As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week’s top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
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REGULATORS OPPOSE BINANCE US TAKEOVER OF VOYAGER ASSETS: The Securities and Exchange Commission and the New York Department of Financial Services have both filed objections to Binance US’ potential $1B takeover of assets from bankrupt Voyager Digital (VYGVQ), the Financial Times’ Scott Chipolina and Philip Stafford reported Thursday, citing the filings. The SEC said it is formally probing whether Voyager breached anti-fraud, registration and other federal securities laws and cautions that part of Binance’s rescue plan, which includes disseminating Voyager’s own token to creditors, may constitute the sale of an unregistered security. In a separate filing, the NYDFS claimed Voyager onboarded users in New York and "thus illegally operated a virtual currency business in the state without a license".
COINBASE Q4 EARNINGS: On Tuesday, Coinbase (COIN) reported fourth quarter loss per share of $2.46 on a revenue of $629.1M, which compared to earnings per share of $3.32 and revenue of $2.5B last year.
The company stated, "We are operating toward a goal of improving full-year 2023 Adjusted EBITDA in absolute dollar terms versus full-year 2022 and believe our recent cost reduction efforts help position us to do so. When Coinbase went public, our goal was to operate at roughly break even across each crypto cycle. We have evolved our approach and are now setting our sights on positioning the company to generate Adjusted EBITDA in all market conditions…We have shared in previous quarters that crypto policy is at an important period of transition. That is more true now than it has ever been, and we expect 2023 to be a significant year for crypto policy in the United States and abroad. This could pave the way for crypto to realize its full innovative potential, but could also result in further actions by policymakers and regulators that would have a negative impact on the industry. We are preparing for both eventualities.”
Following the report, Canaccord analyst Joseph Vafi lowered the firm’s price target on Coinbase to $100 from $120 and kept a Buy rating on the shares. The analyst said the firm recognizes that Coinbase is still unprofitable, but the company is hard on the rudder to transform itself into one that makes money in all parts of the crypto cycle. The firm said Coinbase has an opportunity to be a trailblazer along many fronts, including being an exemplary corporate citizen, and it believes management is taking that path.
Additionally, Oppenheimer analyst Owen Lau raised the firm’s price target on Coinbase to $84 from $72 and kept an Outperform rating on the shares. Based on the trading volume trend year-to-date, interest income projection and sentiment of digital assets, Oppenheimer believes Coinbase continues to show the path of diversification and be adjusted EBITDA profitable. The firm further believes there’s an increasing number of new institutional investors getting into this space potentially buying the dip, which could eventually drive more retail engagement. Together with catalysts such as Shanghai upgrade and Bitcoin Halving, they could support the outlook of the industry and Coinbase, Oppenheimer said.
Meanwhile, BofA analyst Jason Kupferberg maintained an Underperform rating and $35 price target on Coinbase shares. While results were ahead of expectations, the 2023 guidance was "very limited, and we think the Street was likely hoping for more," the analyst said. The firm, which said there was "nothing thesis-changing in the print," remains cautious as it contends that Coinbase continues to face "meaningful" headwinds that include regulatory concerns, competition and a lack of revenue diversity.
Additionally in a Thursday blog post, Coinbase’s Will Robinson wrote, “Today, we’re excited to announce the testnet launch of Base, an Ethereum Layer 2 network offering a secure, low-cost, developer-friendly way for anyone, anywhere, to build decentralized apps or ‘dapps’ onchain. Our goal with Base is to make onchain the next online and onboard 1B+ users into the cryptoeconomy. In pursuit of this goal, Base will serve as both a home for Coinbase’s onchain products and an open ecosystem where anyone can build.”
RIOT BLOCKCHAIN INITIATED WITH BUY: Needham analyst John Todaro initiated coverage of Riot Blockchain (RIOT) on Tuesday with a Buy rating and $9 price target. Riot is one of the largest vertically integrated miners in terms of capacity, hash rate, and bitcoin production, the analyst said. The firm views Riot as a "tier-1 miner" with an estimated all-in breakeven cost of $13,400 per bitcoin, "which places it at the lower end of the spectrum." Riot has more cash and equivalents than any other miner, it holds $125M in bitcoin, and is debt free, Needham said.
NY AG SUES COINEX OVER FAILURE TO REGISTER: New York Attorney General Letitia James announced Wednesday that she has sued a cryptocurrency platform, CoinEx, for failing to register as a securities and commodities broker-dealer and for falsely representing itself as a crypto exchange. The Office of the Attorney General was able to buy and sell cryptocurrencies on CoinEx in New York, although the company is unregistered in the state, which is a violation of New York’s Martin Act. Through this enforcement action, Attorney General James seeks to permanently stop CoinEx from operating in New York through its website and mobile apps.
“Our laws are designed to protect New Yorkers, and when companies ignore them, they put residents, investors, and businesses at risk,” said Attorney General James. “The days of crypto companies like CoinEx acting like the rules do not apply to them are over. My office will continue to protect New York investors and ensure our state’s laws are followed.”
FTX CO-FOUNDER HIT WITH MORE CRIMINAL CHARGES: FTX co-founder Sam Bankman-Fried was hit with four additional criminal charges on Thursday, accusing him of conspiring to make illegal political donations and to commit fraud. Fried, who has already pleaded not guilty to defrauding customers and investors, now faces a total of 12 criminal charges.
“Contrary to Bankman-Fried’s promises to FTX customers that the exchange would protect their interests and segregate their assets, Bankman-Fried routinely tapped FTX customer assets to provide interest-free capital for his and Alameda’s private expenditures, and in the process exposed FTX customers to massive, undisclosed risk,” the indictment said.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Ideanomics (IDEX), Riot Blockchain, Overstock (OSTK), and SRAX (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin dropped roughly 3% this week to $23,446 in U.S. dollars, according to TradeBlock.
Published first on TheFly
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