Credit rating agency Moody’s downgraded the stock market to negative after the SEC sued Coinbase for allegedly operating as an unregistered security.
In a statement on June 8, Moody’s said the downgrade was driven by concerns over the impact of SEC action on Coinbase’s day-to-day operations. Moody’s stated that despite the downgrade, Coinbase maintains a strong liquidity pool. The rating agency welcomed Coinbase’s $5 billion in cash reserves compared to $3.4 billion in long-term debt. In addition, Moody’s stated that Coinbase should work on expense management aimed at reducing the declines in past transaction revenues.
Moody’s Addresses SEC Note Issue
Making a statement as of yesterday, Moody’s stated that it is worried that the downgrade may have an impact on the daily operations of the SEC’s lawsuit against Coinbase, saying;
“The change in outlook from stable to negative reflects the uncertain magnitude of the impact of the SEC’s fees on Coinbase’s business model and cash flows.”
Giving the red light to Coinbase, the SEC changed the way various companies view the stock market. The biggest example of this situation was Coinbase’s stock lost more than 20 percent in one day.
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