Coinbase surpasses Q2 revenue expectations amidst legal battle with SEC

• Coinbase beats Q2 revenue expectations: $707.9 million.
• The interest income surges to $201.4 million from $32.5 million YoY.
• SEC sues Coinbase and Binance over unregistered securities trading.

Coinbase Global (COIN.O) surpassed Q2 revenue expectations due to increased interest income. Its executives are confident in winning the legal battle with the US securities regulator.

In June, the US Securities and Exchange Commission sued Coinbase and its rival Binance, accusing Coinbase of trading at least 13 crypto assets as unregistered securities. This SEC action signifies a significant escalation in the crackdown on the crypto industry.

Chief Legal Officer Paul Grewal expressed confidence during a post-earnings call, saying, “With respect to the litigation with the SEC, I want to be very clear, we do think we can win. We expect to win.”

Coinbase’s shares experienced a 1.2% drop in volatile extended trading. The stock has had a remarkable 156% rally this year due to increased retail interest and a sector-wide tech rebound.

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While initial investor enthusiasm over the results was high, it waned as they further examined the guidance, which was in line with expectations, according to Oppenheimer analyst Owen Lau.

For the third quarter, the crypto exchange expects subscription and service revenue to be at least $300 million, although estimates were $336.15 million.

Coinbase’s second-quarter revenue was reported at $707.9 million, surpassing the estimated $663 million from Refinitiv data.

Interest income in the quarter increased significantly to $201.4 million from $32.5 million compared to the previous year.

Alesia Haas, director of finance, stated that “in Q2, crypto volatility, which is a key input into our trading business, continued to decline and reached multi-year lows.”

In the quarter, trading volumes declined to $92 billion from $217 billion in the previous year, and the loss was reduced to $97 million from $1.09 billion in the same period in 2022.