Reddit Converts Extra Cash into BTC, ETH; S-1 Filing Shows

Reddit made the disclosure in one of the documents it submitted to the SEC yesterday as part of its application to become publicly listed.

Reddit: Crypto Holdings “Immaterial”, But The Tech Has “Significant Potential”

In its S-1 Registration Statement filing, Reddit disclosed that it had used excess cash to buy Bitcoin and Ether and had also acquired Ether and Polygon as payment for “certain virtual goods” — presumably referring to its avatar NFT sales.

The filing didn’t specify how much crypto Reddit holds, but it described “the net carrying value” of its crypto holdings as “immaterial for the periods presented”. 

The company also said that it believes in the potential of crypto tech, while noting its future remains uncertain due to its newness and relatively low level of adoption:

We believe cryptocurrencies and blockchain technology have significant potential, the popularity and prevalence of cryptocurrencies is a relatively recent trend, and whether cryptocurrencies and blockchain technology will continue to be adopted by consumers and businesses in the long term is uncertain.

Reddit

Filing Focussed On Investor Risks

The discussion of its crypto holdings in the filing was focussed on the risks they may present to any potential investor in Reddit shares, with the company stating:

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

Reddit

The filing goes into more detail on these risks later on, explaining:

The prices of cryptocurrencies such as Bitcoin, Ether, and Matic have been and may continue to be highly volatile, and our ability to sell cryptocurrencies for fiat currencies or other cryptocurrencies may be subject to unanticipated suspensions in trading, as well as exchange rate risk, which we may choose not to (or may be unable to) partially or fully hedge against.

Reddit

Reddit also said the only crypto it holds “for treasury purposes” are Bitcoin and Ether, and any other future crypto investments would be limited to tokens that “the SEC, Commodities Futures Trading Commission, or high-ranking members of the staff of such regulatory bodies may, through public statements or guidance, identify as likely not being a security.” 

Reddit Likely To Go Public In March

Reddit has been in the process of launching an IPO since at least 2021, when it submitted a draft registration statement to the SEC — it’s expected the social media giant will officially launch its IPO in March of this year under the ticker symbol RDDT.

Details in its S-1 show Reddit’s sales were over US$800 million in 2023 and that it has over US$1.6 billion in assets, including US1.3 billion in cash.