Coinbase loses market share of the most profitable product
Date: 2023-06-26 Author: Karina Ziganova Categories: BUSINESS
Cryptocurrency exchange Coinbase has lost market share in staking Ether (ETH), a product that makes up a significant part of the exchange's revenue. This is evidenced by Dune analytics.
The exchange's share in ETH staking fell to 9.7%. This is the lowest level since May 2021. The share is down from its peak on April 12, from 13.6%, following the release of the Shanghai Ethereum upgrade.
The decrease in the share of the crypto exchange was due to a sharp increase in demand for ETH staking. The Shanghai update caused a wave of deposits for staking, the inflow of funds exceeded the withdrawal by about 3.5 million ETH - about $7.3 billion at the current exchange rate.
At the same time, the crypto exchange faced a net outflow of $517 million (272,315 ETH) over the same period, the second largest amount after the Kraken crypto exchange.
How much ETH was withdrawn after the lawsuit
On June 6, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase for violating federal securities laws, including offering unregistered securities to users through a staking program.
Since the lawsuit was filed, Coinbase has withdrawn about 149,300 ETH from the Ethereum network, while contributing only 52,992 tokens. Thus, in less than three weeks, the net outflow amounted to $183 million, however, the exchange still retains its position as the second largest staking service provider, despite the fact that Figment, RocketPool and Kiln are increasing their shares.
Lawsuit against Kraken
Earlier, the SEC shut down the staking program and fined Kraken $30 million because the exchange was unable to register the staking program, and therefore worked with unregistered securities.
Later, the exchange received a claim from the US Internal Revenue Service (IRS) demanding to disclose information about users to the court. As a result, Kraken appealed to the federal court in San Francisco to intervene in this matter. According to lawyers, the IRS has gone beyond what is permitted, and its demands for clients are unreasonable.
