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Reddit discloses investments in crypto

Following the news of Reddit's crypto holdings, there was a minor increase in Bitcoin and Ethereum prices before they retraced their gains

Shashank Bhardwaj
Published: Feb 27, 2024 03:50:29 PM IST
Updated: Feb 27, 2024 03:49:23 PM IST

Reddit discloses investments in cryptoImage: Shutterstock
Reddit submitted an initial public offering (IPO) filing with the U.S. Securities and Exchange Commission (SEC) to become publicly traded on the New York Stock Exchange. The San Francisco-headquartered company aims to be listed on the New York Stock Exchange by March with the ticker symbol "RDDT."

With its IPO filing on Thursday, Reddit disclosed its investment in bitcoin and ether, as well as its acquisition of ether and Polygon (MATIC) as payment for specific virtual goods transactions. Reddit also indicated the continuation of this investment strategy in the future.

With this strategic allocation of surplus funds into bitcoin (BTC) and ether (ETH), Reddit echoes the moves of a select few companies that have ventured into purchasing digital assets, like Michael Saylor's MicroStrategy.

Reddit differs from other companies investing in crypto as most adhere to MicroStrategy's "Bitcoin-only" approach, whereas Reddit has invested in both BTC and ETH.

The company did not specify the exact number of tokens it holds but mentioned that the net carrying value of the digital assets was deemed "immaterial."

The filing stated, "We hold cryptocurrencies and experiment with blockchain technology, which may subject us to exchange risk and additional tax, legal, and regulatory requirements."

This move will follow a lengthy process with regulators for Reddit to become a publicly traded entity. Reddit initially filed a non-public draft with the SEC in December 2021.

Co-founder Steve Huffman emphasised in the filing, "We are going public to advance our mission and become a stronger company. Our users have a deep sense of ownership over the communities they create on Reddit. This sense of ownership often extends to all of Reddit. We want this sense of ownership to be reflected in real ownership—for our users to be our owners. Becoming a public company makes this possible."

According to the filing, Reddit reported $804 million in sales in 2023, significantly surpassing the previous year's figure. The company's total assets amount to $1.6 billion, including $1.3 billion in cash.
Following the news of the holdings, there was a minor increase in Bitcoin and Ethereum prices before they retraced their gains. Another Reddit-associated token, DONUT, representing the community points of the r/ethtrader subreddit, surged by 41 percent.

Reddit's disclosure of investments in crypto underscores the growing significance of Web3 technologies in the financial landscape. Reddit’s decision to invest in bitcoin and ether, along with adopting cryptocurrencies for transactions, reflects a commitment to innovation and diversification.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash

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