Cypherpunk posts $39.4M Q2 profit after Zcash gain

Cypherpunk Technologies reported $39.4 million in net income for the second quarter after recording a $46 million unrealized gain on its Zcash (ZEC) holdings that offset a $4.7 million operating loss. The result reversed a $16.6 million loss posted in the same quarter a year earlier.

The $46 million gain was recorded as a period-end revaluation of Cypherpunk’s ZEC treasury. The company marks the treasury to market at each reporting date and used a ZEC price of $400.09 at June 30 to value the holdings at $129.4 million on its balance sheet. That accounting treatment records price changes without requiring token sales.

Before the revaluation, Cypherpunk reported an operating loss of $4.7 million. Research and development expense for the quarter was $0.2 million and general and administrative expense was $4.5 million.

As of Aug. 11, Cypherpunk reported holding 323,394.38 ZEC at an average purchase price of $341.83, implying an aggregate acquisition cost of about $110.5 million. The company said that stake represents roughly 1.92% of Zcash’s circulating supply. Using a ZEC price of $489.34 on Aug. 12, the holdings would be worth about $158.2 million. Cypherpunk also reported $7.6 million in cash and cash equivalents at June 30, separate from its digital asset receivable.

Cypherpunk’s wholly owned biotechnology subsidiary, Leap Therapeutics, began a process to secure resources to advance its cancer drug candidate sirexatamab into Phase 3 development. The company said options include financing the program as an independent entity or pursuing a transaction with a pharmaceutical or biotechnology company, including partnership, licensing, collaboration, sale or another business combination. Cypherpunk provided no timetable and cautioned that financing or a transaction is not guaranteed, and it did not link Leap’s resource search to its Zcash strategy.

Because the company recognizes unrealized gains and losses at reporting dates, changes in the market price of ZEC can alter reported earnings without any token disposals. The quarter’s net income therefore reflects an accounting revaluation of digital assets while operating activities remained loss-making before that revaluation.