- Foresight changed from stable to negative
- Experts cannot yet assess the impact of the courts
- But noted the company’s strong liquidity position
Moody’s Ratings downgraded Coinbase from “stable” to “negative.”
“The change in outlook from stable to negative reflects the uncertain magnitude of the impact of the SEC lawsuit on Coinbase’s business model and cash flow.”
We note that the correction only addresses the outlook. The firm’s corporate rating (B2) and guaranteed unsecured bond rating (B1) remained unchanged.
Moody’s explained that they are not yet clear about the timing of the conflict resolution with the SEC, as well as their financial implications. The assessment may change in the future.
With that, experts noted that Coinbase maintains a strong liquidity position.. The company has benefited from rising interest rates, and has accumulated $5 billion in cash and cash equivalents.
“Moody’s expects Coinbase to continue its focus on cost management, which helps them mitigate declining transaction revenue.”
Reminder that the SEC filed suit against Coinbase on June 6. They accused the cryptocurrency exchange of being an unregistered broker. Some cryptocurrencies according to the regulator are securities. That means they had to register as a broker, a national stock exchange, or a clearing agency.