Catenaa, Friday, May 16, 2025- The Securities and Exchange Commission is reportedly investigating whether Coinbase misled investors by overstating user numbers ahead of its April 2021 public debut, according to a company spokesperson.
The inquiry centers on the company’s disclosure of “verified users” in its direct listing registration, a figure that reportedly exceeded 100 million and was later dropped from public filings.
The probe, first reported by The New York Times, is said to have begun during the Biden administration and continues under President Donald Trump. Coinbase’s stock fell 6.6% Thursday following the news, as confirmed by The Block.
Coinbase transitioned in 2023 to reporting “monthly transacting users,” replacing the broader “verified users” metric. In filings, the company acknowledged that the previous figure included anyone who verified an email or phone number, including non-custodial wallet holders—potentially inflating the true number of active users.
Chief Legal Officer Paul Grewal characterized the SEC’s investigation as a remnant of earlier scrutiny, emphasizing that the metric in question was publicly clarified and discontinued more than two years ago.
Meanwhile, the SEC recently dropped a separate case that accused Coinbase of operating as an unregistered broker and clearinghouse, part of a broader pullback from aggressive crypto enforcement under former Chair Gary Gensler.
Coinbase CEO Brian Armstrong claimed in 2022 that the platform had over 103 million verified users. The latest scrutiny comes on the heels of a confirmed data breach involving customer KYC information, disclosed Thursday.
