Global recently downgraded coinbase’s debt one position from “bbb” to “bb-”, moving it from “investment grade” to “speculative grade”. coinbase announced plans to reduce its headcount by approximately 950 employees and trading volumes at the exchange have “weakened meaningfully”. cathie wood’s ark invest has made 12 separate coin purchases in just one month.
Downgrade happened in november 2022 and the trading took place on coinbase, a crypto exchange. coinbase’s decision to reduce its headcount and the weakening of trading volumes are believed to be the main factors that led to s&p global’s decision. ark invest’s purchases of coinbase shares have likely contributed to the stock’s recent rally.
Downgrade of coinbase’s debt was due to a combination of factors. the 950 layoffs, which will result in severance packages of up to $163 million, and the weakening of trading volumes have put pressure on coinbase’s profitability. additionally, increased levels of regulatory attention following the high-profile collapse of ftx in november 2022 has likely played a role in the downgrade. bullish activity from ark invest, a tech-focused fund controlled by noted institutional investor cathie wood, has likely contributed to the stock’s recent rally. a rating such as aaa is given to the safest borrowers in s&p’s eyes, while letters further down the alphabet such as d are used in instances of payment default on a financial commitment or when a bankruptcy petition has been filed.