The US Securities and Exchange Commission (SEC) is investigating Coinbase to determine whether it has misunderstood the number of users on its platform.
Coinbase confirmed the news on 15 May after an article in the New York Times revealed the probe and reported that it was underway since the Biden administration.
The report, combined with the stock exchange that reveals details about a recent scam problem caused by internal infringements, led to a 6% slide in his share price.
Verified users
The exchange has announced that the SEC is investigating the previously reported “verified users” statistics, a figure that has been published in company requests and marketing material and once covered 100 million.
Coinbase Chief Legal Officer Paul Grewal said in a statement to CNBC:
“This is a remnant investigation of the earlier administration about a statistics that we stopped two and a half years ago with reporting two and a half years ago, which was fully announced to the public.”
He explained that the now-retired metric-counted users who have verified an e-mail or telephone number, so that the number of unique customers may exaggerate.
Grewal added that Coinbase has since shifted to reporting ‘monthly transactions’, a metric that has still been announced in its win reports and said that the company is working with the SEC to close the investigation.
Shifts at the SEC
The investigation unfolds because the SEC undergoes a leadership shift under the government of President Donald Trump, who has taken a more crypto-friendly attitude compared to its predecessor.
However, the continuation of the probe suggests persistent regulatory control over the disclosure of crypto companies and public data.
The company’s challenges became deeper after it had unveiled a security break with stolen customer information and a ransom of $ 20 million. Coinbase said that the incident could cost up to $ 400 million to tackle, which contributes to concern about investors.
Despite the setbacks, Coinbase has made considerable progress in recent weeks. The exchange announced an acquisition that was aimed at expanding its worldwide presence and will enter the S&P 500 index next week.
During his recent win of the first quarter, CEO Brian Armstrong said that the company is planning to become ‘the number 1 app for financial services’ within five to ten years.