Source: Cointelegraph
Original: “Coinbase Stock Drops 7% Due to Customer Data Breach and SEC Investigation into User Numbers”
Coinbase's stock price fell after news of a cyber attack exposing customer data and the ongoing investigation by the U.S. Securities and Exchange Commission (SEC) into the alleged inflation of user numbers in 2021.
This double blow has unsettled investors, with Google Finance data showing the company's stock (COIN) dropped 7% in after-hours trading on May 15, falling to $244.
Coinbase subsequently confirmed a report by The New York Times stating that the SEC has been investigating whether Coinbase inflated user numbers in past disclosures, a probe that began during the Biden administration and continued under the Trump administration.
“This is a legacy investigation from a previous administration concerning metrics we stopped reporting two and a half years ago, which were fully disclosed to the public at that time,” Coinbase Chief Legal Officer Paul Grewal confirmed to Cointelegraph.
“We have also disclosed—and continue to disclose—more relevant metrics, ‘monthly transacting users’—the number of people using our platform in a given month,” he added:
“While we strongly believe this investigation should not continue, we remain committed to working with the SEC to resolve this matter as quickly as possible.”
Regulators have expressed particular dissatisfaction with Coinbase's claim of “over 100 million verified users” in its 2021 marketing and initial public offering (IPO) documents. However, the exchange stopped reporting this metric in 2022.
Although the SEC dropped its enforcement action against Coinbase in 2023 during the Trump administration, the investigation is still ongoing.
Coinbase has hired Davis Polk & Wardwell LLP to assist in responding to the SEC's investigation.
On May 15, Coinbase reported that it had been the target of a $20 million ransom attempt, with cybercriminals recruiting overseas support agents to leak user data.
“These insiders abused their access to the customer support system to steal account data from a small number of customers,” the company stated.
Coinbase refused to pay the ransom but indicated it would compensate victims of phishing attacks resulting from the data breach, with expected repair and compensation costs ranging from $180 million to $400 million.
Related: Coinbase Executive: Trump’s Relationship with Cryptocurrency “Presented Certain Challenges for Passing Legislation”
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