Coinbase announces a 63% drop in revenue amid an industry slowdown.

Coinbase, the largest cryptocurrency exchange in the United States, reported a 63% drop in revenue on Tuesday as it weathers a broader crypto market downturn.

The company said second-quarter revenue was $808 million, up from $2.2 billion a year earlier. Its number of monthly customers rose to nine million from 8.8 million last year, but was down from 9.2 million in the previous quarter. Coinbase also posted a net loss of $1.1 billion, compared to profits of $1.6 billion a year ago.

This is the second quarter in a row that Coinbase has seen a decline in revenue and users compared to the previous quarter.

The findings underscored the difficult challenges Coinbase faces at a turbulent time for the crypto industry. The prices of major cryptocurrencies crashed in May and June as a series of experimental cryptocurrency firms collapsed, plunging investors into financial ruin. The crash prompted industry-wide layoffs and cost-cutting, dampening the excitement that surged last fall when the price of Bitcoin hit an all-time high.

As part of the industry meltdown, Coinbase’s share price has fallen about 75% since November. The company’s success is largely tied to fluctuations in the broader crypto market. In the first quarter, about 90% of its revenue came from the trading fees it charged clients to buy and sell cryptocurrencies like Bitcoin and Ether.

In June, Coinbase laid off 18% of its staff, or about 1,100 employees. Brian Armstrong, the chief executive, said the company had “overhired”.

Coinbase’s recent struggles have fueled concerns that it could squander its early industry lead as competitors like Binance and FTX continue to grow during the recession.

Despite its early start, Coinbase never gained a foothold in the international market and recently missed out on an expansion effort in India. Its highest-profile product launch of the year — a marketplace for digital collectibles known as non-fungible tokens, or NFTs — is widely considered a dud. A hiring spree last year led to overspending and bloat.

The company has also been subject to regulatory review. Last month, the Justice Department filed insider trading charges against a former Coinbase employee. In a related action, the Securities and Exchange Commission said it considers some of the digital coins traded on Coinbase’s exchange to be securities and therefore subject to regulation like stocks or bonds — a position to which the company objected.

Coinbase’s competitors seem to be doing better. FTX, another crypto exchange, saw “similar” financial results to last year, according to its chief executive, Sam Bankman-Fried. Binance, the largest exchange in the world, announcement in June that it was seeking to fill 2,000 positions.

Yet Coinbase remains one of the most trusted and recognized crypto brands in the United States, known for its memorable Super Bowl ad with a bouncing QR code. Last week, the company announced a partnership with BlackRock, the world’s largest asset manager, to help institutional investors trade Bitcoin.

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