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Coinbase, the largest cryptocurrency exchange platform, reported a steep dip in its revenues and profits in the June quarter, with a net loss of USD 1.1 billion and revenue falling sharply by about 60% as compared to the same time last year when the company reported USD 803 million in revenues.
With a decline in trading activity, Coinbase's net revenue for the quarter fell by 31% from Q1 levels. The company quoted that trading volume and transaction revenue both declined by 30% and 35% sequentially during the second quarter. This can be credited to a change in consumer and market behavior, fueled by macroeconomic and crypto credit factors alike.
Additionally, the company attributed the underwhelming results to the decline in the cryptocurrency markets. A slowdown in the overall market has created financial challenges, which are reflected in the company's Q2 result according to Alesia Haas, the company's Chief Financial Officer.
Considering the losses it experienced, Coinbase pointed out that despite unfavorable market conditions, it still managed to post some amazing numbers. According to Haas, revenues from subscriptions and services increased by 44%, but non-cash impairments heavily impacted the net loss.
Haas added that the business successfully reduced costs by 18% by reducing the number of employees, and it is now operating on a tighter budget for technological development and other administrative costs.
Further, she mentioned that no credit losses have resulted from firms financing activities, and they have had no contact with insolvent clients or counterparties. The company has never stopped a customer withdrawal, gated anyone from removing assets from the platform, or altered how clients can access credit products.
Whereas Coinbase was under investigation by the Securities and Exchange Commission (SEC) for listing unregistered securities on its platform. Few of former Coinbase employees were also accused of insider trading in unregistered securities.
Coinbase denied any involvement and stated that it has "a zero-tolerance policy on front-running."
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