Coinbase stock continued lower after announcing a federal investigation regarding the possible sale of unregistered securities. The cryptocurrency exchange reported a fresh probe along with its second-quarter results on Aug. 9. Its stock has reversed lower this week, including a 5.5% drop Wednesday.
The agency subpoenaed Coinbase, seeking information on how the company classifies and lists digital assets, its staking programs, stablecoins and yield-generating products. The SEC previously filed a civil complaint against them, arguing nine of its cryptocurrencies are securities.
In addition to the investigation, Coinbase reported a massive earnings miss for second-quarter results after the bell last Tuesday. For the quarter, revenue dropped 59% to $802.6 million, plummeting from the $2 billion it recorded in the year-ago period. The company announced a $4.98 per share loss, drastically worse than the earnings of $6.42 per share recorded last year. Wall Street predicted a loss of $2.52 per share on $808 million in revenue, according to the FactSet consensus.
Coinbase took a major hit from the falling price of cryptocurrencies for the period. It recorded $377 million in noncash impairment charges from lower prices of crypto assets. Transaction revenue for the period fell to $655 million, down 35% over the year from $1.93 billion.
Coinbase's total trading volume was cut in half compared with last year. Volume tanked 53% to $217 billion vs. $462 billion in 2021. Meanwhile, subscription and services revenue grew to $147.4 million from $102.6 million. As of the end of the second quarter, Coinbase held $6.2 billion in U.S. dollar resources and $428 million in cryptocurrency assets.
Coinbase & BlackRock Partnership
Last week COIN stock jumped on news that it would partner with the world's largest asset manager, BlackRock, on an institutional cryptocurrency investment platform. Announced last Thursday, Coinbase Prime will provide crypto trading, custody, brokerage, financing and staking capabilities to institutional clients of Aladdin, BlackRock's investment management platform. BlackRock launched its Bitcoin private trust for institutional investors on Aug. 11.
COIN shares spiked more than 40% in the last month after tumbling 60% so far this year along with the broader cryptocurrency market crashes. COIN stock fell more than 10% over the past five days.
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