Coinbase rallies more than 60% in same month that FTX and Binance founders brace for prison
Brian Armstrong, CEO of Coinbase, slammed the U.S. Securities and Exchange Commission. He also said the cryptocurrency exchange is looking to invest more outside of the U.S.
Carlos Jasso | Bloomberg | Getty Images
In a month that saw two of the crypto industry’s leading figures headed on the path to prison, Coinbase shares rocketed more than 60%, their second-best monthly performance since the cryptocurrency exchange went public in 2021.
For early holders of the stock, the rebound helps ease the pain of 2022, when Coinbase lost 86% of its value as soaring inflation and rising interest rates pushed investors out of crypto and high-growth tech companies, and into assets deemed safer in a recession.
Tech stocks have roared back this year, particularly those tied to the artificial intelligence boom and crypto. Coinbase has the added benefit of having survived the so-called crypto winter, while so many of its rivals disappeared or downsized.
The industry fallout came to a head this month, when Sam Bankman-Fried, founder of former Coinbase rival FTX, was found guilty of seven criminal fraud counts tied to the collapse of his exchange and the theft of customer funds. His conviction landed on Nov. 2 after a monthlong trial.
Less than three weeks later, on Nov. 21, Binance founder Changpeng Zhao pleaded guilty to violations of the Bank Secrecy Act for failing to implement an effective anti-money laundering program and for willfully violating U.S. economic sanctions.
Combination showing Former FTX CEO, Sam Bankman-Fried (L) and Zhao Changpeng (R), founder and chief executive officer of Binance.
Getty Images | Reuters
Bankman-Fried, who faces potential life behind bars, is scheduled to be sentenced in March. Zhao’s sentencing is set for February. While guidelines suggest a sentence of 12 to 18 months, the Justice Department could push for a lengthier punishment for the Binance founder.
Unlike FTX, which filed for bankruptcy in late 2022, Binance is still standing, though now without Zhao, who agreed to step down as CEO as part of the plea deal. Even before that, the company was seeing a plunge in trading, with volume down by two-thirds between the first and third quarters of the year, according to crypto analyst site CoinGecko.
With assets of more than $65 billion on the platform, Binance remains the world’s largest crypto exchange globally. But its market share fell from over 60% in February to under 50% in September, “an indication that the exchange may be losing its grip on the industry as regulators continue to pressure it,” CoinGecko said.
In the first 24 hours after the Justice Department announced its $4.3 billion settlement with Binance, customers pulled more than $1 billion from the exchange. Liquidity also dropped 25% in the immediate aftermath of the announcement as market makers pulled back their positions, according to data provider Kaiko.
A Binance spokesperson told CNBC in a statement that Zhao appeared in court “to protect our users and to ensure the longevity of our company.”
“Binance’s resilience has been tested unlike any other exchange around today,” the spokesperson said. “Yet, we continue to operate the world’s largest cryptocurrency exchange by volume. In fact, we currently see a climbing percentage of institutional user transactions.”
Coinbase is the fourth-biggest global exchange by daily volume, according to CoinGecko. It’s the only one that’s publicly traded in the U.S. and has a market cap of close $30 billion.
In a report to clients on Wednesday, analysts at Mizuho noted that Coinbase shares are up about 20% since Zhao’s settlement, a rally that’s likely “in anticipation of potential share gains for COIN in wake of outflows from Binance, the industry’s largest exchange,” they wrote. Coinbase shares fell 2.4% to $124.72 on Thursday, wiping out some of their recent gains.
Mizuho raised its price target on the stock to $35 from $31, while keeping its underperform rating, which it’s maintained since December.
A Coinbase spokesperson declined to comment for this story, but CEO Brian Armstrong told CNBC’s Joumanna Bercetche earlier this week that the Binance settlement allows the crypto industry to move past a spate of scandals.
“The enforcement action against Binance, that’s allowing us to kind of turn the page on that and hopefully close that chapter of history,” Armstrong said. “I think that regulatory clarity is going to help bring in more investment, especially from institutions.”
Both Coinbase and Binance still face legal battles with the Securities and Exchange Commission, which was noticeably absent from the Binance settlement. Meanwhile, Coinbase executives have floated the idea of leaving the U.S. altogether for a jurisdiction with hard-and-fast rules on crypto, should the company be unable to come to a resolution with the SEC.
