Moody’s downgrades Coinbase’s credit rating and bonds as crypto prices sink

Moody's Investors Service has downgraded the credit rating and bonds of Coinbase Global Inc., a leading digital currency exchange, due to the sharp decline in the prices of cryptocurrencies.

Moody's lowered the company's corporate family rating to B2 from B1 and its probability of default rating to B2-PD from B1-PD. The ratings outlook is negative.

Moody's noted that Coinbase's ratings remain constrained by the highly volatile nature of the cryptocurrency market and the associated risks to Coinbase's business, including the risk of a sharp decline in the prices of cryptocurrencies.

The ratings agency also noted that Coinbase's business model remains relatively new and unproven, with a customer base that is still relatively small compared to other financial services companies. Additionally, the company faces significant competitive pressures from larger and better-funded competitors.

Moody's concluded that the downgrade reflects the heightened risks to Coinbase's business due to the recent decline in cryptocurrency prices, as well as the uncertainty and potential risks associated with its business model.

Coinbase’s stocks and bonds were knocked following the collapse of FTX, despite the company saying it only had small direct exposure to Bankman-Fried’s exchange.

Shares of Coinbase fell more than four-fifths overall last year but are up by about a half so far in the first weeks of 2023.

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