Shares of leading crypto exchange Coinbase have soared to an 18-month high. This surge comes in the wake of legal troubles for its competitor, Binance and its former CEO Changpeng “CZ” Zhao.
Binance and Zhao have recently pleaded guilty to charges of money laundering and sanctions violations in the United States, as part of a significant settlement with U.S. Department of Justice (DoJ).
The settlement included a $4.3 billion penalty, Zhao stepping down from his CEO position, and Binance agreeing to comply with U.S. Treasury Department and DoJ oversight for up to five years.
Meanwhile, Coinbase is facing its own challenges, having been subpoenaed in the latest U.S. crypto crackdown, in relation to the Commodity Futures Trading Commission’s (CFTC) case against Bybit.
COIN share price action
On 27 November, Coinbase’s stock closed at $119.77, marking its highest point since May 5, 2022, when it closed at $114.25. Like the wider crypto market, Coinbase’s stock has been struggling with the industry’s bearish trend after the collapse of Terra and FTX.
Coinbase has now seen a significant recovery with shares up over 250% year-to-date. Despite this impressive growth, the shares are still down 65% from their all-time high of nearly $343, recorded on November 12, 2021.
Coinbase’s role in ETF applications
As well as profiting from recent legal drama with its rival Binance, Coinbase could also be gaining attention for its role as the custodian or surveillance-sharing partner by several prominent Wall Street firms for their spot Bitcoin ($BTC) exchange-traded fund (ETF) applications.
Speculation and anticipation for the first ever spot BTC ETFs have led to significant rallies in the crypto market over the past couple of months.
According to Bloomberg ETF analyst James Seyffart, Coinbase is the custodian for 13 of the 19 spot crypto ETFs currently pending with the U.S. Securities and Exchange Commission (SEC).
Coinbase subpoena amid U.S. crypto crackdown
However, Coinbase has recently been subpoenaed as part of the country’s ongoing crackdown on the crypto industry. Numerous Coinbase users reported receiving emails about the legal action by the CFTC against Bybit, another crypto exchange.
The email informed users that Coinbase had been served with a subpoena requesting information related to their account and transaction activity.
This subpoena is connected to the case involving Bybit Fintech Ltd. and its CEO Ben Zhou, according to the email.
“You are not in trouble,” he added.
The email stated that no immediate action was required from the recipients. But the exchange said: “Coinbase may respond to the subpoena unless served before November 30, 2023, with a motion to quash or other objection … including sending information concerning your Coinbase account to the CFTC.”