The inside story of the Coinbase crypto OG and Wall Street guard power struggle

QUICK TAKE:

  • Coinbase, the San Francisco crypto exchange is making a pivot to its crypto roots
  • The firm plans to focus its institutional efforts on crypto funds and crypto native firms
  • As such, Jonathan Kellner — former CEO of Instinet — is no longer joining the firm
  • The move could help the exchange better compete with Binance

For many crypto enthusiasts, mid-2018 feels like a lifetime ago.

In those heady days, crypto’s market capitalization stood at $300 billion; rumors swirled that bulge bracket investment banks such as Goldman Sachs were entering the market; and Intercontinental Exchange excitedly announced plans for Bakkt, lauded to be the New York Stock Exchange of crypto.

Since then, the market has effectively halved, Goldman’s exact plans for crypto remain unclear, and Bakkt’s launch date is up in the air.

Things at Coinbase, once a retail exchange powerhouse, also look different. In 2018, the exchange had big ambitions to lure Wall Street’s savviest investors and fastest traders to its marketplace.

But times have changed, and now the firm, which recently scored a $8 billion valuation, is returning to its roots, focusing on San Fran’s Market Street over Wall Street. That is to say, the firm is shifting its client focus away from the likes of Goldman Sachs and BlackRock to crypto-native funds like Pantera and Polychain.

As a result, the firm is readjusting its 2018 goal to build out a full-scale Wall Street-grade prime broker, according to people familiar with the situation. And there’s one striking casualty. Jonathan Kellner, the Wall Street veteran who led brokerage giant Instinet, is no longer joining the firm, a Coinbase spokesperson confirmed.

As first reported by The Block, Kellner was set to join Coinbase this year to lead institutional sales and support, becoming one of the most notable Wall Street hires in crypto. He was expected to leverage his experience on Wall Street to integrate Keystone, the brokerage Coinbase announced it was acquiring in June 2018, into the broader business. This would include building out the aforementioned prime broker unit, dubbed Coinbase Prime, and over-the-counter trading.

Source: The Block

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