Coinbase Shares Plummet 28.6% as Investors Flee Amidst Regulatory Action
Coinbase is currently facing massive setbacks in the stock market as investors flee from its shares. The company stock has slumped 28.6% over the past three weeks due to recent regulatory actions taken against it.
As of April 11, 2023, COIN was trading at slightly over $70. However, the shares had slid to $51 in after-hours trading on May 2, following a 3% fall. The stock is now down almost 40% from its 2023 high of $84 on March 21. In comparison, crypto markets have only retreated 8.5% from their 2023 high.
Downgraded by Citi Group
Earlier this week, Citi Group downgraded shares of the crypto exchange from Buy to Neutral. Analyst Peter Christiansen cited an uncertain regulatory backdrop as the reason for the downgrade. Christiansen stated that until regulatory rules of the road are better established in the U.S., the stock will remain weighed down by this high level of uncertainty.
The Securities and Exchange Commission (SEC) issued a Wells notice to Coinbase in late March. Since then, the company’s stock has suffered severely. Company executives hit back at the securities regulator last week, stating that the threat of legal action when there is no clear rule book is not constructive.
Coinbase has also filed an action in federal court, seeking to compel the SEC to respond to its July 2022 petition asking for regulatory clarity on crypto. Though the federal regulator has ignored the petition and the request, it has continued with its crypto enforcement crackdown.
Insider Trading Allegations
Coinbase found itself in hot water again when executives were accused of insider trading. The latest crypto lawsuit in the land of litigation alleged that Coinbase’s management offloaded their stock before an earnings report prompted the decline in share prices.
Other U.S. banks such as PacWest, Western Alliance, and several other financial institutions faced massive losses in stock values following the seizure of First Republic Bank by U.S. financial regulators.