20-F: Coincheck Group Reports Significant FY2025 Net Loss Amid Nasdaq Listing Costs, Revenue Surges 71%

Coincheck Group N.V. reported a substantial net loss for the fiscal year ended March 31, 2025, primarily driven by non-cash Nasdaq listing expenses, while achieving a 71% increase in total revenue and continued growth in verified users and customer assets.

Summary

• Total revenue for the fiscal year ended March 31, 2025, increased by 71% to 383,330 million JPY, up from 224,049 million JPY in FY2024.
• The company reported a net loss of 14,350 million JPY for FY2025, compared to a net profit of 1,967 million JPY in FY2024.
• Adjusted EBITDA, excluding non-cash listing expenses and transaction costs, was 5,718 million JPY for FY2025, a significant improvement from 3,773 million JPY in FY2024.
• Listing expenses related to the Nasdaq listing and Business Combination amounted to 13,714 million JPY (non-cash) and 4,607 million JPY (cash professional fees) in FY2025.
• Customer assets grew to 859 billion JPY as of March 31, 2025, from 744 billion JPY in FY2024.
• Marketplace trading volume increased to 337.5 billion JPY in FY2025, up from 234.6 billion JPY in FY2024.
• The number of verified users reached approximately 2.3 million as of March 31, 2025, representing an 18.5% retail market share in Japan.
• Approximately 51% of verified accounts are held by customers under 40 years old, indicating a young customer base.
• The company acquired Next Finance Tech Co., Ltd. in March 2025 to enhance its staking award offerings and expand staking platform services.
• The company launched Coincheck Staking for Ethereum (ETH) in January 2025, with plans to integrate Next Finance's platform by 2026.
• Coincheck Prime, a new brand targeting institutional and corporate cryptocurrency investors, was launched on March 25, 2025, offering services like Asset Lock, Large OTC Transactions, and Custody.
• The company's smartphone trading application is used by over 90% of its customers, emphasizing its user-friendly interface.
• The company's average spread per transaction on its Marketplace platform remained relatively stable at 3.50% in FY2025.
• The company's internal control over financial reporting was not effective as of March 31, 2025, due to a material weakness related to Marketplace transaction revenue recognition, which is undergoing remediation.
• The company's largest single credit exposure as of March 31, 2025, relates to crypto assets deposited with bitFlyer (211 million JPY).
• The company does not have insurance for customer crypto assets in its custody or for its own crypto assets, which is customary in the Japanese crypto industry.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While the company reported a significant net loss, it was primarily due to non-cash listing expenses related to its Nasdaq debut. Operationally, the company demonstrated strong revenue growth (71%) and a positive Adjusted EBITDA, indicating a healthy underlying business. Key metrics like customer assets and verified users also showed continued growth. The strategic acquisitions and new product launches (staking, institutional services) point to future growth potential. However, the material weakness in internal controls and the inherent volatility and regulatory risks of the crypto industry temper the overall positive outlook.

Positives

• Total revenue increased by 71% to 383,330 million JPY in FY2025, driven by increased Marketplace platform trading volume.
• Adjusted EBITDA, a measure of operational profitability, was positive at 5,718 million JPY in FY2025, indicating strong underlying business performance despite reported net loss.
• Customer assets grew to 859 billion JPY as of March 31, 2025, reflecting increased trust and engagement.
• Marketplace trading volume saw substantial growth to 337.5 billion JPY in FY2025.
• The number of verified users continued to grow, reaching 2.3 million, maintaining an 18.5% retail market share in Japan.
• A significant portion of the customer base (51%) is under 40, positioning the company for long-term growth as these users mature financially.
• Strategic acquisition of Next Finance Tech Co., Ltd. is expected to enhance staking offerings and expand services.
• Launch of Coincheck Staking for Ethereum (ETH) provides new revenue streams and customer benefits.
• Introduction of Coincheck Prime brand targets institutional investors, diversifying potential revenue sources.
• The company maintains a strong brand reputation and robust compliance infrastructure in a highly regulated Japanese market.
• The company's smartphone application is highly utilized (over 90% of users) and praised for its user-friendliness.

