Here’s What You Missed in Crypto This Week

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.

FTC ENTERS SETTLEMENT WITH CELSIUS: The Federal Trade Commission announced Thursday a settlement with bankrupt cryptocurrency platform Celsius Network that will permanently ban it from handling consumers’ assets and charged three former executives with tricking consumers into transferring cryptocurrency onto the platform by falsely promising that deposits would be safe and always available. The proposed settlement with Celsius and its affiliates will permanently ban the companies from offering, marketing, or promoting any product or service that could be used to deposit, exchange, invest, or withdraw any assets. The companies also agreed to a judgment of $4.7B, which will be suspended to permit Celsius to return its remaining assets to consumers in bankruptcy proceedings, the FTC stated. The former executives — ex-CEO and co-founder Alexander Mashinsky along with Celsius’s other co-founders Shlomi Daniel Leon and Hanoch Goldstein — have not agreed to a settlement and the FTC’s case against them will proceed in federal court. (read more)

JUDGE PARTIALLY SIDES WITH RIPPLE IN SEC SUIT: A U.S. federal judge has partially sided with Ripple Labs in a Securities and Exchange Commission lawsuit alleging the blockchain developer issued an unregistered security offering with its XRP token, giving “both sides something to celebrate,” Blockworks’ Casey Wagner and Katherine Ross reported Thursday, citing the ruling. Ripple’s institutional sales of XRP were found to constitute an unregistered securities offering, but programmatic sales on the secondary market were not, according to the report. The judge concluded that “the SEC need not demonstrate that (Ripple co-founder Chris) Larsen and (CEO Brad) Garlinghouse were aware that Ripple’s transactions and schemes were illegal” so “therefore, a reasonable juror could find that Larsen and Garlinghouse did not know or recklessly disregard Ripple’s Section 5 violations,” the report noted. (read more)

Following the report, TD Cowen Washington Research Group noted that the group expects both the SEC and Ripple will appeal this decision to the U.S. Court of Appeals for the Second Circuit. While the analyst appreciates that “one could read this as positive for other crypto entities that the SEC is targeting,” the group cautions that “this case is not over,” though it does show “that at least one federal judge sees limits to how the securities laws apply to crypto,” which “helps to narrow the window for legislation.” (read more)

COINBASE DOWNGRADES: Atlantic Equities downgraded Coinbase (COIN) on Wednesday to Neutral from Overweight with a price target of $80, up from $70. The stock has rallied 60% off recent lows, and the risk/reward looks less attractive at this level given continued regulatory challenges ahead and the “surprisingly weak volume backdrop,” the analyst said. The firm raised the price target to reflect the impact of higher crypto prices, but downgraded the shares given the limited upside. (read more)

Barclays downgraded Coinbase on Thursday to Underweight from Equal Weight with a price target of $70, up from $61. The company has surprised on revenues and costs in the past few quarters, but with volumes and USD Coin market cap “depressed,” a regulatory overhang that is likely to last for some time, and the significant recent runup in shares, there are few near-term drivers for Coinbase, particularly from a fundamental perspective, the analyst said. (read more)

Meanwhile on Thursday, BofA raised the firm’s price target on Coinbase to $49 from $47 and kept an Underperform rating on the shares. While the firm reduced its FY23 net revenue estimate to $2.59B, versus the Street at $2.74B, and its adjusted EBITDA estimate to $374M, versus the Street at $540M, it slightly raised its multiple applied to 2023 net revenue given higher peer multiples, the analyst said. Despite Q2 data suggesting Coinbase will materially miss top-line estimates, shares have rallied about 60% since June 15 on the news of spot bitcoin ETF applications filed by Blackrock (BLK) and others, BofA noted. However, assuming these applications are approved, the magnitude of P&L benefit for Coinbase “may not be as significant as what shares seem to be implying,” the analyst contended. (read more)

Wedbush also raised the firm’s price target on Coinbase on Thursday to $110 from $75 and kept an Outperform rating on the shares, citing a belief that the ruling on the Ripple versus SEC case is a likely positive for Coinbase’s own case versus the SEC. (read more)

Oppenheimer reiterated a Perform rating on Coinbase on Thursday, noting “increasing optimism” that the company could prevail in the SEC lawsuit. The firm believes the judge in the case asked good questions and showed a little skepticism toward the complaint, adding that there is increasing probability that resolution of Coinbase’s case could come earlier than expected. (read more)

Additionally on Friday, Needham raised the firm’s price target on Coinbase to $120 from $70 and kept a Buy rating on the shares following the summary judgment in Ripple’s case. The courts denied the SEC’s motion that programmatic sales constitute an investment contract, which is a positive read-through to Coinbase as it sets precedent that crypto token sales through exchanges, at least in the XRP case, did not violate securities laws, the analyst said. This outcome should also moderately de-risk regulatory pressure on the Coinbase stock, Needham added. (read more)

MICROSTRATEGY ASSUMED WITH BUY: BTIG assumed coverage of MicroStrategy (MSTR) on Tuesday with a Buy rating and $490 price target. The analyst believes the company serves as the best vehicle for investors to gain exposure to bitcoin due to five key qualities: ease of access, downside protection, access to capital markets, an underlying cash flow-positive software business which generates cash to acquire more bitcoin, and the ability to actively manage bitcoin. In addition, MicroStrategy is the largest publicly traded, independent business intelligence company in the world, and its “One MicroStrategy” business plan positions it well to provide a premier BI offering, the analyst said. (read more)

B. RILEY RAISES MINER TARGETS: B. Riley raised the firm’s price target on Stronghold Digital Mining (SDIG) on Monday to $8 from $7 and kept a Neutral rating on the shares. At current bitcoin prices and network hash rates, the analyst arrives at a 2024 enterprise value to EBITDA multiple for the digital asset mining group of 21.5-times. The firm’s estimates assume the halving occurs in early Q2 of 2024. With the likes of BlackRock and Fidelity behind new exchanged traded funds products, regulatory approval and subsequent listings could drive bitcoin pricing higher, supporting profitability for miners, contended B. Riley. (read more)

The firm also raised the firm’s price target on TeraWulf (WULF) to $3 from $2 and kept a Buy rating on the shares (read more) and on Riot Platforms (RIOT) to $14 from $12 and kept a Buy rating on the shares. (read more)

Meanwhile on Tuesday, Northland initiated coverage of TeraWulf with an Outperform rating and $4.25 price target. The firm said TeraWulf’s “main differentiator” from other bitcoin miners is that greater than 91% of its energy supply is zero-carbon with the goal of achieving 100% zero-carbon energy consumption by 2028. The company also has an “industry-leading” cost of power at just $0.035/kWh across both of its sites, said Northland. (read more)

CRYPTO STOCK PLAYS: Publicly traded companies in the space include Bit Digital (BTBT), Coinbase, Core Scientific (CORZ), Greenidge Generation (GREE), Marathon Digital (MARA), MicroStrategy, Riot Platforms, Stronghold Digital Mining and TeraWulf.

PRICE ACTION: As of time of writing, bitcoin rose roughly 3% this week to $31,148 in U.S. dollars, according to CoinDesk.