Coinbase Global Inc., the largest cryptocurrency exchange in the United States, reported a second-quarter loss of a record $1.1 billion and lower-than-anticipated income as a result of falling digital-asset values.
The company's revenue decreased by more than 60% to $808.3 million, falling short of the $854.8 million forecast by analysts surveyed by Bloomberg.
As a result of what has been termed the latest "crypto winter," Coinbase has decreased by 65.0% so far this year.
The number of monthly transacting users decreased by 2% in the second quarter, falling to 9 million. Additionally, trading volume fell short of expectations, with Bitcoin's proportion of trading volume increasing from 24% to 31%. Total platform assets fell 63% to $96 billion.
In a letter to shareholders, the company stated that the current decline came "fast and furious" and that weak crypto market conditions will persist into the third quarter.
In a Bloomberg TV interview, Chief Operating Officer Emilie Choi stated that the recession has caused core retail customers to "sit on the sidelines."
Owen Lau, an analyst at Oppenheimer & Co, said that investors anticipated a "very dismal quarter" for trading revenue.
"The major theme of crypto winter is continued diversification," such as through staking and interest income, he said.
The business now anticipates 7 million to 9 million average monthly transacting customers for the entire year, decreasing the range from earlier estimates. This compared to the average projection of 8.7 million users by analysts.
Coinbase's revenue decline for the quarter ending June 30 includes $446 million in impairment costs linked to investments and initiatives, the greatest amount since the company went public.
As a result of the collapse of the Terra-Luna ecosystem and the bankruptcy of industry titans such as Three Arrows Capital, the prices of a number of prominent cryptocurrencies reached an 18-month low in June.
During a conference call, Alesia Haas, the chief financial officer, stated, "Clearly, we recognize that these are stressful market conditions."
The Securities and Exchange Commission sent a request for information on Coinbase's listings and listing procedure in May, but Coinbase does not know if this inquiry will become an official investigation.
Bloomberg has reported that the SEC is investigating the company for potentially making unregistered securities available for trade.
Regarding the issue involving an alleged insider trade by a former Coinbase manager, Choi stated, "We have a zero-tolerance policy on front-running."
Meanwhile, Coinbase bondholders are not pleased with the outcomes. The company's 3.375% bonds maturing in 2028 lost 1.375 cents per dollar, falling to 70 cents.
In addition, its 0.5% convertible notes due 2026 have decreased around 2.25 cents to less than 70 cents. Both bonds currently yield greater than 10%.