CoinShares’ Earnings Take Severe Hit Due to FTX Collapse: Q4 Report

Despite the market turbulence brought about by collapses and scams, Coinshares’ Chief Executive Officer Jean-Marie Mognetti asserted that the group’s “financial health remained solid.” Its earnings did take a severe beating, though.

CoinShares released the fourth-quarter report for 2022 in which it recorded £14.5 million in combined revenue, gains, and other income. This was a massive drop of 65% from the fourth quarter of 2021 when the European asset manager fetched a revenue of £41.9 million.

FTX and Terra Blows on CoinShares

CoinShares lost over $21 million due to the collapse of the Terra ecosystem tokens in the second quarter of 2022. After returning to profitability the very next quarter, it had to deal with yet another blow. This time it was FTX. The company stated that its performance was impacted significantly as a result of nearly $30 million of its assets being stuck in the crypto exchange which froze customer withdrawals in November before filing for bankruptcy.

Its revenue, gains, and other income was recorded to be £72.6 million for the entirety of 2022, slashing by more than half since its previous financial year when it raked in £151.8 million.

The company’s total comprehensive income for the full year 2022 also fell by over 97% to £3 million since £113.4 million was recorded in the previous year as a result of the market turbulence, its quarterly earnings report showed. Mognetti further elaborated,

“The collapses and frauds that plagued the industry in 2022 have brought a newfound sense of caution to the market, with investors now seeking trusted, regulated institutional players. As a solution to these problems, CoinShares offers a familiar risk policy to traditional financial players and a commitment to providing a secure and regulated investment experience for the long term.”

Changing Landscape

CoinShares announced shutting down its Consumer Platform as a result of tepid market conditions in the fourth quarter. Hence, the revenues generated by it during the same time frame were minimal following which the company shifted its focus to its core business units of Asset Management and Capital Markets.

The chief executive said the FTX collapse changed the landscape significantly, which also impacted the level of investment required to support HAL, the algorithmic trading platform that was launched last September.

Despite the setbacks, Mognetti stated that CoinShares’ remained “financially robust” and concluded the year by successfully graduating to Nasdaq Stockholm’s main market where it was currently trading at 33.20 Swedish Krona.

The asset manager anticipates the arrival of institutional players in the second half of 2024 with the advent of regulations in Europe, the US, and the UK. This is expected to coincide with the next Bitcoin halving cycle.