{"id":19759,"date":"2023-06-08T01:10:48","date_gmt":"2023-06-08T05:10:48","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/coinbase-junk-bonds-slip-further-into-distressed-territory-after-secs-crypto-crackdown\/"},"modified":"2023-06-08T01:10:49","modified_gmt":"2023-06-08T05:10:49","slug":"coinbase-junk-bonds-slip-further-into-distressed-territory-after-secs-crypto-crackdown","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=19759","title":{"rendered":"Coinbase junk bonds slip further into distressed territory after SEC\u2019s crypto crackdown"},"content":{"rendered":"
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Coinbase Global Inc.\u2019s bonds slipped further into distressed territory Wednesday, a day after the U.S. Securities and Exchange Commission filed charges against the platform as part of its broader crackdown of the crypto industry. <\/p>\n

Prices on its most-active 3.375% bonds due in October 2028 fell to about 60.44 cents on the dollar late Wednesday, down from a high Monday of about 64.53, according to BondCliq data. Bond prices and yields move in the opposite direction.<\/p>\n

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Their Double B credit ratings put the bonds in the high-yield, or \u201cjunk-rated,\u201d category, marking them as a relatively high default risk. Bonds trading below 70 cents on the dollar are broadly considered distressed.<\/p>\n

The SEC on Tuesday charged Coinbase with \u201cunlawfully offering exchange, broker-dealer and clearinghouse functions,\u201d and offering its crypto staking service without registering it with the agency, actions that SEC Chair Gary Gensler claimed \u201cdeprive investors of critical protections.\u201d<\/p>\n

The charges were largely in line with the SEC\u2019s warning to Coinbase in March, wrote MarketWatch\u2019s Tomi Kilgore, but also came with the twist of seeking a disgorgement of any \u201cill-gotten gains\u201d from any alleged violations, with interest. <\/p>\n

Against a volatile stretch for the crypto industry, Coinbase reported a smaller net loss of $78.9 million in the first quarter than its $429.7 million loss in the same quarter last year. <\/p>\n

Coinbase
\n COIN,
\n +3.20%<\/bg-quote>
\n CEO Brian Armstrong said in a tweet<\/a> Tuesday that the SEC complaint would allow the company \u201cto finally get some clarity around crypto rules\u201d in court. Coinbase didn\u2019t immediately respond to a request for comment for this report.<\/p>\n

The chart below shows how volatile the company\u2019s stock price has been in the past two months (yellow line), even while its 3.375% bonds (blue line) largely have been stuck in a range of 65 cents to 60 cents.<\/p>\n

<\/p>\n
<\/p>\n<\/figure><\/div>\n

Coinbase shares were down 50.5% on the year through Wednesday, according to FactSet. The repricing of its most liquid bonds pushed up their yield to 14.2% on Wednesday, about double the 6.9% yield for the broader BB-rated segment of the $1.5 trillion U.S. junk-bond market.<\/p>\n

The SEC on Monday charged Binance and its founder Changpeng Zhao \u201cCZ\u201d with 13 securities violation, claiming the world\u2019s largest crypto exchange \u201csecretly\u201d allows high-value U.S. customers to trade on the platform. It also claimed billions in customer funds were commingled with those of Merit Peak Limit, a company CZ used to trade directly with customers.<\/p>\n

Bitcoin
\n BTCUSD,
\n +0.14%<\/bg-quote>
\n fell 3.2% in the past 24 hours, according to CoinDesk, to around $26,280. It touched a peak above $67,500 in November 2021.<\/p>\n<\/p><\/div>\n<\/div>\n