Coinbase is a cryptocurrency exchange platform. The company went public in April 2021. The initial public offering marks a triumphant moment for the crypto industry.
Despite Coinbase’s initial success, the company has to lay off hundreds of its employees. This is due to the broader cryto industry crash which has resulted in the company’s revenue loss in 2022.
Coinbase reported a 63 percent decline in revenue
According to Coinbase’s financial report, there is a a 63 percent decline in revenue in the second quarter. The cryptocurrency exchange platform has suffered a total $1.1 billion loss within a year.
The founder and the chief executive of the company is Mr Brian Armstrong. He emphasized that the cryptocurrency market has been fluctuating and this is simply the nature of the industry that the company has to accept.
Furthermore, the chief executive reminds the public that Coinbase had faced larger economic challenges but the company was able to survived those downturns.
“It seems scary,” he said. “But it’s never as bad as it seems.”
Coinbase’s stock price has fallen about 75 percent
Since November, 75 percent of Coinbase’s stock price has evaporated. The company’s success depends hugely on the performance of the crypto industry. The fall of the stock price is a sign of the industry meltdown of the broader crypto market.
The largest revenue source of the company came from the trading fees. Coinbase charges its customers for the sale and purchase of digital assets on its platform.
Due to the recession of its financial performance, Coinbase laid off 18 percent of its staff, or about 1,100 employees last month. The company described the lay offs as “necessary” as the company had “over-hired.”
Coinbase has also come under regulatory scrutiny
Besides, Coinbase is facing a stricter regulatory scrutiny.
A former Coinbase employee has been charged with insider trading. Those charges were filed by the US Justice Department.
On the other hand, the Securities and Exchange Commission took a stance that some of the digital coins listed on Coinbase shall be regulated like stocks and bonds. Coinbase rejected to the stance. This has increased tensions between the exchange platforms and the regulatory body.
Coinbase has issued a letter to the company shareholders. In the letter, the company revealed that S.E.C has sent a voluntary request for information in May. There is a possibility that the inquiry will turn into a formal investigation regarding the listing process of the Coinbase digital assets.