Coinbase Shares Price Target Cut By Berenberg Against The SEC Challenge

Key Points:

• Berenberg maintained Coinbase’s hold rating on the company while lowering its price objective from $55 to $39.
• According to Berenberg, the stock is “uninvestable” in the near future.

Berenberg Capital Markets reduced its price objective on Coinbase shares to $39 from $55 after the Securities and Exchange Commission’s lawsuit against the crypto exchange earlier this week.

Berenberg Capital Markets analyst Mark Palmer stated:

“The reduction in our price target reflects our view that COIN, which we had expected to report weak second quarter trading volumes before the SEC filed a lawsuit against it on Tuesday, could see that weakness persist and intensify due to the overhang that the lawsuit has created.”

Before the Securities and Exchange Commission (SEC) launched a complaint against the crypto exchange on Tuesday, the business was already projected to announce dismal second-quarter 2023 trade volumes, according to the article.

“Given the potentially significant impact of the lawsuit’s outcome on COIN’s U.S. operations, we would expect some investors to reduce their exposure to its platform,” Palmer said.

Berenberg claims that a task group of ten U.S. states has added to the uncertainty by alleging that the exchange’s staking incentives scheme breaches state securities laws. According to the bank, this merely adds to the negative overhang on the company’s share price.

Palmer added:

“The upshot is that we view COIN shares as uninvestable in the near term.”

The US Securities and Exchange Commission filed a lawsuit against Coinbase, America’s biggest cryptocurrency exchange, on Tuesday for allegedly functioning as an unregistered broker. The lawsuit came barely 24 hours after a similar action was filed against international competitor Binance.

The SEC accuses the crypto exchange of acting as an unregistered exchange, broker, and clearing agency, as well as offering tokens that it says are securities.

“Since at least 2019, Coinbase has made billions of dollars unlawfully facilitating the buying and selling of crypto asset securities. Coinbase intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the Commission as required by law,” the SEC said in a press release.

Coinbase has refused to list securities. In a statement issued on Tuesday, Chief Legal Officer Paul Grewal said that the company had demonstrated commitment to compliance.

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Harold

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