Coinbase’s logo can be seen on a mobile phone screen as stock market percentages loom in the background. The U.S. Securities and Exchange Commission has been looking into whether the crypto exchange has misrepresented its user numbers, as confirmed by Coinbase on Thursday. The stock has taken a hit, dropping by 6% in the wake of this news.
Investigations have honed in on the reported number of “verified users” by the company, which Coinbase has claimed to be over 100 million in various filings and marketing materials. This inquiry, initiated during the Biden administration’s less-than-crypto-friendly tenure, has carried on under the more favorable stance of the Trump administration’s SEC. Coinbase’s chief legal officer, Paul Grewal, explained that the investigated metric of verified users was discontinued over two years ago and included anyone who verified their email or phone number, potentially inflating the count of unique customers. Despite believing that the investigation is unnecessary, Coinbase remains committed to cooperating with the SEC to put the matter to rest.
The company has disclosed another metric, the number of monthly transacting users, which represents the individuals who utilize the Coinbase platform in a given month. Prior to this development, Coinbase had already been grappling with the aftermath of a hack that resulted in stolen customer information and a hefty $20 million ransom demand. With estimated costs to remedy the situation reaching up to $400 million, Coinbase has been facing significant financial challenges. However, amidst these setbacks, the company recently made headlines with an acquisition aimed at expanding its global presence and securing a spot in the S&P 500 stock index, set to take effect in the upcoming week. CEO Brian Armstrong has expressed his ambitious goal of transforming Coinbase into the top financial services app globally within the next five to ten years.
