CoinShares posts £8.2M Q2 loss due to one-off impairment hit from Terra

London-based digital asset management firm Coinshares reported a loss before tax of £8.2 million for the second quarter, versus a profit before tax of £28.6 million a year ago, on the back of a one-off loss of £17.7 million due to the collapse of Terra.

Combined revenue, gains, and other income for the quarter, excluding the Terra impairment, stood at £15.3 million, compared to £38.3 million a year ago.

Financial highlights

Total revenue, gains, and other income for the quarter stood at negative £2.4 million, compared to £38.3 million in 2021. The company said the Terra impairment mainly impacted its revenue for the period

The firm’s capital markets business reported a loss of £11.4 million for the quarter, versus £14.7 million in the previous year, while its assets management business recorded a profit of £14.2 million, down from £19.6 million in the second quarter of 2021.

Additionally, write-downs in equity investments and proprietary digital asset holdings resulted in a £5.1 million principal investment loss for the quarter, compared to a £4.1 million gain in 2021. The writedowns were primarily in holdings related to 3iQ and Solana.

Coinshares’ total AUM stood at £1.66 billion as of June 30. Due to the loss, EPS for the quarter is £0.00, compared to £0.40 in the same period a year ago.

Terra exposure

While Coinshare Capital Markets was not directly exposed to Terra, the firm was carrying a book linked to the TerraUSD stablecoin, which led to the impairment.

Despite the incident, CEO Jean-Marie Mognetti is optimistic about the firm’s future and said:

“In light of the market turmoil, we have reviewed our risk profile and moved into a more defensive mode. We have commenced taking steps to reduce both our cost base and various exposure across the group. This conservative approach will enable us to preserve our capital, ready to take advantage of opportunities in the digital asset space as they emerge.”

Mognetti said that the loss cannot be ignored but the business remains strong. He added that Coinshares is committed to “improving the trading platform to ensure greater transparency for risk management and finance purposes.”

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