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.
COINBASE UPGRADED TO OVERWEIGHT: Atlantic Equities upgraded Coinbase (COIN) on Tuesday to Overweight from Neutral with an unchanged price target of $70. The company’s Q1 results confirmed management’s focus on returning the business to sustainable profitability, the analyst said. The firm added Coinbase is regaining custody asset share and is also leveraging its trust credentials to exercise pricing power. These are both important steps "towards building resilience in the model," writes Atlantic. It believes Coinbase’s recent actions allow investors to look through near-term risks towards the longer-term opportunity.
Additionally on Tuesday, the Securities and Exchange Commission announced that former Coinbase product manager Ishan Wahi and his brother, Nikhil Wahi, agreed to settle charges that they engaged in insider trading through a scheme to trade ahead of multiple announcements regarding at least nine crypto asset securities that would be made available for trading on the Coinbase platform. Ishan and Nikhil Wahi each agreed to be permanently enjoined from violating Section 10(b) of the Securities Exchange Act and Rule 10b-5 and to pay disgorgement of ill-gotten gains, plus prejudgment interest. As is often the case when a criminal court has already ordered defendants to forfeit their ill-gotten gains, the disgorgement and prejudgment interest in the SEC’s case would be deemed satisfied by the orders of forfeiture of the Wahi brothers’ assets in the criminal action, if approved by the court, and the SEC determined not to seek civil penalties in light of the Wahi brothers’ prison sentences.
“While the technologies at issue in this case may be new, the conduct is not. We allege that Ishan and Nikhil Wahi, respectively, tipped and traded securities based on material nonpublic information, and that’s insider trading, pure and simple," said Gurbir Grewal, Director of the SEC’s Division of Enforcement. "The federal securities laws do not exempt crypto asset securities from the prohibition against insider trading, nor does the SEC.”
INVESTORS ACCUSE MUSK OF DOGECOIN MANIPULATION: Tesla (TSLA) CEO Elon Musk is being accused of insider trading in a proposed class action, which claims Musk manipulated the cryptocurrency Dogecoin, Reuters’ Jonathan Stempel reported Thursday. Investors, in a Wednesday night filing in Manhattan federal court, said Musk used Twitter posts, paid online influencers, his 2021 appearance on NBC’s "Saturday Night Live" and other "publicity stunts" to trade profitably at their expense through several Dogecoin wallets that he or Tesla controls. A "deliberate course of carnival barking, market manipulation and insider trading" enabled Musk to defraud investors, promote himself and his companies, the filing said.
STRONGHOLD ACHIEVES 3.0 EH/S HASH RATE: Stronghold Digital Mining (SDIG) announced Tuesday that its bitcoin mining operations achieved a hash rate of 3.0 EH/s, approximately one month earlier than expected. Of the 3.0 EH/s, approximately 80% is wholly owned by the company and not subject to a profit share. During the second half of May, the company received 5,000 MicroBT Whatsminer M50 bitcoin mining rigs related to its previously announced miner purchase. This was in addition to the initial 2,000 Avalon 1246 bitcoin mining rigs associated with the company’s Canaan Bitcoin Mining Agreement that were delivered in early May. Stronghold expects to receive the remaining 2,000 Avalon 1346 bitcoin mining rigs pursuant to the Canaan Bitcoin Mining Agreement in June. During May, Stronghold expects to earn over 220 bitcoin through its mining operations, a sequential increase of approximately 23% from its 179 bitcoin mined during April. The company continues to believe that it will be able to fill its existing 4 EH/s of data center capacity by the end of the third quarter of 2023.
CLEANSPARK BUYS ADDITIONAL BITCOIN MINERS: CleanSpark (CLSK) announced Thursday a purchase of 12,500 brand-new units of the Antminer S19 XP bitcoin mining machine for a total price of $40.5M, or $23 per terahash, which is lower than the current average market price. The Antminer S19 XP units have a power-efficiency rating of 21.5 joules per terahash and a bitcoin mining compute power of 141 terahash per second each, for a combined total hashrate of 1.76 exahashes per second. According to the purchase agreement, 6,000 of the 12,500 machines are scheduled to be shipped by the manufacturer in June, while the remaining 6,500 machines are set for shipping in August. The units are expected to be deployed across the company’s mining facilities.
“This purchase ensures that we are prepared to meet and potentially exceed our year-end target of 16 EH/s and also positions us to be one of the most power-efficient miners on an energy-per-hashrate basis,” said CEO Zach Bradford.
GEMINI PLANS FOR UAE CRYPTO LICENSE: In a Wednesday blog post, cryptocurrency exchange Gemini announced it will begin the process of acquiring a crypto license to serve customers based in the United Arab Emirates.
The firm said, “As a forward-thinking, global financial hub, the UAE is continuing its tradition of leadership by establishing itself as a fast-emerging hub for crypto. By applying for a license, we will be taking another step towards making Gemini a truly global company and advancing our mission to unlock the next era of financial, personal, and creative freedom for all. This week, as the second leg of Gemini’s global odyssey tour, we have met with stakeholders throughout the region to learn more about local regulatory requirements and the needs of UAE crypto investors so that we can better serve this rapidly growing and vibrant crypto community.”
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 1% this week to $26,970 in U.S. dollars, according to CoinDesk.
Published first on TheFly
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