• Moody’s has downgraded its rating of Coinbase from “stable” to “negative” following the SEC’s legal action against the crypto exchange.
• Financial services firm Berenberg Capital told Cointelegraph that it viewed Coinbase shares as “uninvestable” in the near term.
• The SEC’s desired remedy would require the complete wind-down of COIN’s core business practices, namely its staking services.

Moody’s Downgrades Coinbase

Credit ratings agency Moody’s has downgraded its rating of Coinbase from “stable” to “negative” following the SEC’s legal action against the crypto exchange for allegedly operating as an unregistered securities broker. In a June 8 statement, Moody’s said the downgrade was due to concerns about the impact of the Securities and Exchange Commission action on Coinbase’s day-to-day operations.

Berenberg Capital Views Shares as Uninvestable

Financial services firm Berenberg Capital told Cointelegraph that it viewed Coinbase shares as “uninvestable” in the near term. Additionally, Palmer noted the SEC’s “desired remedy” would require the complete wind-down of COIN’s core business practices, namely its staking services. As such, Palmer advised that investors should hold off on pursuing any investment in Coinbase shares in the short term.

Coinbase Maintains Strong Liquidity

Despite the downgrade, Moody’s noted that Coinbase maintains a “strong” liquidity position with $5 billion in cash and equivalents compared to its $3.4 billion in long-term debt. The firm added that it expects Coinbase to maintain its “focus on expense management” which has successfully mitigated declines in transaction revenue in past years.

Investment Suggested

Mark Palmer suggested investors reduce their exposure to Coinbase platform due to uncertain magnitude of impact resulting from SEC charges and recommended holding off investment until further clarity is obtained regarding potential negative outcome for U.S operations of COIN — such as possibility of complete wind downs or other changes to core business practices like staking services .

Conclusion

Coinbase is currently facing uncertainty due to recent SEC charges which have resulted in downgrade by Moody’s and recommendation from Berenberg Capital not to invest near term until more clarity emerges regarding potential outcomes resulting from charge brought forth by SCE against crypto exchange for being unregistered securities broker