SEC Revives Probe Into Coinbase—Stock Wipes Out Monthly Gains in 24 Hours

Regulators double down on crypto crackdown as Coinbase shares nosedive 18%—because nothing says ’healthy markets’ like knee-jerk enforcement actions timed to maximize pain.

Wall Street’s favorite whipping boy takes another hit: The SEC’s sudden re-examination of Coinbase’s compliance comes just as retail traders started dipping toes back in. Cue the synchronized sell-off.

Bonus finance cynicism: Watch institutional investors feign surprise while quietly scooping up discounted shares—the oldest hedge fund trick in the book.

Coinbase is facing headwinds despite recent milestones

The news that Coinbase still has a legal issue to contend with represents a major headwind for the exchange that has been basking in the euphoria of a pro-crypto administration. With most regulatory agencies changing their approach to crypto, the exchange has been a big beneficiary.

So far this year, the SEC has dropped two lawsuits over unregistered securities and staking against Coinbase.  Five US states have also dismissed similar litigations over the exchange staking program.

Beyond its legal wins, the company also recently joined the S&P 500, becoming the first crypto company to achieve this and signaling its growth over the past few years. However, news of recently disclosed investigations by the SEC represents a headwind for the company.

With a pro-crypto SEC that has dropped dozens of lawsuits and investigations and is choosing to hold on to one against Coinbase, there are concerns that the regulator might have a case against the company.

Meanwhile, Coinbase had also revealed that it was the victim of a breach that allowed bad actors to gain access to the data of some of its users. Although the exchange said it affected less than 1% of its monthly users, it estimates that remediation and reimbursements for users may cost between $180 million and $400 million.

The disclosure by Coinbase finally confirms the recent concerns raised by cybersecurity experts such as ZachXBT and Tayvano, who have criticized the exchange multiple times for allowing scammers to steal from its users.

Tayvano recently condemned Coinbase’s plan to introduce encrypted messaging to the Coinbase Wallet, noting that it WOULD only give scammers direct access to users.

Coinbase stock falls 7%

With the headwinds that the company is facing, it is unsurprising that its COIN stock fell 7% today to $244.44. This wiped out most of its gains for the past month, when it had gained almost 40%.

Following today’s drop, COIN is down 1.55% year-to-date, a performance worse than that of Bitcoin and XRP, which has gained 9.44% and 4.57% YTD  but better than that of major altcoins such as Ether and Solana.

Interestingly, COIN’s performance contrasts with that of another major crypto stock, MSTR. The bitcoin treasury company is up 37% YTD.

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