Negatives

• Reported a net loss of 14,350 million JPY for the fiscal year ended March 31, 2025, a significant decline from a net profit in the prior year.
• The net loss was primarily due to substantial non-cash listing expenses (13,714 million JPY) and cash professional fees (4,607 million JPY) related to the Nasdaq listing and Business Combination.
• Selling, general, and administrative expenses increased by 114% to 14,458 million JPY, largely due to professional fees for the Business Combination.
• Other revenue decreased by 54% to 125 million JPY, mainly due to decreased sales of NFTs.
• The company's internal control over financial reporting was deemed not effective as of March 31, 2025, due to an un-remediated material weakness related to revenue recognition.
• Cash and cash equivalents decreased by 2,253 million JPY to 8,584 million JPY at year-end FY2025.
• Net cash used in operating activities was 1,915 million JPY in FY2025, a significant change from net cash provided in FY2024.

Risks

• Total revenue is substantially dependent on the prices of crypto assets and transaction volumes, which are historically volatile.
• Operating results are expected to fluctuate significantly from period to period due to volatile crypto asset prices and trading volumes.
• Cyberattacks and security breaches on platforms or back-office systems could adversely impact brand, reputation, business, and financial condition, potentially leading to theft or irretrievable loss of assets.
• Acquisitions and investments, especially outside Japan, could require significant management attention, disrupt business, result in dilution, and adversely affect financial results.
• Expansion into markets outside of Japan would increase obligations to comply with diverse and evolving laws, rules, and regulations, potentially leading to investigations and enforcement actions.
• Operating in a highly competitive industry, the company's business may be adversely affected if it cannot respond effectively to competitors, especially unregulated or less regulated offshore entities.
• Inability to keep pace with rapid industry changes and provide new, innovative products and services could lead to declining use of products and services and reduced revenue.
• Changes in economic conditions and consumer sentiment in Japan could cause demand for products and services to be lower than anticipated.
• Limited operating history and the volatile nature of the business make it difficult to evaluate future prospects and achieve sustained profitability.
• Dependence on heavily-traded crypto assets like Bitcoin, Ethereum, and XRP means a decline in demand for these specific assets could adversely affect the business.
• The recent trend of public companies embracing Bitcoin in treasury strategies, if such strategies fail, could drive down crypto asset prices and negatively affect trading volume.
• Extensive regulation in Japan means any adverse changes or non-compliance could harm brand, reputation, product offerings, and financial condition.
• Potential administrative sanctions or legal claims if services are found to violate laws of jurisdictions other than Japan or international sanctions regimes.
• Uncertainty regarding a particular crypto asset's status as a security in any relevant jurisdiction could lead to legal or regulatory action.
• Operation of Coincheck NFT Marketplace exposes the company to legal, regulatory, and other risks, including intellectual property issues and evolving regulatory frameworks for NFTs.
• Loss or destruction of private keys required to access crypto assets held in custody for customers may be irreversible, leading to regulatory scrutiny, reputational harm, and financial losses.
• Failure to retain existing customers, add new customers, or increase engagement could significantly harm the business.
• Many customers are first-time users, and trading volumes could be reduced if these customers stop trading crypto assets or switch platforms.
• Losses may occur due to staking, delegating, and other related services provided to customers, including penalties or 'slashing' events.
• Exposure to transaction losses due to chargebacks from fraud or uncollectibility, especially if credit/debit card payments are resumed.
• Failure to develop, maintain, and enhance brand and reputation could adversely affect business.
• Key business metrics and other estimates are subject to inherent measurement challenges, and inaccuracies could adversely affect the business.
• Unfavorable media coverage could negatively affect the business and customer confidence.
