Working at Airbnb Inc. allowed Brian Armstrong to see the difficulties of handling payments from around the world.

That led to the idea of creating a digital wallet to hold Bitcoin, which later became Coinbase Global Inc. The biggest U.S. crypto exchange is now going public in a direct listing, and Armstrong is one of the biggest winners.

Coinbase’s co-founder has become a billionaire but estimates of his fortune vary, underscoring the wild price swings of cryptocurrencies. His stake is worth US$7 billion to about US$15 billion, based on recent private share sales that people familiar with the matter have said valued Coinbase at as much as US$100 billion. Either way, that’s enough to put Armstrong among the world’s 500 richest people, according to the Bloomberg Billionaires Index.

Former Goldman Sachs Group Inc. currencies trader Fred Ehrsam, who joined Armstrong soon after he created the digital wallet, owns a stake worth more than US$2 billion, according to Bloomberg’s calculations.

“Trading and speculation were the first major use cases to take off in cryptocurrency, just like people rushed to buy domain names in the early days of the internet,” Armstrong, 38, wrote in a letter included in Coinbase’s filing with the U.S. Securities and Exchange Commission. “But we’re now seeing cryptocurrency evolve into something much more important.”

Profitable Year

Coinbase’s public listing is another milestone putting crypto further into the mainstream. The higher estimates of Armstrong’s fortune exceed those of Twitter Inc. founder Jack Dorsey and Snap Inc. Chief Executive Officer Evan Spiegel, according to the wealth index. Bitcoin has surged more than 400 per cent over the past year and hit a peak earlier this month before retreating.

Coinbase swung to a profit of US$322 million in 2020 from a loss the previous year, with transaction fees on its exchange accounting for most of the US$1.14 billion in net revenue, according to the registry filing. It’s also facing U.S. federal and state investigations, highlighting the headaches of operating in the crypto industry.

Coinbase isn’t the only company making money off digital currency. Billionaire Mike Novogratz’s crypto-focused merchant bank said Wednesday it expects to report income of about US$325 million for the fourth quarter after the value of Bitcoin and other holdings soared. MicroStrategy Inc.’s stock, meanwhile, has surged more than 300 per cent since the enterprise-software maker started buying Bitcoin as part of its corporate strategy.

“With 30 per cent of its volume from Bitcoin, and the remainder mostly tied to cryptocurrencies that track it, Coinbase will face the related volatility,” Bloomberg Intelligence analyst Julie Chariell said. “But the impact on revenue can be half as much, since Coinbase makes money on both sides of the trade.”

Goldman Connection

Armstrong grew up in San Jose, California, and studied economics and computer science at Rice University in Houston. He worked in information technology for Deloitte & Touche before returning to an education company he founded while in college. He joined Airbnb in 2011, and set up Coinbase the following year.

Ehrsam came across Armstrong’s work online and traveled to meet him in San Francisco, where they initially ran Coinbase out of a two-bedroom apartment.

“We decided to work on something for a week,” Armstrong told Bloomberg in 2014.

Other major investors include Andreessen Horowitz, Chase Coleman’s Tiger Global Management and Ribbit Capital, one of the investment firms that provided emergency funds to online brokerage Robinhood Markets earlier this year.