SEC Probes Coinbase Over Old User Metrics Amid Insider Breach Fallout

Highlights:

• The SEC continues to investigate Coinbase over past user count claims despite the company dropping the metric in 2022.
• Coinbase confirms an insider data breach with a $20 million ransom demand and a 20 million bounty offer instead.
• Despite ongoing legal issues, Coinbase is joining the S&P 500 index, marking a major milestone for the crypto firm.

The SEC is reviewing Coinbase for earlier claims about its user base. The focus of the agency is on the “verified users” data found in company documents. The figure appeared both in Coinbase’s 2021 IPO filing and in advertisements. Even so, Coinbase chose to bury the metric in its 2022 reports. Even with the new administration, the SEC kept looking into this case.

BREAKING⚡:

The SEC is investigating Coinbase for allegedly inflating user metrics in its 2021 IPO filing, per NYT. pic.twitter.com/dJWBYP5aXM

— Marzell (@MarzellCrypto) May 16, 2025

The inquiry began during the previous tenure and has not been dropped. The SEC has contacted former employees to gather more details. The figure counted users who verified their phone or email, which may have included duplicate accounts. Coinbase acknowledged this and said the count did not reflect active or unique users. The company explained the shift to a new metric for greater clarity.

Coinbase now reports “monthly transacting users” instead of verified accounts. This metric includes only users who complete transactions each month. The company has disclosed this in its earnings reports. Coinbase said the SEC should end the probe because the metric is outdated. Paul Grewal, the company’s chief legal officer, described the issue as a holdover from the previous administration.

He stated the company had not used the figure in over two years. He also confirmed that Coinbase had disclosed the metric’s limitations to the public. Coinbase believes it acted transparently and in line with public reporting standards. Although the SEC has dropped other crypto cases, it has not closed this one. The investigation remains active, keeping the company under further pressure.

Data Breach Adds Pressure to Coinbase Operations Amid SEC Probe

Coinbase revealed there was a data breach due to some bribed customer service representatives. Attackers gained access to personal information using an inside source on May 11. They managed to access some private details from less than 1% of their customers. The attackers demanded $20 million in Bitcoin from Coinbase.

Coinbase set a $20 million reward for tips leading to the attackers. CEO Brian Armstrong said foreign support agents accepted bribes from the hackers. These insiders helped criminals breach Coinbase’s internal systems.

As the news spread, Coinbase’s stock dropped 6% on the same day. Although a small number of people were impacted, the result was quite significant. This incident is just one more obstacle Coinbase must deal with. The company is taking measures to win back trust from its users as well as investors.

Continued Legal Hurdles Shadow Company’s S&P 500 Entry

Despite the difficulties, Coinbase reached a milestone by entering the S&P 500 index. Meanwhile, the SEC dropped an earlier case on Coinbase’s token sales. In addition, the agency ended a separate review of its revenue from USDC. These improvements brought some relief to the company.

However, not all legal matters have been resolved. In April, the state of Oregon took legal action against Coinbase. The state claimed that the company was in violation of local rules on securities. The situation is not over yet and may lead to more legal issues. Despite facing these matters, Coinbase is expanding its business globally.