SEC Investigation into Coinbase
The Securities and Exchange Commission (SEC) remains focused on an investigation into Coinbase regarding its previous claims about the number of users on its platform, despite recent efforts from the Trump administration to ease regulatory scrutiny on cryptocurrencies, as reported by The New York Times.
Claims Under Scrutiny
This inquiry specifically examines statements made by Coinbase in 2021 during its initial public offering (IPO), where the company boasted over 100 million “verified users”. Select sources indicate that regulators suspect these claims might have exaggerated the company’s actual user base, potentially misleading investors.
Notably, Coinbase acknowledged issues with this metric in 2023, as multiple account registrations by the same individuals could distort unique user numbers.
Company’s Response
In response to the investigation, Coinbase, which is partnering with the law firm Davis Polk & Wardwell, claims that this inquiry originated under President Biden’s administration and that it anticipates a resolution soon. The company’s Chief Legal Officer, Paul Grewal, described the investigation as a
“holdover”
from past governance, emphasizing that the disputed metric was no longer in use for over two years.
Regulatory Environment
Despite a shift in SEC leadership towards a more crypto-friendly stance under Chair Paul Atkins, who has reduced several enforcement actions—including a significant lawsuit against Coinbase initiated last year—this investigation highlights that regulatory oversight continues.
Coinbase’s Growth and Challenges
Meanwhile, Coinbase is experiencing growth in its institutional presence, having recently joined the S&P 500. CEO Brian Armstrong has also gained visibility in political circles, notably attending a White House crypto summit in March alongside President Trump.
Additionally, this week, Coinbase revealed a data breach that could incur costs reaching $400 million, as detailed in an SEC filing.
