SEC vs Coinbase: Crypto Exchange Under Investigation for Allegedly Misstating User Data

Coinbase Global Inc. (NASDAQ: COIN) has ostensibly been under the investigative radar of the United States Securities and Exchange Commission (SEC). According to a report by the NYT, the U.S. SEC has been investigating whether Coinbase misstated its user data, which stated that the firm had more than 100 million verified users, in the past filings. 

The investigation was reportedly launched during the Joe Biden administration by Gary Gensler and continued under the Donald Trump administration. Interestingly, the investigation was not dropped earlier this year when the agency dropped several cases against crypto companies including Coinbase, and Binance.

According to Paul Grewal, the Chief Legal Officer at Coinbase, the agency’s inquiry was ‘a holdover investigation from the prior administration about a metric we stopped reporting two and a half years ago.’

“While we strongly believe this investigation should not continue, we remain committed to working with the S.E.C. to bring this matter to a close,” Grewal said.

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Impact of Coinbase Woes on its Stock Market

As Coinpedia reported, Coinbase joined the S&P 500 stock index, fueled by the mainstream adoption of digital assets and web3 protocols. The crypto exchange has played a crucial role in onboarding more institutional investors into the crypto space, especially through providing liquidity for the spot Bitcoin (BTC) and Ethereum (ETH) ETFs.

In addition to legal headwinds, the cryptocurrency exchange has been a top target for sophisticated attackers. Earlier on Thursday, Coinbase reported that some of its users’ data were stolen, thus leading to an extortion attempt. According to a public filing, the Coinbase data breach could cost the firm to a tune of up to $400 million.

Following the recent news, COIN stock dropped over 6 percent Tod trade about $247 on Thursday, May 15 during the mid-North American trading session.