Here’s What You Missed in Crypto This Week

Signature Bank reportedly probed by prosecutors prior to seizure as analyst lowers Coinbase price target

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.

SIGNATURE BANK PROBED BY PROSECUTORS PRIOR TO SEIZURE: U.S. prosecutors were probing Signature Bank’s (SBNY) work with crypto clients before the bank was seized by regulators, including over detecting money laundering, Bloomberg’s Tom Schoenberg, Ava Benny-Morrison and Austin Weinstein reported Tuesday. According to people familiar with the matter, Justice Department investigators in Manhattan and Washington were probing whether Signature took sufficient steps to detect potential money laundering by clients, and two people say the SEC was also "taking a look."

Additionally on Tuesday, a spokesperson from the New York State Department of Financial Services told Reuters that, “The decisions made over the weekend had nothing to do with crypto. Signature was a traditional commercial bank with a wide range of activities and customers,” adding the closure “was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”

COINBASE PRICE TARGET LOWERED: Oppenheimer analyst Owen Lau lowered the firm’s price target on Coinbase (COIN) to $70 from $84 Additionally on Monday, blog The Bear Cave noted that it had previously published on "the crypto banking collapse and warned that a collection of U.S. banks had significant exposure to the crypto industry" ahead of one of those banks, Signature Bank, having failed. It also said it previously published on problems at Silvergate Bank ahead of the shares falling over 90% before the bank announced it is entering liquidation and announced it is publishing additional concerns about Coinbase.

"The Bear Cave believes Coinbase currently faces a perfect storm of problems including ballooning losses and legal liabilities, the collapse of bank partners, and a volatile stablecoin that all add pressure to its deteriorating core business," said the blog, which added: "The Bear Cave does not bet against the companies we write about and only makes money from reader subscriptions.”

MARATHON REPORTS Q4 EARNINGS: On Thursday, Marathon Digital (MARA) reported fourth quarter loss per share of $3.14 on revenue of $28.42M, which compared to analyst estimates of a loss per share of 16c on revenue of $34.95M.

“2022 was a difficult year to be a Bitcoin miner, but our team met each challenge head on, and we emerged smarter and more resilient,” said CEO Fred Thiel. “We achieved several operational milestones during the year, including becoming significantly more sustainably powered as we shifted away from fossil-fuel generation and broke the mold on deploying behind the meter at a large wind farm in Texas. While navigating the macro environment, pivoting our energy strategy, and negotiating new hosting contracts, we doubled our hash rate to 7.0 exahashes of capacity year-over-year, and we finished the year with one of our most productive quarters to date. We produced a record 1,562 bitcoin in Q4, and we increased our bitcoin production 30% year-over-year from 3,197 BTC in 2021 to 4,144 BTC in 2022…We have two primary goals for 2023: the first is to energize our previously purchased mining rigs to reach our target of 23 exahashes by the middle of this year, and the second is to optimize our performance – to become more effective and more efficient.”

BAKKT DOWNGRADE: Citi downgraded Bakkt (BKKT) to Sell from Neutral on Tuesday with a price target of 50c, down from $3.25. While the firm continues to view the platform as a concept with a formidable "network building" mountain to climb, the company’s prospects appear to be deteriorating. Citi finds it too challenging to justify investment merits for the stock currently, until evidence of improving market conditions, ample liquidity, and scaling milestones become tangible.

CHIPMIXER SHUTTERED OVER ALLEGED MONEY LAUNDERING: The Justice Department announced Wednesday a coordinated international takedown of ChipMixer, a darknet cryptocurrency “mixing” service responsible for laundering more than $3B worth of cryptocurrency, between 2017 and the present. The operation involved U.S. federal law enforcement’s court-authorized seizure of two domains that directed users to the ChipMixer service and one Github account, as well as the German Federal Criminal Police’s seizure of the ChipMixer back-end servers and more than $46M in cryptocurrency. Coinciding with the ChipMixer takedown efforts, Minh Quốc Nguyễn, 49, of Hanoi, Vietnam, was charged today in Philadelphia with money laundering, operating an unlicensed money transmitting business and identity theft, connected to the operation of ChipMixer.

“This morning, working with partners at home and abroad, the Department of Justice disabled a prolific cryptocurrency mixer, which has fueled ransomware attacks, state-sponsored crypto-heists and darknet purchases across the globe,” said Deputy Attorney General Lisa Monaco. “Today’s coordinated operation reinforces our consistent message: we will use all of our authorities to protect victims and take the fight to our adversaries. Cybercrime seeks to exploit boundaries, but the Department of Justice’s network of alliances transcends borders and enables disruption of the criminal activity that jeopardizes our global cybersecurity.”

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 Platforms (RIOT), 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 rose roughly 33% this week to $26,543 in U.S. dollars, according to TradeBlock.

Keywords: bitcoin, ethereum, dogecoin, litecoin, crypto, cryptocurrency, cryptocurrencies, token, stocks, blockchain, stablecoin, regulation