• Product and service offerings may be exploited for illegal activity such as fraud, money laundering, and tax evasion, leading to claims, lawsuits, and regulatory investigations.
• Compliance and risk management methods might not be effective, resulting in adverse outcomes.
• Abrupt and erratic market movements in crypto assets could lead to transaction losses or extreme pressures on infrastructure.
• Negative publicity associated with other crypto asset platforms (e.g., FTX, DMM Bitcoin hacks) may cause customers to lose confidence in the industry.
• Errors in depositing or withdrawing crypto assets could result in permanent loss of customer assets, disputes, and liabilities.
• Temporary or permanent blockchain forks to supported crypto assets could disrupt networks, lead to security concerns, and result in losses.
• Underlying smart contracts for supported crypto assets may not operate as expected, leading to value loss.
• Technical issues with integration or upgrades of underlying networks could adversely affect the business.
• High transaction fees demanded by miners or validators could adversely affect operating results.
• Reliance on third-party service providers (payment processors, cloud services) means interruptions could impair ability to support customers.
• Dependence on payment networks and acquiring processors means changes to their rules or practices could adversely impact the business.
• Reliance on app stores and mobile operating systems means changes to their policies or functionality could adversely affect customer usage.
• Exposure to credit risks due to reliance on cryptocurrency exchange brokers for cover transactions; bankruptcy or inability of counterparties to fulfill obligations could cause losses.
• Inability to protect intellectual property rights could adversely impact the business.
• Subject to claims for alleged infringement of proprietary rights of third parties.
• Failure to comply with terms of open source software licenses could harm the business.
• Loss of key personnel or failure to attract and retain qualified personnel could adversely impact the business.
• Employee or similar service provider misconduct or error could lead to legal liability, financial losses, and regulatory sanctions.
• Fluctuations in the price of Ordinary Shares could contribute to the loss of investment.
• Lack of an active trading market for Ordinary Shares could adversely affect liquidity and price.
• Future sales of Ordinary Shares or anticipation of sales could reduce market price.
• Issuance of additional Ordinary Shares or other equity securities would dilute ownership interests and may depress market price.
• Largest shareholder, Monex, exercises supermajority control, potentially having interests that differ from or conflict with other shareholders.
• Significant increased expenses and administrative burdens as a public company could adversely affect financial results.
• Failure to maintain effective internal control over financial reporting could adversely affect share price.
• As a foreign private issuer, the company is exempt from certain U.S. provisions, meaning less or different information for U.S. investors.
• No plans to pay cash dividends for the foreseeable future means no return on investment unless shares are sold for a gain.
• If securities or industry analysts cease coverage or change recommendations adversely, price and trading volume could decline.
• Subject to securities litigation, which is expensive and could divert management attention.
• No assurance of compliance with Nasdaq continued listing standards.
• Imposition of additional or higher taxes or retaliatory measures could affect demand for services and financial condition.
• Potential Dutch dividend withholding tax if the company ceases to be a Dutch tax resident.
• May not be eligible for withholding tax relief benefits under relevant treaties.
• Other jurisdictions may claim taxation rights over the company.
• No guarantee that the company will not become a Passive Foreign Investment Company (PFIC) for U.S. tax purposes.
• Shareholders may have different rights than those of U.S. companies due to Dutch incorporation.
• Does not comply with all suggested governance provisions of the Dutch Corporate Governance Code.
• Difficulty in enforcing U.S. judgments against the company due to Dutch incorporation and non-U.S. assets/personnel.
• Adverse developments affecting the financial services industry could adversely affect the business.
• Market conditions, economic uncertainty, or downturns could adversely affect the business.
• Natural disasters, pandemics, wars, terrorism, and other catastrophic events could disrupt business operations.

