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.

COINBASE MOTIONS TO DISMISS SEC SUIT: Coinbase (COIN) is motioning to dismiss an SEC lawsuit claiming the company committed securities violations, TechCrunch’s Jacquelyn Melinek reported Wednesday. The SEC alleged that 13 cryptocurrencies available for trading on the exchange were securities, but Coinbase is requesting that New York District Judge Katherine Polk Failla dismiss the suit because it alleges that cryptocurrencies aren’t under the jurisdiction of the SEC as shares in stocks are. (read more)

Additionally in the court hearing, Coinbase said that buying crypto on an exchange is more like collecting Beanie Babies than investing in a stock or bond, Bloomberg’s Chris Dolmetsch reported Wednesday. William Savitt, a lawyer for Coinbase, told Judge Failla that tokens trading on the exchange aren’t securities subject to SEC jurisdiction because buyers don’t gain any rights as a part of their purchases. (read more)

On Thursday, Mizuho raised the firm’s price target on Coinbase to $60 from $54 and kept an Underperform rating on the shares when providing the firm’s 2024 FinTech and payments outlook. Mizuho is most cautious on the near-term earnings outlook for Coinbase Global and Toast (TOST). (read more)

Meanwhile on Friday, Citi raised the firm’s price target on Coinbase to $151 from $90 and kept a Neutral rating on the shares. Coinbase’s defense versus the SEC’s lawsuit has begun with oral arguments to dismiss the case, the analyst said. Given the stature of the case, Citi agrees with the notion that this dispute is unlikely to be solved on motions alone – likely pushing the summary judgment phase out over a year. The firm remains Neutral on the stock purely on regulatory risk, saying any potential ruling can have significant impact on the company’s future business model. However, the firm reset estimates and target price sharply following a 53% quarter-to-date increase in crypto prices and a 105% increase in crypto volumes. (read more)

MARATHON CLOSES ACQUISITION OF BITCOIN MINING SITES: Marathon Digital Holdings (MARA) announced Tuesday it has closed its previously announced acquisition of two operational bitcoin mining sites, totaling 390 megawatts of operational capacity, from Generate Capital. “With the closing of this acquisition, we have officially made the transition to a more sophisticated organization with a diversified portfolio of bitcoin mining assets,” said Fred Thiel, CEO. “Our mining portfolio now consists of approximately 910 megawatts of capacity, 45% of which resides on sites we directly own, and 55% of which is hosted by third parties. We look forward to integrating these assets into our portfolio, where we can leverage our cutting-edge technologies to improve efficiencies, and, over the next 18-24 months, scaling our operations to 50 exahashes of capacity.” (read more)

On Wednesday, BTIG upgraded Marathon Digital to Buy from Neutral with a $27 price target. The SEC last week approved 11 Spot ETFs, another step in bitcoin’s maturation that should pave the way for more institutional capital into the ecosystem, the analyst said. The firm cites weakness in the miners and Marathon’s decision to pivot into infrastructure late last year for the upgrade. (read more)

IRIS SECURES PATHWAY TO 20 EH/S: Iris Energy (IREN) announced Tuesday it has entered into an agreement with Bitmain Technologies, which provides a pathway to increase its self-mining capacity up to 20 EH/s in 2024. Key highlights of the deal include an immediate focus on completing current expansion to 10 EH/s; 10 EH/s of new Bitmain T21 miners secured for 2024 at a fixed price of $14/TH; Childress project can support expansion to 20 EH/s by end of the year. With current operating capacity of 5.6 EH/s, the company is now purchasing a total of 5.3 EH/s from Bitmain, with options to purchase up to an additional 9.1 EH/s at a price of $14/TH in 2H24. If the miner purchase options are exercised in full, overall fleet efficiency for 20 EH/s would improve to 21.9 J/TH. Decisions with respect to exercising all, some or none of the miner purchase options will be made during 2024, taking into consideration market conditions, shareholder value and funding availability. In addition, the company retains flexibility to utilize miner purchase options for purposes of upgrading some or all of its existing fleet. (read more)

MICROSTRATEGY PRICE TARGET LOWERED: On Tuesday, TD Cowen lowered the firm’s price target on MicroStrategy (MSTR) to $580 from $660 and kept an Outperform rating on the shares. The firm said they are keeping with their investment thesis that the launch of several SEC-approved spot Bitcoin ETFs has driven a substantial reduction in MicroStrategy’s bitcoin premium. (read more)

J CAPITAL SHORT HUT 8: In a Thursday published report, J Capital Research said it is short Hut 8 Corp. (HUT) and that management is “hiding stock ownership through an undisclosed related party, a stock-promoter cabal, and a host of left-for-dead assets.” Hut 8 recently merged with U.S. Bitcoin Corp. J Capital said it has uncovered that “USBTC is backed by promoters with a history of legal trouble,” and that one of USBTC’s largest shareholders is an undisclosed related party. One person highly familiar with USBTC told J Capital that without the merger, USBTC would have done a structured bankruptcy. “Why then did HUT pay $745M to acquire this company and its planned payments? Even worse, we estimate a value for USBTC that’s as much as 70% less. Typically, such egregious over-payments occur only when management is being enriched,” the report read. Further, J Capital says, “We reveal a relationship between USBTC and the SEC-charged Honig group stock promoters. The SEC accused the Honig group of engaging in ‘classic pump and dump’ and ‘fraudulent schemes’… We have linked another group of likely stock promoters, the DesLauriers twins, to both of HUT and USBTC’s CEOs. We believe that the DesLauriers may also be behind the promotion scheme. Limited lock-ups and undisclosed related-party shell corps lead us to believe insiders may soon sell shares.” (read more)

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

PRICE ACTION: As of time of writing, bitcoin dropped roughly 4% this week to $40,994 in U.S. dollars, according to CoinDesk.