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The Securities and Exchange Commission is investigating if Coinbase (COIN-3.06%), the largest U.S. cryptocurrency exchange, misstated its user numbers.
Coinbase previously claimed to have more than 100 million “verified users” in marketing materials and its original public offering document in 2021, but the company ceased to quote it two years later.
The SEC’s probe hinges on whether that metric is accurate, The New York Times (NYT+0.23%) reports.
Shares in Coinbase Global Inc dropped 6% on Thursday.
The investigation began during the Biden administration and has continued under President Donald Trump, sources told the Times. Paul Grewal, Coinbase’s chief legal officer, said that the inquiry is “a holdover investigation from the prior administration about a metric we stopped reporting two and a half years ago,” in a statement. “While we strongly believe this investigation should not continue, we remain committed to working with the S.E.C. to bring this matter to a close.”
The ongoing investigation indicates that the regulator hasn’t backed-off the crypto industry altogether since changing leadership. Gary Gensler, notorious for his crackdown on the industry, stepped down as chair in January, paving the way for the crypto-friendly Paul Atkins to be sworn in as chair in April.
Shortly after Trump’s return to office, the agency published a statement titled the “SEC Crypto 2.0.” whereby it announced a new task force to draft the first-ever regulations for digital assets. The agency has also dropped dozens of lawsuits against crypto companies in recent months and issued guidance on “meme coins,” which classified the tokens as non-securities.
The inquiry surfaces the same day that the company announced it had been the victim of a cyberattack. Coinbase thinks it will be on the hook for $180 million to $400 million after hackers breached a “small subset” of its customers’ accounts.