Coinbase revenue beats estimates on interest income boost

(Reuters) -Coinbase Global beat second-quarter revenue expectations on Thursday as a surge in the crypto exchange’s interest income cushioned a slump in trading volumes.

The strong result comes on the heels of a dramatic quarter for the company and its rival Binance who were sued by the U.S. Securities and Exchange Commission in June.

The lawsuit alleged that Coinbase (NASDAQ:) traded at least 13 crypto assets that are securities without registering them with the regulator, marking a dramatic escalation of a crackdown on the crypto industry.

“Despite our good faith efforts and transparency of our business to the SEC for years now, we were deeply disappointed that the SEC brought an unwarranted enforcement against us in June,” Coinbase said in a letter to shareholders.

Shares of the company were down 2% in volatile extended trading after surging 10% just after the results.

Coinbase earns interest on reserves backing (USDC), the second-biggest stablecoin by market capitalization. It also earns interest on bitcoin-backed loans it provides to customers.

Interest income in the quarter surged to $201.4 million from $32.5 million a year ago, boosting revenue at the company’s subscription and services segment.

In a victory for the industry, a U.S. judge ruled in July that Labs did not violate federal securities law by selling its XRP token on public exchanges.

Coinbase’s revenue in the second quarter came in at $707.9 million, beating estimates of $662.5 million, according to Refinitiv data.

The company’s loss in the quarter narrowed to $97 million, compared with $1.09 billion a year ago.

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