BitGo, Bullish, Galaxy, Gemini struggle as crypto winter persists

However, the credit card bonanza was more than offset by $20.1 million in transaction losses—more than 5x higher than the year before—of which $16.1 million was due to the cards.

Earlier this year, Gemini suffered an ‘identity fraud event’ for which the company initially put aside $4.1 million to cover. But further investigation revealed, “additional fraud patterns and affected accounts … associated with the same Q1 origination cohort and the related accounts migrated into later-stage delinquency buckets during the second quarter.”

Ominously, Gemini confessed that “managed credit card receivables grew to $219.6 million at quarter-end from $93.5 million a year ago … management believes the elevated provision is concentrated within this identified fraud-related cohort and does not reflect broad-based deterioration in the underlying credit portfolio.” Uh-huh.

On a more positive note, Gemini’s staking contributed $4 million to the service’s total, 50% greater than the year before, which Gemini credited to building out its in-house staking validator capabilities. 

Like its rivals, Gemini’s Q2 trading volume was grim, falling two-thirds year-on-year to $3.8 billion. Part of this has to do with the Winklevii’s March decision to de-emphasize its crypto origins and pivot hard towards a new prediction-market future.

Tyler W, Gemini’s CEO, said the results showed “we still have work to do” but “we’re making significant strides building a more resilient company by developing multiple paths to revenue that are less sensitive to crypto market forces and reducing operating expenses.”

Possibly, but Gemini’s crypto exchange was always something of an afterthought in the U.S. market and had even less clout abroad. The early performance of Gemini’s prediction market suggests it will have a tough time carving off market share from the sector’s well-established incumbents.

Their court victory over Mark Zuckerberg aside, the Winklevii’s entrepreneurial efforts haven’t performed much better than the twins’ awful cover band.

Last November, the Winklevii hopped on the digital asset treasury bandwagon by co-opting a former biotech firm, rechristening it Cypherpunk Technologies Inc (NASDAQ: CYPH), and loading it up with Zcash (ZEC) privacy tokens. The initial announcement caused Cypherpunk’s shares to nearly $4, but they almost immediately fell back to earth and closed Thursday at just $0.65.

Back to the top ↑

BitGo to new custodians: bring it

Digital asset custodian/trading/staking platform BitGo (NASDAQ: BTGO) booked a $19 million net loss in Q2, an improvement over Q1’s $60.7 million loss but a significant turnaround from the $38.3 million profit in Q225. Revenue was up 14.7% sequentially and nearly 80% year-on-year to $4.33 billion, but costs were also on the up, including an $18.8 million decline in the value of the company’s token treasury.

The bulk of revenue came via digital asset sales, which rose 14.7% sequentially to just under $4.2 billion. Staking revenue was up 30.9% sequentially to $64.7 million, although that’s 28.8% below Q225’s tally. BitGo attributed the rise in sequential staking to increased institutional activity, but the take rate was just 6%, down from 16.1% in Q1.

The ‘subscriptions & services’ segment brought in $27.5 million, an increase in both sequential (+7.7%) and year-on-year (+8.5%) terms. BitGo stressed that its custody and wallet relationships “remain the foundation of the platform” and the company has prioritized converting more of these relationships into “recurring, multi-product revenue.”

The stablecoin-as-a-service segment generated $38.8 million, up 1.7% sequentially but more than doubling from Q225, while the take rate on sponsor fees grew to 8%. The sequential growth came courtesy of higher reserve balances and fixed monthly fees from supported stablecoin programs.

BitGo boasted 5,833 clients as of June 30, up 26.2% year-on-year and 4.7% higher than Q1. Its user growth was more restrained, rising 6.1% year-on-year and 1.3% sequentially to 1.2 million.

BitGo has been doing its best to keep costs down, including a 15% reduction in its workforce last month. BitGo CEO Mike Belshe claimed, “the ecosystem has evolved, and the way we build financial services has changed dramatically.” Making BitGo “more deliberate than it is today” involves focusing on “the areas that matter most: security, trading, stablecoins, settlement, and AI-powered infrastructure.”

On the earnings call, Belshe said his company was “poised pretty well” to weather increased custodial competition as regulatory ‘clarity’ dawns. BitGo offers “not just the custody components, but the full stack around it,” and new market entrants will “have to kind of build all of those things.”

