Title: Coinbase Tumbles After Cyberattack and SEC Probe, Revealing Indecisive Journey
Stock Price of Coinbase Drops Significantly on Thursday
Thursday saw a tumultuous day for Coinbase Global (COIN) as the crypto trading platform reported a cyber attack and grappled with an ongoing investigation from the Securities and Exchange Commission (SEC). Shares plummeted over 7%, erasing gains made earlier in the week following news that Coinbase was set to join the S&P 500 next week.
Coinbase revealed that an unknown cybercriminal had demanded money in exchange for withheld data, implying that international contractors and employees may have been compromised. The company confirmed that it has not paid the ransom and is working closely with law enforcement, estimating mounting costs of $180M to $400M for remediation and customer reimbursements.
Sensitive customer information, such as names, addresses, phone numbers, email addresses, last four digits of Social Security numbers, masked bank account numbers, and Coinbase account data like balance snapshots and transaction history, could potentially be compromised. Yet, Coinbase ensured that no passwords or customer funds were ever accessed during the incident.
In a separate development, The New York Times reported that the SEC is digging into Coinbase’s use of a "verified users" metric in regulatory filings, which the company ceased reporting in 2023. Coinbase's Chief Legal Officer, Paul Grewal, characterized the investigation as a hold-over from the previous administration and remains committed to addressing the SEC's concerns. The SEC declined to comment on the matter.
Despite the challenges, Coinbase is headed for inclusion in the S&P 500 on May 23, 2025.
This article has been adapted for clarity and readability from its original publication.
Additional Insights
The U.S. Securities and Exchange Commission (SEC) is conducting an ongoing investigation into Coinbase Global, Inc. concerning whether the company misstated its user numbers in past filings and public disclosures. Specifically, the probe focuses on the "verified user" metric that Coinbase once reported, which it claimed exceeded 100 million users but subsequently stopped reporting about two and a half years ago[4][3].
The SEC's investigation can be traced back to the Biden administration, questioning whether Coinbase overstated unique users, potentially misleading investors. This probe coincides with other challenges for Coinbase, such as a recent customer data breach with a potential exposure of $400 million and ransom demand issues, underscoring a challenging period for the company ahead of its S&P 500 inclusion[4][2].
While CEO Brian Armstrong and other Coinbase executives often touted the "verified user" metric in interviews and social media, the company had cautioned that this metric might overstate unique customers due to multiple account creation[4]. Yet, it appears that investors relied on this metric to gauge Coinbase's scale, fueling potential misleadings.
- Coinbase is currently embroiled in an investigation by the Securities and Exchange Commission (SEC) over allegations that it may have misstated user numbers in past filings and public disclosures, specifically regarding the "verified user" metric.
- The SEC's investigation into Coinbase's use of the "verified users" metric, which the company ceased reporting in 2023, dates back to the Biden administration and questions whether Coinbase overstated unique users, potentially misleading investors.
- The ongoing SEC probe is just one of the challenges Coinbase is facing, as it also grapples with the aftermath of a recent customer data breach, which could result in a remediation cost of up to $400 million.
- Despite these challenges, Coinbase is still scheduled for inclusion in the S&P 500 on May 23, 2025, marking a significant milestone in the company's business and finance journey within the ever-evolving realm of technology and crypto.
