Coinbase posts a $557 million loss; revenue tumbles 75% in the fourth quarter as crypto investors move their digital assets out of the exchanges
Coinbase, the biggest cryptocurrency exchange in the US, reported another quarterly loss today after it posted a $557 million loss in the fourth quarter. The crypto exchange also saw revenue tumble 75% during the period as retail traders pulled back significantly. According to the earnings report, Coinbase saw its trading volume in the quarter plummet nearly 89% to $20 billion.
The news comes after a string of high-profile bankruptcies roiled the crypto industry. The overall digital assets markets suffered from sour sentiment over the collapse of Sam Bankman-Fried’s crypto exchange FTX in November 2022. The plunging value of digital assets amid rising interest rates has led to the collapse and bankruptcies of some of crypto’s biggest crypto players including BlockFi, Celsius, Core Scientific, and FTX, among others.
In a call with analysts, Coinbase founder and CEO Brian Armstrong said the development will ultimately benefit Coinbase.
“In the wake of FTX and other crypto company failures, we have seen increased regulatory scrutiny,” Armstrong added.
As crypto investors move their digital assets out of the exchanges, Coinbase trading volume plunged by 75% to $145 billion in the fourth quarter, compared with $547 billion a year earlier. According to a study conducted by Bankless, more than 450,000 bitcoins were moved from crypto exchanges and hot wallets to cold wallets in 2022.
The slow demand for digital assets also forced Coinbase Global to halt its operations in Japan in January, citing volatile market conditions.
Meanwhile, early this month, a former product manager at crypto exchange Coinbase pleaded guilty on Tuesday in what U.S. federal prosecutors have called the first insider trading case involving cryptocurrency. The news came just a month after Coinbase Global reached a $100 million deal to settle with US regulators over anti-money-laundering law violations.
Coinbase agreed to “pay a $50 million fine after financial regulators found that it let customers open accounts without conducting sufficient background checks.” The settlement closes the regulator’s investigation into the firm’s compliance with requirements to prevent money laundering.
Founded in 2012 by Brian Armstrong and Fred Ehrsam, the San Francisco, California-based Coinbase is a digital currency wallet and platform where merchants and consumers can transact with new digital currencies like bitcoin, Ethereum, and Litecoin.