Hassan Maishera
TL;DR
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The U.S. SEC is investigating the crypto exchange Coinbase over concerns that it misrepresented user numbers a few years ago.
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The probe began under the Gensler leadership and has continued into this administration.
SEC Probes Coinbase for Misrepresenting User Numbers
The United States Securities and Exchange Commission (SEC) is investigating crypto exchange Coinbase over whether it misrepresented its user numbers in past securities filings and marketing materials.
According to the New York Times report, the investigation began under the Gary Gensler administration and has persisted under the SEC’s current, crypto-friendly leadership.
NYT added that
“The investigation, which has not been previously reported, has focused on a metric that Coinbase included in securities filings and marketing materials, claiming that the company had more than 100 million “verified users,” said the people, who spoke on the condition of anonymity. The data point appeared in Coinbase’s original public offering document in 2021, but the company stopped citing it two years later.”
While speaking to CoinDesk, Paul Grewal, Coinbase’s chief legal officer, stated that the SEC’s investigation 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.”
Grewal added that,
“We explained that the verified users metric includes anyone who verified their email address or phone number with us, so it may overstate the number of unique customers. We also disclosed – and continue to disclose – the more relevant metric of ‘monthly transacting users’ – the number of people who use our platform in a given month. While we strongly believe this investigation should not continue, we remain committed to working with the SEC to bring this matter to a close.”
Coinbase has come under pressure in the last 24 hours after revealing that user data was breached by a group of rogue support agents who were "bribed" by cyber criminals. The cryptocurrency exchange added that it will reimburse any impacted users.
Coinbase’s stock (COIN) lost 7% of its value during trading hours on Thursday and now trades $244.
