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Moody&#8217;s, the international credit ratings agency, has revised its outlook on Coinbase, the cryptocurrency exchange, from &#8220;stable&#8221; to &#8220;negative.&#8221;



This decision comes after the U.S. Securities and Exchange Commission&#8217;s (SEC) lawsuit against Coinbase for allegedly functioning as an unregistered securities broker.



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Moody&#8217;s <a href="https://ratings.moodys.com/ratings-news/403841?mod=article_inline" target="_blank" rel="noreferrer noopener">expressed</a> concerns about the potential impact of the SEC&#8217;s charges on Coinbase&#8217;s daily operations. The agency highlighted that the shift in outlook to negative from stable mirrors the uncertain extent of the SEC&#8217;s charges&#8217; effect on Coinbase&#8217;s business model and cash flows.



Despite the downgrade, Moody&#8217;s acknowledged that Coinbase still holds a &#8220;strong&#8221; liquidity position. 



The rating agency commended the company&#8217;s $5 billion in cash and equivalents, which stands against its $3.4 billion in long-term debt. Moody&#8217;s anticipates that Coinbase will continue its &#8220;focus on expense management,&#8221; a strategy that has previously helped offset decreases in transaction revenue.



In addition to Moody&#8217;s, Berenberg Capital, a financial services firm, also adjusted its perspective on Coinbase. 



While maintaining its &#8220;hold&#8221; rating for its clients, Berenberg Capital reduced its price target for Coinbase shares from $55 to $39. Berenberg&#8217;s research analyst, Mark Palmer, explained that this reduction reflects their belief that Coinbase&#8217;s already weak Q2 trading volumes could &#8220;persist and intensify&#8221; due to the SEC&#8217;s charges.




 
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Palmer further noted that the SEC&#8217;s &#8220;desired remedy&#8221; would necessitate completely ceasing Coinbase&#8217;s core business practices, mainly its staking services. Consequently, Palmer advised investors to refrain from investing in Coinbase shares in the short term, describing them as &#8220;uninvestable.&#8221;



Despite these concerns, ARK Invest CEO Cathie Wood remains optimistic. In a recent interview, Wood suggested that the increasing regulatory scrutiny of leading competitor crypto exchange Binance could ultimately benefit Coinbase in the long run. 



As of now, Wood&#8217;s ARK Invest is the world&#8217;s fourth-largest holder of Coinbase shares and shows no intention of relinquishing that position. On June 7, the investment firm purchased an additional $21.6 million worth of Coinbase shares.



Coinbase shares have dropped 15.7% since the start of the week and are currently trading at $54.90 per share, according to data from Google Finance.




 
 Read more:

 <a href="https://crypto.news/coinbase-affirms-support-for-tokens-amid-sec-lawsuit-no-delistings-planned/">
 Coinbase affirms support for tokens amid SEC lawsuit, no delistings planned </a>

Moody’s downgrades Coinbase amid SEC lawsuit

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