CoinShare’s Income Plummets Heavily Due To FTX Aftermath

The ongoing market turmoil caused by the FTX and Terra collapse has led many crypto companies to close up shop. CoinShares, Europe’s largest investment and trading platform, is among the companies suffering catastrophic effects of FTX implosion. Though the ongoing market situations have massively decreased the platform’s earnings, the company reports its financial health still “remained solid.”

In line with CoinShare’s report for the fourth quarter of 2022, the company recorded a massive income decline of 65% compared to the Q4 earning of 2021. The European asset manager collectively produced £14.5 million in gains revenue and other income in Q4 last year. In contrast, the platform fetched a combined revenue of £41.9 million in the last quarter of 2021.

First, the firm faced a loss of $21 million in May caused by the Terra USD (UST) stablecoin collapse. And while it was recovering from its previous losses; the FTX saga hit the market, wiping out billions of dollars in crypto.

CoinShares affirmed that the recent FTX collapse had badly disrupted the company’s performance. The company got $30 million of its funds frozen in the troubled exchange after it filed for bankruptcy and halted withdrawals in November.

BTCUSD price chart

CoinShares’ Total Comprehensive Revenue Decreased By Over 97%

In other words, the total comprehensive revenue of the previous year has plummeted by over 97% since 2021. The market turbulence reduced the platform’s income to £3 million from a whopping £113.4 in 2021. Despite the decreased revenue, the platform claims to have a strong financial position.

CoinShares tweeted:

Amidst difficult market conditions, CoinShares has remained financially robust, with strong levels of inflow into CoinShares Physical ETPs recorded in Q4. We’re proud to have graduated to Nasdaq Stockholm’s main market, a testament to the hard work and dedication of our team.

In the last quarter of 2022, CoinShares shut down its Consumer Platform to survive in the bear market. Instead, the firm decided to focus on its core operations of Asset Management and Capital Markets as the generated revenues were minimal at that time. Even the firm found it hard to compensate for its algorithmic trading platform, HAL, which launched last September.

The company added:

Market conditions gave rise to a situation that did not allow us, with our existing capital structure, to support a consumer activity that required significant upfront investment in marketing.

Additionally, the firm highlighted its goals moving forward into 2023. The company revealed it now focuses on scaling up its institutional offerings and digital asset management business as the new milestones. 

While CoinShares managed to survive in the FTX aftermath, its fellow firm hedge fund Galois Capital recently announced shutting down its operations. The now-defunct Galois Capital cited the FTX collapse as the reason behind this move.

Featured image from Pixabay and chart from • 2023