Future Outlook

The company intends to increase its share of the growing Japanese crypto asset retail market, expand its institutional business through initiatives like Coincheck Prime and its IEO platform, and mainly through acquisitions, investments, or joint ventures, acquire and operate retail and institutional crypto businesses outside of Japan. It expects to complete the integration and testing of Next Finance's staking platform service during the 2026 calendar year to provide Coincheck Staking using its own platform. The company plans to apply for a Type I Financial Instruments Business operator license later this year to expand product offerings, though this requires substantial increased capitalization and regulatory approval. It also plans to continue investing in finance, legal, compliance, and security functions to remain at the forefront of crypto policy and regulatory trends.

Management Comments

• We believe we are, today, a leader in the Japanese retail crypto asset industry through our Marketplace platform offering and related retail crypto services.
• Our mission is threefold: (1) to increase our share of the growing Japanese crypto asset retail market; (2) to expand our institutional business; and (3) mainly through acquisitions, investments, or joint ventures or other strategic partnerships, to acquire and operate retail and institutional crypto businesses outside of Japan.
• We believe that our customers choose us due to our trusted and recognized brand, robust product offering and strong customer service.
• Approximately 51% of our verified accounts are held by customers under 40 as of March 31, 2025, providing the opportunity for our business to grow alongside our customers as they reach their prime earning years.
• We believe that having recently become a publicly traded company listed on Nasdaq will help us access international capital markets, increase our ability to make acquisitions of crypto businesses both inside and outside of Japan, and enhance hiring and retention of key personnel via equity compensation incentives.
• We believe that Japans robust regulatory environment has been developed ahead of other markets in the world, contributes to greater acceptance of crypto assets by Japanese individuals, and places domestic exchanges in an advantageous position.
• We believe our higher proportion of altcoin trading volume demonstrates the differentiated value of our Marketplace platform.
• We believe a key long-term advantage of our business is our young customer base.
• One of our key strengths is our ability to provide not only an intuitive and simple, easy-to-use platform for first-time users who may be inexperienced in crypto asset trading, but also offer robust features for more experienced users.
• We believe that we have a strong brand that is trusted by users, and that a strong trusted brand is critical in acquiring customers who are first-time crypto users and to attract larger, including institutional, investors.
• We believe our historical growth and profitability, combined with re-investment in our platforms and brand, position us well to pursue further opportunities.
• We believe that our expense structure enables us to be profitable, or minimize loss, even in periods with low trading volume.
• Our management team is comprised of experts from across the crypto asset and financial services industries. We believe that our team gives us a competitive advantage over other exchanges and our corporate culture combines compliance and regulatory engagement with an innovation mindset that permeates throughout our company.

Industry Context

The company operates in the rapidly evolving and highly competitive Japanese cryptocurrency market, which is characterized by significant price volatility and regulatory scrutiny. Japan is noted as one of the first countries to establish a regulatory framework for cryptocurrencies, contributing to greater acceptance among Japanese individuals. The market has seen increasing institutional adoption globally, with traditional financial institutions entering the crypto custody business. Despite periods of volatility and negative publicity surrounding other industry players (e.g., FTX, DMM Bitcoin hacks), the Japanese market shows potential for growth, with only 10% of the population owning crypto assets compared to 17% in the U.S. The company faces competition from both licensed Japanese providers and less regulated offshore entities, which can offer a wider range of products. The industry is also seeing rapid innovation in decentralized finance (DeFi) and NFTs, requiring continuous adaptation.

Comparison to Industry Standards

• The company's 24.9% market share in Japan by trading volume and 18.5% retail market share by verified users (as of March 31, 2025) indicate a leading position in the Japanese retail crypto asset industry, as per JVCEA data.
• The company's Bitcoin trading volume on its Marketplace platform (43% of total trading volume in FY2025) is lower than the industry average for all domestic platforms (approximately 68%), suggesting a more diversified trading volume with a higher proportion of altcoin trading, which is presented as a differentiated value.
• The company's customer assets grew to 859 billion JPY, demonstrating continued growth despite market fluctuations, similar to broader industry trends of increasing crypto asset adoption.
• The company's first IEO, Hashpalette IEO in July 2021, was 24 times oversubscribed, and its second IEO with Financie, Inc. in February 2023 was approximately 19 times oversubscribed, indicating strong demand for its IEO platform, which was the first of its kind in Japan.
• The company's practice of not having insurance for customer crypto assets is stated as customary in the Japanese crypto industry, contrasting with practices in some other jurisdictions where such insurance might be more common or mandated.

Management Changes

Corporate Governance

Legal Proceedings

• All but one lawsuit related to the January 2018 NEM hack, concerning the calculation of customer compensation, had been resolved by judgment or alternative dispute resolution as of March 31, 2025. The remaining one was settled in June 2025.

