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In a surprising move, Reddit announced a substantial sale of its Bitcoin and Ethereum holdings in Q3 2024, citing minimal financial impact in an SEC filing. This significant crypto exit comes as Reddit reconsiders its treasury approach amid a challenging economic environment.
Reddit Sells Major Portion of Crypto Holdings in Q3
A recent filing with the Securities and Exchange Commission (SEC) indicates that social media network Reddit liquidated most of its cryptocurrency assets in the third quarter of 2024.
Government holdings of Bitcoin and Ether were the primary source of the sales. According to the 10-Q SEC filing, the overall worth of the cryptocurrency holdings and the profit made from their sale were considered negligible during that time:
“During the three months ended September 30, 2024, we sold the majority of our cryptocurrency portfolio, which consisted primarily of Bitcoin and Ether. The net carrying value of our cryptocurrencies, as well as the gain recognized on sale, was immaterial for the periods presented.”
Quarterly Sale Generates $6.869 Million
The report states that for the quarter ended September 30th, $6.869 million was generated from the selling of cryptocurrency.
A portion of the firm's surplus funds were previously put into Bitcoin and Ether. It carried on with its acquisition of ETH and MATIC, the token of Polygon (now called POL), as a "form of payment for sales of certain virtual goods."
"Was not material for the year ended December 31, 2023 or the nine months ended September 30, 2024," Reddit stated regarding its ETH and MATIC sales. The social media firm also kept restricted digital assets for the use of its technical and product teams.
Reddit’s Policy on Digital Asset Investments
Since 2022, Reddit has been replenishing its cryptocurrency reserves with tiny sums from its surplus funds, Cointelegraph shares. Crypto and blockchain were lauded by the company in an earlier IPO filing for their "significant potential."
For treasury reasons, digital assets can only be invested in Bitcoin, Ethereum, and any other cryptocurrency that US regulators have publicly stated or given guidance as "likely not being a security," according to Reddit's policy.
Advertising Demand Drop Linked to Economic Uncertainty
According to the filing, Reddit's advertising demand has dropped since the outbreak, with the cause being worldwide economic worries, increasing interest rates, and geopolitical unpredictability:
“Since the three months ended December 31, 2022, we experienced declines in advertising spending in certain macro-challenged sectors, particularly technology, media and entertainment, and cryptocurrency.”
Company officials claim that diversification into "other advertising verticals" has helped to mitigate the impact of falling ad revenue from some industries.
