6ebZJgMP

with spot margin, up to 5x! pic.twitter.com/asvRx0EEZk

— SBF (@SBF_Alameda) December 22, 2020

Tokenized Stocks are an FTX product that tracks the prices of the popular equities that were traded on the traditional exchanges and they can be easily purchased just like cryptocurrencies. The tokens are backed by the German financial institution CM-Equity which holds the actual shares that are represented by the tokens. Coinbase is valued at $8 billion with the IPO listings seeing more rumors of the market cap ranging from $40 billion to $80 billion. However, the company itself has no actual shares on the market yet but the speculative IPO tokens are a bet that they will be converted to equivalent share prices at the end of the first public day.
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This means that if the traders purchase $10 worth of CBSE today and coinbase shares trade in the public market at $15, they will gain 50% on their initial investment but if the shares trade at any value less than $10 the traders will see a loss on their investment. If the IPO doesn’t happen at all, the tokens will expire at a Coinbase valuation of $8 billion on June 1, 2022, according to the initial document. CBSE balances will drop to $32 in line with the valuation.

The maximum market cap of CBSE is limited to $250 million as FTX said but with the high volatility of these tokens being limited to 20%, CM-Equity which is the counterparty of these tokens could close the positions at its discretion. In the meantime, FTX deemed CBSE tokens as high risk and stated trades face a few risks on their purchase like the possibility of CM-equity not paying out at expiry.