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In summary
- Reddit sold the majority of its Cryptocurrency portfolio during the third quarter, dumping Bitcoin and Ethereum it held “for treasury purposes.”
- The company sold nearly $6.9 million in cryptocurrency during the quarter, according to a filing with the Securities and Exchange Commission (SEC).
- Although Reddit has moved away from Bitcoin and Ethereum, it still owns some cryptocurrencies, including Ethereum and Polygon derived from the sale of virtual avatars.
Reddit sold the majority of its cryptocurrency portfolio during the third quarter, divesting Bitcoin and Ethereum it held “for treasury purposes,” according to a Tuesday filing with the Securities and Exchange Commission (SEC).
When the social media company filed for an initial public offering in February, the company had an “immaterial” amount of cryptocurrencies on its balance sheet, purchasing crypto assets with excess cash. On Tuesday, Reddit used the same language to describe the proceeds from the recent sale.
“We sold the majority of our cryptocurrency portfolio, which primarily consisted of Bitcoin and Ether,” Reddit stated. “The net value of our cryptocurrencies, as well as the gain recognized on the sale, was immaterial.”
The SEC report noted that Reddit sold nearly $6.9 million in cryptocurrency during the quarter.
Given the time frame, with the sale taking place during the quarter ending September 30, that means Reddit missed the latest gains seen by Bitcoin, the largest cryptocurrency on the market.
On Tuesday, Bitcoin was $175 away from its all-time high price of $73,737 set in March, hitting a monthly high of $73,562 during a month known to traders as “Uptober” for its historic cryptocurrency gains. Between July and September, the period during which Reddit sold its assets, the price of Bitcoin ranged between approximately $54,000 and $68,000.
Although the company has moved away from Bitcoin and Ethereum to strengthen its balance sheet, Reddit noted that it still owns some cryptocurrencies. That includes Ethereum and Polygon derived from the sale of virtual avatars, which exist on the Ethereum scaling network. Reddit said it owns MATIC, although Polygon recently began the process of migrating its token to a new one called POL.
Reddit was an early pioneer among social media giants, experimenting with digital assets as a way to offer collectibles and reward user participation. Although the company noted that its product and engineering teams are still involved in crypto technology to some extent, it also noted that the future of digital assets is full of unknowns.
“While we believe that cryptocurrencies and Blockchain technology have significant potential, the popularity and prevalence of cryptocurrencies is a relatively recent trend, and whether cryptocurrencies and blockchain technology will continue to be adopted by consumers and businesses in the long term is uncertain.” said Reddit.
Reddit’s stock price rose 41% on Wednesday, reaching $116 per share, at the time of writing. However, Reddit turned profitable, beating analysts’ expectations, reporting $30 million in net income compared to a loss of $7.4 million for the same quarter last year.
When asked about the dollar value of its cryptocurrency portfolio, or what constitutes an “immaterial” amount, Reddit did not immediately respond to a request for comment from Decrypt.
The social media company has distanced itself from several of its cryptocurrency-related projects after diving headfirst into the space in 2020. Moons, once the cryptocurrency token of Reddit’s r/cryptocurrency community, became a project led by the community after Reddit “officially relinquished” control of the smart contracts associated with the token in November of last year.
In July, the company moved further away from the digital asset space when it removed its feature called Collectible Expressions, which displayed animations based on users’ Collectible Avatar NFTs minted on Polygon. Upon release in 2022, Collectible Avatars were an early success, sometimes selling for thousands of dollars on secondary markets.
Reddit has released multiple waves of Collectible Avatars, with more than 18 million minted as of July 2023. At times, the social media company used them as a way to promote events—selling them as a way to engage fans for the upcoming season. of the NFL last year.
According to Reddit’s investment policy, the company said that any future investments in cryptocurrencies will need to be approved by its board of directors. Additionally, allocations would be limited to Bitcoin and Ethereum, or any other cryptocurrency that is not identified as a security.
To this day, Reddit’s mobile app features a cryptocurrency wallet, dubbed Vault. However, it seems like Reddit is putting a barrier around its balance sheet.
Edited by Andrew Hayward
Editor’s note: This story was updated after publication to note the US dollar amount made from Reddit’s cryptocurrency sale.
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