Coinbase shares jump over 12% following settlement with New York regulator

Quick Take

  • Coinbase shares are up 12.3%, trading above $37. 
  • The exchange recently reached a $100 million settlement with the New York Department of Financial Services.

Coinbase shares soared following the exchange's $100 million settlement with a New York state financial regulator.

Coinbase shares rose 12.3% to $37.65 at 12:30 p.m. EST, according to Nasdaq data. The news of the settlement with the New York Department of Financial Services (NYDFS) buoyed the stock, which had plunged 5% yesterday.

The exchange will pay a $50 million fine as part of the settlement and invest another $50 million into its compliance program. The NYDFS found gaping holes in how Coinbase reviewed customer identities and alerted on transactions, with the exchange failing to keep up with the growth in its customer base from 2020 through 2021.

"Such settlements are generally viewed as the regulator having their say and then moving on from the entity in question," said Stéphane Ouellette, CEO at FRNT Financial. 

Relative to the size of Coinbase, the settlement was relatively small, he added.

"There is a view that 'OK, the regulators have made their point, and they will leave Coinbase alone for now,'" Ouellette said. "There is a recent precedent to support that view as well. Following the NYAG suit against Bitfinex/Tether and then the settlement, both entities have seen relatively little US-administrative attention and the regulatory focus appears to have shifted to other entities or lawsuits."

Coinbase reached an all-time low of $31.86 last week. 

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