Coinbase, the largest U.S. cryptocurrency exchange, announced its second-quarter financial results on Thursday, showing a sharp decline in its revenue and a net loss amid a challenging market environment and a legal battle with the Securities and Exchange Commission (SEC).
The company’s letter to shareholders revealed that Coinbase’s net revenue plummeted from $2.033 billion in Q1 to $802.6 million in Q2, a drop of around 60%.
The main reason for the revenue decline was the lower trading volume and fees from its crypto trading platform, which slumped by 13% from Q1 and 50% from a year ago to $327 million. The company also reported a net loss of $97 million, compared to a net income of $771 million in Q1.
Coinbase blamed the lower trading volume on the increased volatility and uncertainty in the crypto market, which caused bitcoin’s price to drop by more than 40% in Q2.
The company also faced regulatory headwinds, as the SEC accused it in June of operating as an unregistered securities exchange, broker-dealer, and clearing agency by offering certain crypto tokens that the SEC considers securities. Coinbase has rejected the allegations and promised to fight the lawsuit.