That said, Belshe acknowledged that part of BitGo’s historic appeal has been its national trust bank charter from the U.S. Treasury Department’s Office of the Comptroller of the Currency (OCC). And with the OCC’s new leadership now issuing national charters like they’re going out of style—including to some of BitGo’s stablecoin-issuing custodial clients—that aspect of BitGo’s appeal could diminish.

The GENIUS Act, passed by Congress last year, prohibits stablecoin issuers from offering ‘yield’ to customers. One of the major sticking points preventing the CLARITY Act from advancing is whether non-issuing platforms like Coinbase can offer their customers ‘rewards’ for engaging in certain stablecoin activities.

Belshe said he thinks the ban on issuers offering yield is “wrong.” The U.S. “should” allow offering yield to retail token holders, and Belshe believes “we are going to see some more technical innovations from BitGo, probably from others too, which make it ever increasingly easy to build a stablecoin that is your own, that you can then claim the rewards on, as the issuer of it. That is going to lead, at least for some period of time, to a continued proliferation of new stablecoins. We will see how it plays out.”

On August 1, Belshe issued a public challenge to artificial intelligence (AI) developer Anthropic in response to the latter’s claims regarding its Claude model’s purported capacity to break out of its cage and gain unauthorized access to external systems. Dismissing Anthropic’s claims as “marketing,” Belshe provided a BitGo wallet address containing 100 BTC and dared Claude to “go get it.”

On the earnings call, Belshe was asked how many BTC the wallet still contained. “We still have all the Bitcoin … I think it is very safe. We have not had any significant threat.” Belshe said BitGo “always keep our guard up, and we have to continue to work on it. But so far, there has been no negative outcome for BitGo as a result of that challenge. I think we will win.”

Investors appear suitably impressed, as BitGo’s share price closed Thursday up 10.8% to $5.53. However, the shares are down 57% for the year-to-date.

Back to the top ↑

BitGo v Galaxy: it ain’t over till it’s over

In case you missed it, BitGo is still embroiled in a legal fight with digital asset infrastructure firm Galaxy Digital (NASDAQ: GLXY) over Galaxy’s aborted $1.2 billion acquisition of BitGo in 2022. Before the deal was cold, BitGo management was already insisting that Galaxy boss Mike Novogratz had violated the terms of the acquisition agreement and insisted BitGo was owed a $100 million breakup fee. 

BitGo’s claim was initially dismissed in 2023 after a Delaware Chancery Court judge ruled that the financial documentation BitGo provided to Galaxy wasn’t up to scratch. That ruling was overturned in 2024 by the Delaware Supreme Court and returned to the lower courts, where it continues to rage to this day.

In May, Belshe and Novogratz each took the stand to offer their competing views of the breakup. Bloomberg quoted Novogratz saying “the entire time, I was pushing to get this deal done,” but Gary Gensler, then-head of the U.S. Securities and Exchange Commission (SEC), was making this “very difficult.”

The crypto-skeptical Gensler was allegedly thwarting the combined entities’ goal of listing on the Nasdaq exchange (a condition of the acquisition agreement). New SEC accounting rules also caused problems, and Galaxy’s announcement of the deal’s demise pinned the blame on BitGo’s alleged failure to produce satisfactory documentation in a timely manner.

Belshe testified that “Galaxy telling the world we can’t pass an audit” was “incredibly damaging to BitGo’s reputation.” Belshe also accused Galaxy of withholding “critical information” regarding law enforcement inquiries into Galaxy’s role in the 2022 collapse of Terraform Labs, issuer of the Luna token. (Novogratz has a Luna tattoo, and Galaxy reached a $200 million settlement with the New York Attorney General’s office in 2025 for its role in the Terraform debacle.)

There’s still no word on when Delaware Chancellor Kathaleen St. J. McCormick might issue her verdict in this civil brouhaha. Should BitGo emerge triumphant, the company could seek additional damages in addition to the $100 million penalty it claims Galaxy is already on the hook for.

Speaking of Galaxy, the company reported a net loss of $85 million in its Q2 report, an improvement from Q1’s $216 million loss, with most of that red ink attributed to declines in the value of the company’s BTC treasury (6,894 tokens, 18th largest). Hopefully, there’s still something left in the kitty should Judge McCormick look unfavorably on Novogratz’s ‘it wasn’t me’ defense.

Back to the top ↑

Watch | Teranode Explained: How Teranode Changes Blockchain Scaling