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SEC Investigation and Data Breach Weigh on Coinbase as Shares Slide

Coinbase faces scrutiny over past user metrics and a costly hacking incident, prompting a 6% drop in its stock price.

A representation of the cryptocurrency is seen in front of Coinbase logo in this illustration taken, March 4, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
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Coinbase attracted scrutiny for claiming that it had more than 100 million “verified users”
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Overview

  • The SEC is investigating whether Coinbase overstated its 'verified users' metric in past filings and marketing materials, a probe initiated under former SEC Chair Gary Gensler.
  • Coinbase stopped using the 'verified users' metric in 2021, citing its potential to overstate unique customer numbers, and now reports 'monthly transacting users' as a more relevant measure.
  • Paul Grewal, Coinbase's Chief Legal Officer, confirmed the company is cooperating with the SEC to resolve the matter but questioned the investigation's continuation.
  • Coinbase disclosed a major data breach earlier today, with hackers demanding a $20 million ransom and potential remediation costs estimated at up to $400 million.
  • News of the SEC investigation and the data breach has led to a 6% decline in Coinbase's stock price, reflecting investor concerns over operational and regulatory challenges.