SEC attack: Coinbase devalued by Moody’s

Start of the week, the SEC hit the crypto industry hard like a cyclone. His passage ended with a heavy balance sheet on Binance, Coinbase and several tokens not registered as “security”. For Coinbase, the damage seems immense: fall in its shares, fall in the price of COIN… And to drive the point home, Moody’s just announced a “negative” rating for the US crypto exchange.

Coinbase gets a “negative” rating

Prominent members of the crypto community, elected officials and barons of the American exchange have raised their voices against the SEC after its operations against Coinbase and Binance. Some even went so far as to call Gary Gensler a market manipulator. But note that the situation continues to worsen on the side of Brian Armstrong and his entire team.

According to Cointelegraph, Moody’s has just published its verdict for Coinbase. A recent article published on the website of the financial rating agency highlighted a stock tumble of the crypto exchange on its rating scale.

Thus, Moody’s noted that Coinbase, formerly “ steady “, tipped in the box” negative ».

” The change in outlook from stable to negative reflects the uncertain extent of the impact the SEC charges will have on Coinbase’s business model and cash flow. “, can we read on the press release.

What about the reasons for this downgrade by Moody’s?

On this subject, Moody’s was not stingy with explanations.

” The bills that could lead to a downgrade of Coinbase ratings are:

1. an accelerated decline in the company’s liquidity position, even if it suffers significant regulatory penalties,
2. a strategic or mandatory review of its business model, resulting in lower revenues or higher costs and an inability to return to relatively healthy free cash flow generation,
3. a further substantial and lasting reduction in trading income,
4. a reduction in interest rate levels negatively impacting the company’s free cash flow outlook. »

At the same time, Moody’s Rating Assessment Service committee also recalled that Coinbase could become stable again in case of :

• resolution of his problem with the SEC,
• increase ” substantial and lasting » of its trading income,
• and income diversification through development strong and sustainable non-transactional revenue streams. »

But for now, Moody’s doesn’t seem worried about Coinbase’s financial health. Indeed, the crypto exchange that recently decided to stay in the United States, is 5 billion dollar rich in its treasury. While its long-term debt is estimated at 3.4 billion dollars.