Coinbase loses $1.1 billion in second quarter as crypto winter hits trading volumes
Cryptocurrency exchange Coinbase reported a net loss of $1,1 billion on revenue of $808.3 million for the second quarter as investors exit the crypto market after last year’s bull run.
On a conference call with investors, Coinbase’s CFO shared his view about the company’s $1.1 billion loss, he blamed the losses to the accounting rules that force Coinbase to take impairments when the crypto price falls.
The company’s revenue generated by both retail and institutional trading fell dramatically, while its custody and services businesses also declined
Trading volumes at the cryptocurrency exchange down nearly halved to $217 billion in the second quarter, with retail trading plummet 68% and institutional trading falling 46%.
“While we did see net outflows in Q2, we observed that the majority of this behavior was institutional clients de-risking and selling crypto for fiat as opposed to withdrawing their crypto to another platform,” Coinbase said in the shareholder letter
The total number of users made transactions on the platform totaled 9 million, down by 200,000 over the past three months.
Coinbase has already layoff more than 1,100 employees, which was equivalent to 18% of its workforce before releasing its second quarter’s earning results.
While its operating expenses surged 37%, Coinbase is cutting its annual expense forecasts for technology, development and administration to between $4 billion and $4.25 billion, from $4.25 billion to $5.25 billion.
Looking ahead, Coinbase said it expects trading volumes to fall further in the current quarter, citing the uncertainties surrounding the cryptocurrencies market amid the collapse of certain crypto institutions and a broader selloff for risky assets in financial markets.
Coinbase became the first publicly-traded cryptocurrency exchange after it made its debut on Nasdaq last April.