Related Party Transactions

• A currently unused subordinated line of credit for Coincheck, for a total of up to 6,000 million JPY, with Monex Finance Corporation, a subsidiary of Monex.
• Currency forward transactions with Monex's brokerage subsidiary to purchase $1.2 million in exchange for Japanese yen, settled on July 31, 2024.
• Certain cross-selling transactions with Monex's brokerage firm subsidiary related to the buying and selling of held crypto assets.
• A loan agreement for a line of credit (in USD) with Monex Finance Corporation, as lender, and Coincheck Parent, as borrower, originally dated December 11, 2024, amended and restated as of March 31, 2025, for operating capital, with a maximum borrowing amount of $16 million (2,400 million JPY), and $5 million (751 million JPY) outstanding as of March 31, 2025.
• A business management services agreement with Monex, terminated in November 2024, under which Coincheck paid 397 million JPY in FY2025 (363 million JPY in FY2023, 458 million JPY in FY2024).
• A $100,000 line of credit (in USD) from Monex to Coincheck Parent, dated September 22, 2022, terminated on March 31, 2025, with the remaining balance of $10,733 repaid in February 2025.
• A promissory note (in USD) for a total of up to $1,500,000 with Thunder Bridge Sponsor, as borrower, and Thunder Bridge (now CCG Administrative Services, Inc.), as lender, of which $300,791 was outstanding as of December 31, 2024, and repaid in full on January 15, 2025.
• Loans (in USD) by Monex to an affiliate of Thunder Bridge in September 2023 and October 2024 of $1.2 million and $600,000, respectively, both fully repaid on December 16, 2024.
• A reimbursement arrangement for shared executive expense, effective April 1, 2025, under which Coincheck Parent and Monex share equally the base salary compensation expense of Executive Director Yo Nakagawa.
• Sponsor Support Agreement, Monex Support Agreement, Lock-Up Agreements, Registration Rights Agreements, and Nomination and Voting Agreement were entered into in connection with the Business Combination, involving Monex Group, Inc. and Thunder Bridge Sponsor.

Stakeholder Impact

• **Shareholders**: Experienced a significant net loss due to listing expenses, but underlying operational performance (Adjusted EBITDA) improved. Dilution from future equity issuances is possible. Monex Group, as the largest shareholder, maintains supermajority control, which may influence strategic decisions.
• **Customers**: Benefit from increased crypto asset offerings (30 cryptocurrencies), user-friendly platforms (90%+ mobile app usage), and new services like Coincheck Staking and Coincheck Prime. Customer assets and verified users are growing, indicating continued trust. However, the lack of insurance for customer crypto assets and the material weakness in internal controls present potential risks.
• **Employees**: The company continues to invest in personnel, with engineers and product developers comprising 36.6% of staff. Equity compensation incentives are used for key personnel attraction and retention. New policies like the Securities Trading Policy and Clawback Policy impact executive compensation and trading activities.
• **Regulators**: The company is subject to extensive regulation in Japan (JFSA, JVCEA) and now in the U.S. (SEC, Nasdaq). The un-remediated material weakness in internal controls is a point of regulatory scrutiny. The company actively engages with regulators and aims for compliance.
• **Competitors**: The company operates in a highly competitive and evolving market. Its strong market share in Japan and diversified altcoin trading volume are competitive advantages, but it faces challenges from less regulated offshore competitors and traditional financial firms entering the crypto space.

Next Steps

• Complete remediation of the material weakness in internal control over financial reporting during the current fiscal year.
• Complete integration and testing of Next Finance's staking platform service to provide Coincheck Staking using its own platform during the 2026 calendar year.
• Actively explore and pursue potential acquisitions and strategic investments in retail and institutional crypto businesses outside of Japan.
• Apply for a Type I Financial Instruments Business operator license in Japan to expand product offerings.
• Continue to invest in finance, legal, compliance, and security functions to stay ahead of crypto policy initiatives and regulatory trends.
• Monitor the list of Subject VASPs and update systems in accordance with periodic updates for travel rule compliance.
• The Board plans to propose an amendment to the Remuneration Policy at the next annual general meeting of shareholders in September 2025.

Key Dates

Recommendation

The company's strong revenue growth, increasing customer base, and positive Adjusted EBITDA indicate a robust underlying business in a growing market. Strategic initiatives like the acquisition of Next Finance and the launch of Coincheck Prime position it for future expansion and diversification. However, the reported net loss, while largely due to non-cash listing expenses, could deter some investors. The un-remediated material weakness in internal controls and the inherent volatility and regulatory risks of the crypto industry also warrant caution. Given the mixed financial signals (strong operational performance vs. reported net loss) and the high-risk, high-reward nature of the crypto market, a 'hold' recommendation is appropriate. Investors should monitor the remediation of internal control weaknesses and the successful execution of international expansion plans.

Keywords

Cryptocurrency, Crypto Exchange, Japan, SEC Filing, 20-F, Digital Assets, Blockchain, NFT, IEO, Staking, Financial Results, Marketplace, Trading Volume, Customer Assets, Nasdaq Listing, Risk Management, Regulatory Compliance, Monex Group, Bitcoin, Ethereum, XRP