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Coinbase Shares Fail to Maintain Gains Made after $100-Million Settlement with New York Regulators

Coinbase Global, the largest US cryptocurrency exchange, saw its stock price jump by over 17% on Wednesday. But it failed to maintain the gains and dropped below the opening price of $33.67 to $31.59 on Friday. Its highest price for the week $38.15 came on Wednesday.   

The jump in Coinbase’s shares on Wednesday was attributed to the news of its $100 million settlement with the New York State Department of Financial Services, which was investigating the exchange since 2020 for its failure to carry out robust background checks of its investors for possible money laundering activities.

Of the $100 million settlement, $50 is the penalty and $50 will go into improving Coinbase’s internal system of vetting customers and transactions, media reports said. 

“Coinbase has taken substantial measures to address these historical shortcomings and remains committed to being a leader and role model in the crypto space, including partnering with regulators when it comes to compliance,” Paul Grewal, Coinbase’s chief legal officer, said in a statement.

A day later, Investment firm Cowen downgraded COIN shares to market perform from outperform. Cowen also cut COIN shares’ target price from $75 to $36. The investment firm cited a decline in trading volume and the lack of clarity as to how Coinbase plans to recover trading volume, especially in the aftermath of FTX’s collapse.

On December 30, Cathie Wood’s ARK Invest bought more than 158,000 COIN shares, worth $5.5 million based on the closing price. The Coinbase shares would be used for ARK Fintech Innovation ETF. Coinbase shares fell 86% in 2022.

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