Feds Take Aim at Coinbase: SEC Launches Full-Scale Probe Into Crypto Giant

Coinbase’s stock tanks 12% pre-market as regulators circle—because nothing says ’healthy market’ like a surprise investigation.

The SEC’s latest move follows months of escalating tensions between crypto exchanges and Washington’s compliance hawks. Sources say subpoenas already hit executives.

While Coinbase claims it’s ’confident in our compliance,’ Wall Street’s already placing bets on how many zeros get wiped from their valuation. Bonus cynicism: At least someone’s making money on volatility this week.

“We have notified and are working with the DOJ and other US and international law enforcement agencies and welcome law enforcement’s pursuit of criminal charges against these bad actors,” said Paul Grewal, Coinbase’s chief legal officer. Coinbase disclosed the breach last Thursday, revealing that hackers bribed customer representatives to steal the data. Those hackers then asked for $20 million in ransom to cover it up.

Coinbase estimates that the incident could cost the firm as much as $400 million to resolve. The US Justice Department has yet to comment on the investigation

Coinbase has been NEAR the center of investigation and controversy for years. The exchange is arguably the biggest in the world and most popular, leaving it a prospective victim for hackers at any time. Last week, the exchange said that in the months leading up to this attack, it had detected instances of customer support agents outside of the US collecting data from internal Coinbase systems. The company added that those people have since been fired.

Also reported earlier today, Circle is in “informal talks” to sell to either Coinbase or Ripple in what would be a landmark deal. However, the USDC stablecoin issuer is still moving forward with its plan to go public. Therefore, an interesting development occurs if Coinbase were to acquire the stable coin issuer.