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Coinbase (Nasdaq: COIN) shares fell 12.58% on Friday, trading at $140.39 as of 19:34 UTC, down $20.20 from the previous close, according to Yahoo Finance, even after the cryptocurrency exchange reported third-quarter net income of $718.7 million (almost $719 million). The decline came as major digital assets fell and Binance continued investigating a security incident it estimated had a $6.3 billion impact.
The stock traded between $136.90 and $148.50 during the session. Trading volume reached approximately 16.49 million shares, compared with an average volume of about 9.14 million. Its intraday market capitalization stood at roughly $37 billion, according to Yahoo Finance data (at 19:34 UTC on October 30).
The company’s reported profit included a $715 million gain on crypto assets held for investment. Excluding that and other specified adjustments, Coinbase reported adjusted net income of $77.7 million, a non-GAAP measure. Adjusted EBITDA was $332.9 million, up 60% from the previous quarter.
Coinbase also reported gains in crypto trading market share, record paid Coinbase One subscriptions, and more than $200 million in annualized revenue from prediction markets. Those business updates came during a weaker quarter for crypto prices, with Bitcoin and Ether both trading lower on Friday.
Investment gain accounts for most of Coinbase’s reported profit
Coinbase’s $718.7 million in third-quarter net income was largely supported by gains on its crypto investments. The company’s earnings reconciliation showed a $715 million net gain on crypto assets held for investment. After adjustments, net income was $77.7 million. The calculation also excluded $39.2 million in net investment losses and included a $113.3 million tax effect from the adjustments.
The difference between the two figures is relevant to assessing the quarter’s operating performance. Coinbase excludes gains and losses on crypto assets held for investment from adjusted net income because it considers those holdings primarily long-term investments rather than part of its regular revenue-generating activities.
Adjusted EBITDA reached $332.9 million, marking the company’s 15th consecutive quarter of positive adjusted EBITDA. The measure excludes items including taxes, interest, depreciation and amortization, stock-based compensation and certain investment-related gains and losses.
Coinbase reports higher trading market share and prediction-market revenue
Coinbase’s share of crypto trading volume reached 10.7% in the third quarter, marking its fourth consecutive quarterly increase, according to the company. It reported gains in both spot and derivatives trading. The exchange also said assets held on its platform represented 12.5% of total crypto market capitalization, returning to its previous peak level.
Prediction markets added another source of activity. Coinbase said the business surpassed $200 million in annualized revenue, while daily traders increased by more than 60% from the previous quarter. Revenue in the segment grew at an 82% compound quarterly rate since launch, according to the company.
The $200 million figure is an annualized revenue measure, not revenue generated during the third quarter. Coinbase did not disclose a standalone quarterly revenue figure for the prediction-market business in the earnings release. The company said users trading prediction contracts also contributed incremental spot trading volume.
Subscription revenue and USDC holdings reach records
Subscription and services revenue accounted for 49% of Coinbase’s net revenue in the third quarter. Paid Coinbase One subscribers reached a record, increasing 24% from a year earlier. Coinbase said these subscribers generated 3.5 times the average revenue per user and held 4.2 times the average customer balances compared with other users. Their long-term trading retention was more than 50% higher, according to the company.
Average USDC held in Coinbase products reached a record $22 billion, up 49% year over year. The figure represented approximately 30% of USDC’s average market capitalization during the quarter, Coinbase said. The company also reported that its average daily loan book balance rose 74% from a year earlier to a quarterly record. Tokenized stock trading volume on its Base network exceeded $1 billion since launch, according to the earnings release.
Binance security incident coincides with broader crypto market decline
Coinbase’s share-price decline came as the wider digital-asset market weakened and Binance investigated unauthorized outflows from its hot wallets across Ethereum, Bitcoin and Tron. Binance estimated the impact at approximately $6.3 billion.
The exchange initially said its investigation pointed to a potentially compromised DevOps engineer’s laptop, which may have allowed an attacker to access a service container and submit unauthorized withdrawal transactions. Binance reported no evidence that wallet private keys had been leaked.
In an October 30 video posted on X, co-CEO Richard Teng disclosed additional breach points. He said the attacker exploited Ethereum’s EIP-7702 authorization mechanism to obtain on-chain execution approval over a Binance hot wallet, bypassing the exchange’s normal approval controls. Binance has not yet released a complete technical account of the incident.
Teng said industry partners had frozen approximately $3 billion in affected assets. Separately, Binance had reserved more than $6.34 billion in company funds to cover the affected assets, including about $5 billion already held in the same tokens involved in the incident. The exchange said it would acquire the remaining assets through market and over-the-counter transactions.
Binance has said customers will not bear the losses and that it will use company funds and its Secure Asset Fund for Users (SAFU) to cover any shortfall. Binance.US was not affected, according to the exchange.
The incident coincided with declines across major cryptocurrencies on Friday. Bitcoin traded at $76,494.98, down 5.5% over 24 hours, while Ether fell 4.6% to $2,224.54. BNB declined 6.4% to $696.27, and XRP lost 4% to $1.24, according to data from CoinGecko (at 19:34 UTC on October 30).
The market declines provide context for Coinbase’s trading environment, but the available information does not establish that the Binance incident or falling crypto prices directly caused COIN’s share-price drop.
Coinbase’s Q3 results show different measures of profitability
Coinbase’s third-quarter results presented a contrast between its GAAP net income and adjusted earnings. The $718.7 million net profit included a substantial investment gain, while adjusted net income was $77.7 million.
At the same time, the company reported higher trading market share and growth in subscription, stablecoin, and prediction-market activity. Subscription and services revenue made up nearly half of net revenue, according to Coinbase.
Those figures offer a broader view of the quarter than net income alone, although the company’s non-GAAP measures should be considered alongside its GAAP results and the adjustments used to calculate them.
Also Read: Crypto Stocks Slide Alongside Bitcoin as Binance Reports $6.3B Breach