On May 5th, Coinbase shares increased by 18.33%, despite the company’s latest revenue report for the first quarter of 2023, which showed multimillion-dollar losses despite the rise in Bitcoin prices.
According to Coinbase’s report, the company registered a loss of $79 million, which was much lower than expected compared to the first quarter of 2022, where it lost nearly $430 million.
Coinbase reduced its operating expenses to increase its revenues
The report showed that Coinbase Global, Inc. had revenues of $772 million during this first quarter. However, operating expenses were $896 million, leaving an operating loss of $128 million, which was much less than the $554 million lost during the first quarter of 2022.
The decrease in operating expenses is largely due to the mass layoffs of 950 workers carried out by the company earlier this year after having a net loss of $557 million during the fourth quarter of 2022.
The January 2023 layoffs were the second-largest made by the company, as they laid off one-fifth of their workers in July 2022 to reduce operating expenses.
Although the massive layoff of workers is an unpleasant decision for those who work in this industry, it was a correct decision for Coinbase as the company began to show signs of recovery.
Coinbase faces a legal battle against US regulators
Unlike other exchanges that have declared bankruptcy following the collapse of FTX and other large cryptocurrency funds, Coinbase is fighting regulators in the US due to the lack of regulatory clarity, for which they have had to pay several fines.
As reported by ZyCrypto, legal issues between Coinbase and the SEC continue to increase, to the point that in late March, Paul Grewal, Coinbase’s legal director, stated in a statement that the SEC refused to identify which assets on the platform they “believe may be securities, and refused to do so.”
However, on May 3rd, Grewal reported that the US court ordered the SEC to respond within ten days to Coinbase’s requests on how they are applying securities laws to crypto assets, as the regulatory environment in the country is becoming hostile towards exchanges, which like Bittrex, have begun to move to other pro-crypto countries.