SEC Takes Aim at Coinbase: Crypto Giant Accused of Cooking the Books on User Metrics

Wall Street’s top cop just threw a grenade into crypto’s biggest playground. The SEC alleges Coinbase inflated key user data—because nothing says ’trust us, we’re decentralized’ like good old-fashioned number fudging.

Regulators claim the exchange misrepresented trading volumes and active users, potentially misleading investors. Coinbase’s stock dipped 8% on the news—because who needs market manipulation when you’ve got regulatory whiplash?

This comes as the SEC tightens its chokehold on crypto exchanges. Gary Gensler’s crew appears determined to prove they can out-bureaucrat even the most opaque DeFi project.

Coinbase maintains its innocence, but let’s be real—when the feds come knocking, the ’math error’ defense rarely works. Especially when your entire business model depends on appearing more legitimate than the guy selling Bitcoin from his trunk.

• Coinbase has been under Wall Street scrutiny following its recent addition to the S & P 500 index.

• The ongoing investigation involves a marketing metric dropped over two years ago.

• COIN stock dropped today following a series of negative news including a data breach.

Coinbase Global Inc. (NASDAQ: COIN) has ostensibly been under the investigative radar of the United States Securities and Exchange Commission (SEC). According to a report by the NYT, the U.S. SEC has been investigating whether Coinbase misstated its user data, which stated that the firm had more than 100 million verified users, in the past filings. 

The investigation was reportedly launched during the Joe Biden administration by Gary Gensler and continued under the Donald Trump administration. Interestingly, the investigation was not dropped earlier this year when the agency dropped several cases against crypto companies including Coinbase, and Binance.

According to Paul Grewal, the Chief Legal Officer at Coinbase, the agency’s inquiry was ‘a holdover investigation from the prior administration about a metric we stopped reporting two and a half years ago.’

“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,” Grewal said.

Impact of Coinbase Woes on its Stock Market

As Coinpedia reported, Coinbase joined the S&P 500 stock index fueled by the mainstream adoption of digital assets and web3 protocols. The crypto exchange has played a crucial role in onboarding more institutional investors into the crypto space, especially through providing liquidity for the spot Bitcoin (BTC) and Ethereum (ETH) ETFs.

In addition to legal headwinds, the cryptocurrency exchange has been a top target for sophisticated attackers. Earlier on Thursday, Coinbase reported that some of its users’ data were stolen, thus leading to an extortion attempt. According to a public filing, the Coinbase data breach could cost the firm to a tune of up to $400 million.

Following the recent news, COIN stock dropped over 6 percent Tod trade about $247 on Thursday, May 15 during the mid-North American trading session.