NatalieLopez
15 May 25
The SEC is investigating whether Coinbase misstated user numbers in past disclosures, continuing a probe even after dropping a lawsuit accusing Coinbase of failing to register with the commission. Coinbase's Chief Legal Officer stated the investigation concerns a metric discontinued over two years a...
The Securities and Exchange Commission (SEC) is investigating whether Coinbase misstated its user numbers in past disclosures. This probe persists even after the agency dropped a lawsuit accusing the world's largest crypto exchange of failing to register with the commission to market alleged securities.Paul Grewal, Chief Legal Officer for Coinbase, stated to Yahoo Finance, "This is a holdover investigation from the prior administration about a metric we stopped reporting two and a half years ago, which was fully disclosed to the public." He added that while Coinbase strongly believes the investigation should not continue, the company remains committed to working with the SEC to resolve the matter.Coinbase explained that the Verified Users metric includes anyone who verified their email address or phone number, potentially overstating unique customer numbers. They continue to disclose the more relevant metric of monthly transacting users—the count of individuals actively using Coinbase's platform each month.When filing to go public in February 2021 via its S-1 form, Coinbase differentiated between verified users (a broader category including those with verified contact details) and monthly transacting users (users making at least one transaction per month). In 2023, the company disclosed in a 10-K filing that the verified users metric no longer accurately reflected user engagement and ceased reporting it from March 2023.The SEC has not yet commented on the ongoing investigation.Separately, Coinbase revealed it was hacked by cyber attackers who stole sensitive private customer information and demanded a $20 million ransom, which Coinbase has denied paying. Bloomberg reports that Coinbase’s system has been vulnerable to hackers since January. Coinbase did not immediately respond to requests for further comment.