Wall Street appears to be shrugging off that concern.
Analysts at Needham, who recommend buying Coinbase shares, wrote in a report on Nov. 21 that the company “exited the crypto ‘winter’ better positioned than in the prior up cycle.” They also noted that in addition to FTX’s failure and Binance’s retreat, crypto trading platform Bittrex has also exited the market.
Bittrex said on Nov. 20, that effective Dec. 4, “all trading activity on Bittrex Global will be disabled,” and it encouraged customers “to log into their account and withdraw assets as soon as possible.” In April, the SEC charged Bittrex and its ex-CEO with operating an unregistered exchange.
Yet there may be a new competitive threat on the horizon.
U.S. regulators are expected to soon approve the first U.S. spot bitcoin exchange-traded funds, which would allow investors to buy into digital currency directly through the same mechanism they use to buy stock and bond ETFs. Top asset managers, including BlackRock, WisdomTree and Invesco, have filed applications with the SEC.
Regulatory approval would open up many more avenues for people to buy bitcoin. While Coinbase allows investors to buy a variety of cryptocurrencies, bitcoin accounted for 38% of transaction volume in the third quarter and almost the same percentage of revenue. For casual investors who just want some exposure to bitcoin, there will potentially be additional ways to buy, including through their primary online brokerage.
JPMorgan Chase analysts wrote last week that crypto ETFs would likely be good for Coinbase in the short term but more problematic as time passes.
The initial boost would come from custody revenue tied to the ETFs. Most of the big asset managers jumping into market, including BlackRock, Franklin Templeton and WisdomTree, have picked Coinbase for custody services, which involves the storage and safekeeping of the assets.
However, the longer-term concern, according to JPMorgan, is that fewer people will need Coinbase accounts, leading to pricing pressure.
“We see many novice investors never going beyond these flagship tokens and thus never needing the services of a Coinbase,” wrote the analysts, who have a neutral rating on the stock and an $80 price target. “We also see the ETF markets as more transparent, efficient and lower cost to execute and we see the potential for a migration to ETFs for cheaper exposure and trading driving Coinbase to lower fees.”
Italy is putting a big hybrid floating solar–floating wind farm in the sea
A 540-megawatt (MW) hybrid floating solar–floating wind farm is going to be developed off Italy’s southern coast, in the Ionian Sea.
Dutch-Norwegian offshore solar company SolarDuck, Italian investment fund Arrow Capital, and Italian developer New Developments are jointly developing the Corigliano project, which will be in the Gulf of Taranto off the Calabrian coast of Corigliano-Rossano:
SolarDuck is a spin-off of Damen Shipyards, a major shipbuilder in the Netherlands. It’s tapped into that knowledge to design elevated solar platforms made of offshore-grade aluminum that sit 10 feet (3 meters) off the water to withstand rough waters. The elevation also reduces salt deposits on the solar panels. (Floating solar farms on lakes and ponds tend to sit directly on the water.)
The triangular floating platforms are modular, so they can be connected to form large plants. Plus, the platforms have slip-resistant walkways and fences for access and maintenance.
The hybrid floating solar–floating wind farm will feature 420 MW of offshore wind and 120 MW of floating solar. It will have 28 floating wind turbines, but SolarDuck’s announcement doesn’t indicate who is developing them. We’ve reached out to SolarDuck for details and will update when we hear back.
The Corigliano hybrid floating project is expected to come online in 2028.
SolarDuck is running an up to three-year 5 MW pilot with multinational energy company RWE in the North Sea, 7.5 miles (12 km) from The Hague’s Dutch coast. In December, it secured €15 million in funding, and it’s going to install Japan’s first offshore floating wind farm.
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Doroni unveils production-intent H1-X eVTOL, offering personal air travel up to 120 mph [Video]
Young urban air mobility (UAM) developer Doroni Aerospace is stepping out of the shadows and into the eVTOL startup with the official reveal of its flagship aircraft – the H1-X. The two-seat eVTOL was showcased during a livestream event today and is damn close to being market-ready, touting some impressive specs.
Doroni Aerospace was founded in 2016 by Doron Merdinger – a lifelong entrepreneur with 25 years of design, manufacturing, and firm management expertise.
To bring his dreams of sustainable aviation transportation to life, Merdinger assembled a team of engineers and technicians working together to democratize flight in a growing eVTOL segment.
