Coinbase Says SEC Investigating Its Past Reporting of User Metrics

Coinbase Global reportedly said Thursday (May 15) that it is cooperating with the Securities and Exchange Commission (SEC) on the agency’s investigation into how the cryptocurrency exchange used to report its user metrics.

The company said the SEC is looking into whether Coinbase overstated the number of unique users in past disclosures, Bloomberg reported Thursday.

“This is a hold-over investigation from the prior administration about a metric we stopped reporting two and a half years ago, which was fully disclosed to the public,” Coinbase Chief Legal Officer Paul Grewal said in the report. “While we strongly believe this investigation should not continue, we remain committed to working with the SEC to bring this matter to a close.”

Reached by PYMNTS, an SEC spokesperson declined to comment on the report.

In a separate case, the SEC dismissed a lawsuit against Coinbase in February, saying it was working to reform its regulatory approach to the crypto industry.

The SEC had sued Coinbase in June 2023, alleging that the crypto exchange violated securities laws with its business that “intertwines the traditional services of an exchange, broker, and clearing agency” without registering those functions with the SEC, as the law requires.

Grewal said at the time in a post on X, regarding the dismissal of that case: “We thank the new leadership and staff at @SECGov. Common sense once again is not so common.”

It was reported Feb. 28 that the SEC had dismissed or halted at least eight cases against crypto firms over the previous month.

Coinbase’s disclosure of the SEC investigation came on the same day that the company said it is reimbursing users following a data breach that turned into an extortion attempt.

The breach happened when cybercriminals convinced “a small group” of company insiders to copy the data from its customer support tools for less than 1% of Coinbase’s monthly transacting users, with the aim of contacting customers while pretending to be Coinbase and tricking them into handing over their crypto, the company said.

Coinbase said it fired the compromised employees, referred them to law enforcement, will reimburse customers who were tricked into sending funds to the attacker, and is adding new customer safeguards.