On May 15th, Coinbase confirmed that the U.S. Securities and Exchange Commission (SEC) ‘s investigation into the number of its “verified users” is still ongoing. The investigation began during the Biden administration.
Previously, an article in The New York Times disclosed this investigation. The investigation focused on the “verified users” metric previously reported by Coinbase, which had appeared in the company’s documents and marketing materials and once exceeded 100 million. In a statement to CNBC, Paul Grewal, the chief legal officer of Coinbase, said that this was an investigation left over from the previous administration, involving an indicator that they stopped reporting two and a half years ago and that the indicator has been fully disclosed to the public. He explained that this defunct metric counted users who verified their email or phone numbers and might have exaggerated the number of independent customers.
Grewal also mentioned that Coinbase has since switched to reporting the metric of “monthly trading users”, which is still disclosed in its earnings reports. The company is working with the SEC to end this investigation.
This investigation was launched against the backdrop of a leadership transition at the SEC. The SEC under the Trump administration has a more friendly attitude towards cryptocurrencies compared to the previous administration. However, the continuation of this investigation indicates that regulatory authorities still have ongoing scrutiny of the disclosed information and public data of cryptocurrency companies.
Recently, Coinbase also disclosed a security vulnerability incident where customer information was stolen and hackers demanded a ransom of 20 million US dollars. The company claimed that resolving the incident might cost as much as 400 million US dollars, which has further intensified investors’ concerns.
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