Coinbase seeks legal sanctuary in Texas amid Delaware drift

Coinbase is severing ties with Delaware, seeking refuge in Texas’ nascent business courts after losing faith in the once-reliable Chancery’s judicial predictability and corporate deference.
Summary

• Coinbase will reincorporate in Texas after shareholders approved leaving Delaware.
• The move follows growing frustration with Delaware’s Chancery Court unpredictability.
• Notably, the shift comes amid strong Q3 financial performance, beating analyst estimates.

According to a FOX Business report on Nov. 12, crypto exchange Coinbase will reincorporate in Texas after shareholders voted to approve the move, formally ending its decades-long registration in Delaware.

The decision, disclosed in a regulatory filing with the SEC, positions Texas as the company’s new legal home amid growing frustration with Delaware’s once-vaunted Chancery Court.

Coinbase Chief Legal Officer Paul Grewal said the state’s court system has become increasingly unpredictable, eroding the very stability that long made Delaware the corporate capital of America.

“As a lawyer who’s practiced for many years on King Street in Wilmington, Del., I’m saddened by the need to depart. For decades, Delaware was known for predictable court outcomes, respect for the judgment of corporate boards and speedy resolutions,” Grewal noted in a statement.

Coinbase joins the corporate ‘Dexit’ movement

Grewal’s critique strikes at the heart of Delaware’s corporate appeal. He argues that the Chancery Court, once the gold standard for business dispute resolution, has become “rife with unpredictable outcomes.”

This perceived volatility, he contends, creates an untenable risk for public companies navigating complex legal landscapes. While Grewal acknowledges that Delaware lawmakers have attempted to address these concerns, he firmly stated that their efforts are “not sufficient for businesses,” requiring absolute legal certainty.

Coinbase’s move places it among other major firms that have broken with Delaware in what some are calling “Dexit.”

Tesla made a similar switch last year after Delaware’s Court of Chancery voided Elon Musk’s multibillion-dollar compensation plan. Musk then griped about Delaware on X.

This strategic pivot for Coinbase follows a quarter of formidable financial performance. The exchange reported third-quarter earnings that surpassed analyst expectations, posting $1.5 per share versus the $1.05 consensus, a 45% beat.

Revenue reached $1.86 billion, up 25% quarter-over-quarter, driven by $1 billion in transaction revenue, $747 million from subscriptions and services, and $355 million in stablecoin-related revenue.

Notably, Coinbase’s spot trading volumes climbed 38% globally and 29% in the U.S., while net income reached $433 million and adjusted EBITDA totaled $801 million. The exchange also expanded its crypto holdings and, following the acquisition of Deribit, collectively achieved over $840 billion in derivatives trading volume.