The crypto nugget in Reddit’s SEC filing

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You know how Empire pulls back the curtain to give you that look inside the crypto industry? 

Well, the fun part about Wall Street’s earnings season is that it does the work for us. For the public crypto companies, I mean.

We’re in the thick of it, and last night had a ton of earnings-related news. There are two things I want to focus on this morning. 

The overall tone of the earnings call after the results were announced was positive with Coinbase executives including Brian Armstrong updating analysts on how the business is faring this cycle. 

Of course, Armstrong spent a chunk of the non-Q&A portion discussing the company’s political efforts. Not a big surprise given that the election is less than a week away. 

He also affirmed something we’ve talked about numerous times here: That regulatory clarity on the institutional side will be a “massive source of inflow of capital.”

Overall, the $1.2 billion revenue reported by the exchange was impressive albeit just shy of analyst expectations for $1.25 billion. To put it in perspective, that figure is nearly double the amount reported in the same quarter last year ($674 million). 

The real figure to watch going into the next (and final) quarter of 2024 is the total trading volume, which was down 18% QoQ to $185 billion. That metric will stand out if we start seeing more pickup in the overall spot market. 

That second thing I teased? An interesting tidbit in the SEC filing from Reddit yesterday. The doc itself is pretty run-of-the-mill, but buried within it, the newly-public social media company said that it sold off the “majority” of its crypto portfolio, which had primarily been made up of bitcoin and ether. 

All in all, it looks like Reddit sold crypto for roughly $6.8 million. How much of that was divided up between bitcoin and ether is unclear, unfortunately. In the filing, crypto is just grouped into intangible asset sales.

We know, from previous disclosures, that Reddit had exposure to crypto. Although, in an S-1 filing ahead of its public debut, the firm had previously invested its “excess cash reserves” in bitcoin and ether. We also know that the company held a bit of MATIC, but it was immaterial. 

So there you have it: COIN’s readthrough shows the potential setup for a very interesting fourth quarter, while Reddit’s backing away from holding crypto. 

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