Coinbase Global, the popular cryptocurrency exchange, has reported losses for the fifth quarter in a row. Despite a recovery in crypto markets during the first quarter, customers and investors appear to have lost faith in the company. However, the company’s losses of $79 million were much lower than the $430 million it lost in the same period last year. The company’s retail trading activity did not grow much in the first quarter, and its total trading volume fell to $145 billion for the period from $309 billion a year ago.
Regulatory Pressure and Lawsuit
Coinbase is currently facing regulatory pressure, with threats of SEC enforcement action and various lawsuits looming over it. The legal fight with the SEC could be lengthy, but the firm expects to be fully operational in the meantime. The company was also hit with a lawsuit this week in which executives were accused of dumping millions in stock to prevent losses by insider trading. This legal quagmire has likely contributed to the lack of investor confidence in the company.
Despite these challenges, the company’s stock surged almost 9% in after-hours trading, and COIN prices hit $53.75 on May 4. Shares in Coinbase have gained 60% since the beginning of the year but remain down 84% from their peak price of $343 in November 2021. COIN is currently down around 36% from its 2023 high of $84 on March 21 as regulatory pressure intensifies.
However, Coinbase does have some of the highest fees in the industry, so savvy traders may have sought alternatives. Additionally, the losses were limited by a 20% cut in the Coinbase workforce in January. The company’s total revenue was $772.5 million, which was 37% lower than the $1.1 billion in revenue for Q1 2022. Total operating expenses were less than $900 million, resulting in an operating loss of $124 million, according to the report. The total transaction revenue fell 63% to $375 million from more than $1 billion a year ago.
This week, the firm stated that it will be ceasing its Coinbase Borrow services as of May 10. However, it did not clarify whether this was due to regulatory pressure. Despite this setback, Coinbase remains one of the most popular cryptocurrency exchanges in the world, with millions of active users.