Cryptocurrency exchange Coinbase Global (COIN) is under investigation by the U.S. Securities and Exchange Commission (SEC) for possibly misstating its user numbers.
The SEC is examining figures previously disclosed by Coinbase that claim the crypto trading platform has more than 100 million verified users.
The SEC’s investigation is focused on whether Coinbase provided accurate user metrics in its securities filings and marketing materials.
The verified user number was first highlighted in Coinbase’s initial public offering (IPO) prospectus back in 2021.
However, Coinbase stopped referencing the figure in 2023. Management at Coinbase Global has acknowledged the situation and engaged legal counsel to help with the investigation.
The SEC investigation sent Coinbase stock down 7% on May 15. The shares had been riding high in recent trading sessions on news the company is being added to the S&P 500 index.
Coinbase’s Chief Legal Officer Paul Grewal said in a statement that the company is committed to cooperating with the SEC to resolve the investigation and any related issues.
The SEC investigation casts a cloud over Coinbase at a time when cryptocurrency firms have been expecting regulatory oversight to ease under U.S. President Donald Trump.
Reports of the SEC probe also surfaced on the same day that Coinbase disclosed a major data breach of its cryptocurrency exchange.
The stock of Coinbase has declined 5% this year to trade at $244.44 U.S. a share.
