Coinbase, the world’s largest publicly traded crypto company, has seen a significant decline since its IPO in April 2021. When it floated on the Nasdaq, it was valued at nearly $100 billion, or $381 per share. However, after the SEC came knocking and the company was sued this week for allegedly violating US securities law, its stock has now fallen to a market cap of $12.5 billion, an 86% decline.
This week’s SEC lawsuit is intriguing as Coinbase went public under the SEC’s watch and has repeatedly called for regulatory clarity. In March 2021, the SEC issued a Wells notice to Coinbase, after which the stock fell 25%. The following month, Coinbase went on the counter-offensive, suing the regulator and requesting they be forced to answer a petition from July 2022.
The decline of Coinbase reflects the wider industry, which has seen prices collapse and enthusiasm turn into a trickle since the top in November 2021. Bitcoin and every other cryptocurrency trade like a high risk assets, highly correlated and on the long end of the risk spectrum. This is despite allures of grandeur from certain investors during the pandemic.
Coinbase has responded to the industry downfall with layoffs, chopping 18% of its workforce in June 2022, and another 20% of the company in December of the same year. The SEC suit is an existential threat to Coinbase, and may have wider implications for the entire crypto industry in the US if Coinbase is found guilty.
This is an industry that has seen its reputation dragged through the mud, and it has never needed a win so bad. Those holding onto Coinbase shares are betting that win will come, but the challenges are multiple and the road ahead is steep.
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Categories: Cryptocurrency, Coinbase, Financial Regulation, SEC
Tags: Coinbase, SEC, Cryptocurrency, Market Cap, Stock Price, Regulatory Clarity, U.S. Securities Law, Layoffs, Bitcoin, Ethereum, Nasdaq, MicroStrategy, Regulatory Hostility, Robinhood
