In a surprising turn of events, Coinbase shares ($COIN) surged by more than 60% during the same month that Sam Bankman-Fried (SBF), the founder of FTX, and Changpeng Zhao (CZ), the founder of Binance, are bracing for prison sentences.
On November 2, a 12-member jury in Manhattan federal court convicted SBF on seven federal criminal charges related to the collapse of FTX. Less than three weeks later, CZ pleaded guilty to federal criminal charges of violating and causing Binance to violate the Bank Secrecy Act.
Shortly after CZ’s guilty plea, trading volume at Binance declined, with investors pulling out more than $1 billion from the crypto exchange.
$COIN Sees 60% Surge in November
At the same time, trading volume at Coinbase continued to surge, with $COIN rallying by 60% during the month. According to a CNBC report, the 60% surge marks the stock’s second-best monthly performance since Coinbase went public in 2021.
In addition to challenges at rival exchanges, the recent rallies in bitcoin (BTC) and ether (ETH) also led $COIN to become one of the best-performing crypto stocks in 2023, rising more than 250% from year-to-date (YTD).
This rally marks a significant recovery for $COIN, which struggled during last year. In 2022, Coinbase shares lost 86% of its value amid soaring inflation and rising interest rates. At the time, analysts at Goldman Sachs downgraded the stock from neutral to sell, lowering the price target to $45.
At the time of writing, $COIN was trading at $124.72, representing a 2.43% surge in the last 24 hours.
Regulatory Scrutiny
The latest developments suggest that Coinbase has continued to benefit from the recent heightened legal challenges its rivals have faced. However, it is worth mentioning that Coinbase is also facing regulatory scrutiny from the United States Securities and Exchange Commission (SEC).
In June, the SEC filed a lawsuit against Coinbase on claims that the exchange violated federal securities laws by allegedly operating as an unregistered broker, exchange, and clearing agency in the U.S. The financial regulator also alleged that the exchange’s staking product, which allowed customers to earn rewards on crypto assets, constituted an illegal securities sale.
