Things continue to look bad for the blockchain. Bank of America (BofA) analysts have downgraded Coinbase’s stock, citing the “fallout from the FTX collapse.” The bank moved Coinbase shares to “neutral” from “buy,” in a Friday note to the bank’s investment clients, according to multiple financial outlets. BofA also shifted the stock’s projected target value to $50, down from the $77 the analysts placed it at previously. The platform’s stock sits at just around $45 as of writing, and has fallen more than 7.5% today alone.
Coinbase is the second largest crypto exchange by volume, after Binance. In the past 24-hours, more than $1.2 billion has been traded on the platform. But even with such prominent standing, Coinbase isn’t immune from the destabilization brought on by the swift implosion of FTX.
“We do not think COIN is another FTX,” wrote BofA senior analyst Jason Kupferberg in the note. But “diminished confidence in the crypto ecosystem” means that the the stock isn’t a sure bet, in BofA’s assessment. Kupferberg wrote that “contagion risk” from FTX could lead investors to abandon crypto exchanges and blockchain companies altogether.
Coinbase already wasn’t doing particularly well. And honestly, for their own sakes, we can only hope BofA’s investment clients cut and run. Crypto has never been a good long-term bet, and it sure isn’t now. An estimated three-quarters of all bitcoin buyers lose money, “stablecoins” are decidedly not, the industry is rife with Ponzi schemes and criminals (and is, itself, basically just one big pyramid grift), and one of the biggest purveyors of digital coins can go from super bowl ads and celebrity endorsements to disappeared investor dollars in a flash.
What is going on with FTX?
Not too long ago, FTX was the third largest cryptocurrency exchange. Its founder and CEO, Sam Bankman-Fried, was heralded as a new posterchild for the industry—shotgunning to billionaire status basically overnight. But then, as you’ve probably heard by now, SBF and his hastily assembled crypto empire collapsed over the course of a week after mismanaging investor funds and doing a whole ton of likely illegal things.
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FTX’s breakdown has already caused at least one other crypto company to implode: the lender BlockFi—while other blockchain platforms also struggle, but deny FTX exposure. Bankman-Fried is facing a class action lawsuit and federal investigations from the DOJ and SEC. There continue to be no signs that investors will recover their funds amid ongoing bankruptcy proceedings, and the U.S. is considering extraditing SBF from the Bahamas.
Though there may be a wrench in those plans. On Thursday night, the Bahamian government announced that it had seized control of FTX’s remaining assets—adding in another layer of chaos. The mysterious disappearance of the hundreds of millions in FTX funds was previously chalked up as a “hack”, but the island country has claimed credit for it, stating that “it is not the understanding of the [Bahamian] Commission that FDM is a party to the US Chapter 11 Bankruptcy proceedings.”
The Bahamian and U.S. regulators seem to be sparring over where proceedings surrounding FTX and its liquidation should take place. Though the Bahamas wrote that it would “engage with other regulators and authorities, in multiple jurisdictions” to determine the best course of action.
