Coinbase faces a hit to profits after FTX's implosion, S&P says as it downgrades the crypto exchange again

• Coinbase's credit rating just got cut again as its profits face a further hit in the wake of FTX's implosion.
• S&P Global Ratings lowered the company's long-term credit ratings deeper into junk territory by one notch to "BB-."

Coinbase just got downgraded again by S&P Global Ratings, which said the crypto exchange faces a hit to its profits amid a confidence crisis in the industry following the FTX implosion.

S&P Global, the largest debt-rating agency, lowered Coinbase's long-term credit ranking deeper into junk territory, cutting it by one notch to 'BB-' from `BB' with a negative outlook.

The downgrade follows a slump in Coinbase's trading volumes and rising regulatory risks for the company following the collapse of bankrupt crypto exchange FTX, according to the credit assessor.

"We believe FTX's bankruptcy in November has severely hit the crypto industry's perceived credibility, causing a lack of retail engagement," S&P said in a release. "As a result, trading volumes across exchanges, including Coinbase, have declined sharply," the ratings agency said, adding that it expects the firm's "profitability to remain pressured in 2023".

Coinbase reported losses of $545 million and $1.1 billion, respectively, for the third and second quarters of 2022.

"The negative outlook reflects continued uncertainties about the depth and duration of the crypto market downturn, insufficient visibility regarding trading volumes following the collapse of FTX, and heightened regulatory risk," S&P said.

FTX's crash last November reverberated through crypto markets, pulling a growing list of crypto firms down with it, including BlockFi and Genesis.

To counteract the headwinds, Coinbase slashed its workforce by 20% on Tuesday, blaming "unscrupulous actors" for putting pressure on the digital asset industry. The exchange also made the decision to shutter most of its Japan operations in a big budgeting move.