Rating agency S&P Global downgraded the rating of the largest US crypto exchange Coinbase. This happened as a result of the latest round of layoffs. The decrease in trading volumes as a result of the collapse of FTX also played a role.
Coinbase’s rating has been downgraded to ‘BB-‘ from ‘BB’ with a negative outlook, the agency said in a press release.
An AAA rating indicates a very high ability to meet its debt obligations on time and in full. It is assigned, for example, to the US government or trusted companies such as Microsoft. Letters below C are used in cases of financial default or when filing for bankruptcy (D).
“We believe that the weakening of trading activity after the collapse of the FTX cryptocurrency exchange will negatively affect the profitability of Coinbase operations,” S&P experts explained.
On Monday, Coinbase CEO Brian Armstrong announced that his company plans to cut its costs by 25% by laying off 20% of its staff.
Armstrong stressed that Coinbase is firmly on its feet and cryptocurrencies are “not going anywhere,” but the firm must continue layoffs to maintain “proper operational efficiency.” Coinbase will shut down several failed projects, the CEO noted. However, layoffs are not cheap entertainment. The company will spend at least $149 million on severance pay and other benefits.
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