Moody’s explained the cut on June 8 by saying it was worried about the SEC action.

Some investors may choose to minimize their exposure to COIN’s platform amid litigation.

Coinbase’s credit rating has been lowered by Moody’s from “stable” to “negative.” As a result of the SEC’s legal action against the cryptocurrency exchange for allegedly acting as an unregistered securities broker. Moody’s explained the cut on June 8 by saying it was worried about how the SEC action would affect Coinbase’s day-to-day business.

Although Moody’s downgraded Coinbase, the exchange was still seen to have a “strong” liquidity position. The credit rating agency was impressed with the company’s $3.4 billion in long-term debt. And $5 billion in cash and equivalents.

Investors May Minimize Exposure

According to the company, Coinbase will continue to “focus on expense management” to offset any future losses in transaction revenue. Not just Moody’s changed its mind on Coinbase. Berenberg Capital reaffirmed to its clients its “hold” recommendation. But lowered its price objective for COIN shares from $55 to $39.

As per a research analyst, the firm’s decision to lower its price target for Coinbase reflects its belief that the company’s already dismal Q2 trading volumes might “persist and intensify” as a consequence of the SEC’s accusations.

Due to the uncertainty surrounding the result of the litigation. Some investors may choose to minimize their exposure to COIN’s platform.

Palmer also brought up the fact that the “desired remedy” proposed by the SEC would include shutting down the principal commercial activities of COIN, which are the company’s staking services. Therefore, Palmer recommended that anyone who was thinking about purchasing Coinbase shares put such ideas on hold for the time being.

Despite Palmer’s predictions about Coinbase and its potential in the near future. The CEO of ARK Invest, Cathie Wood, did not seem too worried. During an interview with Bloomberg, Wood said that more regulatory oversight of Binance, one of Coinbase’s competitors in the cryptocurrency exchange industry, would be beneficial to the company in the long run.  

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Filed under: Bitcoin - @ June 9, 2023 8:25 am