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- Coinbase is under SEC investigation over claims of 100M verified users in its 2021 IPO filing.
- Regulators remain cautious about past crypto disclosures despite relaxed enforcement under new leadership.
- A recent $400M data breach adds to Coinbase’s mounting legal and regulatory challenges.
Coinbase is being investigated by the U.S. Securities and Exchange Commission (SEC) after questions about the number of users the company claimed to have during its initial public offering in 2021. Despite recent changes under Trump’s presidency, the SEC is still investigating whether the company was truthful when it claimed to have many verified users.
The investigation is looking into whether Coinbase had more than 100 million verified users when it went public, which is a big figure that the company mentioned in its IPO. According to The New York Times, four sources who know about the situation said that regulators are worried that this number may have given a false or misleading idea of how many people actually use the platform. The concern is that the number listed may have included multiple accounts made by the same person.
Legal Response from Coinbase
In 2023, Coinbase stopped releasing the number of verified users. The company explained that while the number looks high, it doesn’t mean the exact number of people using the service. This change happened after the company looked at how the data was shared and thought it wasn’t always correct or shown clearly.
Coinbase’s Chief Legal Officer, Paul Grewal, said the investigation started under the Biden administration, and it’s time for it to end. He said that the information he was looking at was old. Since, Coinbase stopped reporting that data a long time ago. The company is currently working with lawyers from Davis Polk & Wardwell to figure out how to handle this situation.
Although the SEC’s enforcement efforts on crypto have slowed down under Chair Paul Atkins. The investigation into the short-selling process is still ongoing. Atkins has dropped some big lawsuits, like the one it filed against Coinbase. However, these questions suggest regulators are still worried about past public statements made by big crypto companies.
Coinbase Joins S&P 500
Earlier this week, Coinbase became part of the S&P 500. A big achievement that shows the company has grown in the financial world. CEO Brian Armstrong has also started to get more involved in politics, recently joining a White House crypto summit in March. And speaking publicly with other top officials and the president.
Coinbase recently revealed that a major data breach had occurred, which is included in their latest SEC filing. The breach could end up costing the company up to $400 million. And it might also make people more worried about how the company is handling its finances. And sharing info with investors.