The result of those efforts is the HX-1, Doroni’s flagship “flying car,” better known as an electric Vertical Takeoff and Landing (eVTOL) vehicle. After years of development behind the scenes, which we at Electrek have kept close tabs on, Doroni has finally revealed the H1-X to the public, which looks pretty cool. Have a look for yourself.
Doroni hard launches with production-intent eVTOL
The eVTOL startup shared many details of the H1-X earlier today during a livestream event you can view below. While Doroni’s flagship aircraft is an eVTOL through and through, its design and use vary from several of its competitors in development.
For instance, Doroni designed the H1-X as a two-seat personal aircraft rather than the larger cabins designed for air taxi services many other companies are working on. The H1-X also features a unique tandem wing configuration, with propellers built in (less risk of decapitation!)
The company says this design feature enhances the eVTOL’s lift and efficiency compared to traditional designs, and its wing fences can better manage airflow. The ducted fans are also quieter, even when the eVTOL’s eight electric motors are revving. Doroni’s CEO spoke during the eVTOL launch event:
The H1-X is not just a vehicle; it’s a leap toward a future where freedom of movement and sustainability coexist. Our dedication to innovation, safety, and the environment is embodied in every aspect of the H1-X, marking a new chapter in transportation.
Doroni shared that the H1-X weighs 1,850 pounds, can haul a payload capacity of 500 pounds, and can fly for 40 minutes on a single charge. What’s most interesting is that the incoming eVTOL can reach a top speed of 120 mph! Hopefully, Doroni will aid in training and certifying its future owners because that’s a lot of speed for the average person.
Representatives for Doroni Aerospace told Electrek that the first several examples of the H1-X eVTOLs are currently being built and will be used for extensive test flights at the end of the year. That being said, we were told the aircraft you see below is the go-to-market product, although there may be some minor tweaks before scaled production.
The H1-X has already received FAA certification for flightworthiness in the US and is expected to enter mass production in 2026. Each eVTOL is expected to cost between $300,000 and $400,000. You can learn more from the replay of the entire reveal event below:
Fisker is talking to Nissan for a lifeline and electric pickup partnership
Nissan has been revealed as the potential savior of Fisker. The Japanese automaker is reportedly talking with Fisker to invest in the company and partner on electric pickup trucks.
Earlier today, we reported on Fisker’s disastrous fourth-quarter results showing that the electric vehicle startup lost $400 million in 2023 and it now has less than $400 million of cash on hands.
The automaker had to admit that it wouldn’t be able to continue operations past next year without a big cash injection.
It did reveal that it was talking to a “large automaker” about an investment that could save the company.
Now, Reuters reported that the automaker in question is Nissan:
Nissan is in advanced talks to invest in electric vehicle maker Fisker (FSR.N), in a deal that could provide the Japanese automaker with access to an electric pickup truck while giving the struggling startup a financial lifeline, according to two people familiar with the negotiations.
The deal would reportedly involve Nissan investing $400 million in Fisker. It would also involve Nissan building the Alaska pickup truck unveiled by Fisker last year at one of its US plants.
On top of it, Nissan could use the Alaska platform to build its own electric pickup truck.
Neither Nissan nor Fisker commented on the report.
Fisker’s stock dropped by more than 50% today after the release of its earnings, but the stock recovered a bit after the report that Nissan is considering investing.
The stock currently trades at a valuation of $295 million.
I’m not sure what to think about it. I’ve never been a big fan of Fisker, and I’ve warned people about investing in the company before.
If the report is true, I don’t know what Nissan sees in this. If they are behind on developing electric pickup trucks, it might be worth it for them, but I think that any significant investment would be a takeover the company.
It is now worth less than $300 million and that might be an attractive investment as a company that had $200 million in revenue last quarter in the growing EV market, but the looks are deceiving.
As I’ve highlighted before, Fisker was desperate in its previous fundraising efforts and took big convertible notes, which now add up to $1.2 billion, according to its last SEC filing.
Currently, there’s just no way Fisker can manage to pay that back and therefore, they will convert to stock and drastically dilute it for current shareholders.
So I don’t see a good outcome here other than Nissan picking the whole company up for cheap and accelerating its EV programs with it.
What do you think? Let us know in the comment section below.
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