SEC Probes Coinbase Over Alleged User Count Inflation: Is the War on Crypto Still Alive?

• The SEC is investigating whether Coinbase misled investors by overstating its “verified user” count in past filings.
• Coinbase’s legal chief calls the probe a “holdover” from the Biden administration, arguing the metric was dropped over two years ago.
• The investigation resurfaces as Coinbase discloses a $400 million potential loss from a data breach and prepares to join the S&P 500.

The SEC is reportedly investigating Coinbase over whether it overstated its “verified user” numbers in past filings and public statements, according to a New York Times report. The inquiry, which began under the Biden administration, focuses on a metric Coinbase once claimed exceeded 100 million users but later stopped reporting, citing its limited value in assessing business performance.

Coinbase Pushes Back – Calls Investigation a “Holdover”

Coinbase’s Chief Legal Officer Paul Grewal called the investigation a “holdover” from the previous administration, noting that the company stopped reporting the “verified user” metric over two years ago. Despite the SEC dropping other crypto-related cases this year, the focus on potential investor misrepresentation remains active, particularly as Coinbase eyes its S&P 500 debut.

Timing Raises Questions – Data Breach and S&P 500 Inclusion

The renewed scrutiny comes at a critical time for Coinbase, which recently disclosed a potential $400 million hit from a customer data breach involving rogue employees and contractors.

With the exchange set to join the S&P 500 index, the ongoing SEC investigation could cast a shadow over its efforts to present itself as a trusted, regulated entity in the mainstream financial sector.