Moody's cuts Coinbase outlook to negative on SEC charges, but affirms credit ratings

Moody's Investors Service revised its outlook on Coinbase Global ( NASDAQ: COIN ) to negative from stable after the Securities and Exchange Commission sued the cryptocurrency exchange for allegedly operating as an unregistered broker . The revised outlook reflects the lawsuit's "uncertain magnitude" of impact on Coinbase's ( COIN ) business model and cash flow. Moody's also affirmed Coinbase's ( COIN ) B2 corporate family rating and B1 guaranteed senior unsecured notes' ratings. "This reflects its healthy liquidity position, recent cash flow generation improvements stemming from prudent expense management, and because the SEC's charges pertain only to some of Coinbase's ( COIN ) products, and exclude its leading traded products." The lawsuit could potentially force Coinbase ( COIN ) to give up "ill-gotten" gains, interest and penalties. It could also negatively impact certain product offerings, including its staking rewards business. Moody's expects Coinbase ( COIN ) to continue to focus on expense management, which has helped offset a slowdown in transaction revenue. More on the Crypto Crackdown Coinbase: Q2 Is Going To Be Rough Coinbase Global Is In Serious Trouble Coinbase: Look Out Below (Rating Downgrade)