Coinbase shares took a sharp hit, dropping 7% to $244 in after-hours trading on May 15, following revelations of a customer data breach and an active SEC investigation into previously reported user numbers, according to Google Finance.
The company has acknowledged the incidents, which were first reported by The New York Times. The SEC is reportedly examining whether Coinbase misrepresented user statistics in its 2021 disclosures — an investigation that began during the Biden administration and has persisted into the current one.
“This is an inherited inquiry regarding a user metric we stopped using over two years ago. It was transparently communicated to the public at the time,” a spokesperson stated. “We now report more relevant data such as ‘monthly transacting users,’ which reflects platform activity more accurately. While we believe this matter should be resolved, we continue to cooperate with the SEC to bring it to a close.”
The scrutiny reportedly centers on the exchange’s claim of “100+ million verified users,” which featured in its IPO materials and marketing in 2021. Coinbase discontinued use of that metric in 2022. Despite dropping a separate enforcement lawsuit in 2023, the SEC has not closed this particular case. Coinbase has retained Davis Polk & Wardwell to support its legal response.
$20 Million Ransom Rejected by Coinbase
Also on May 15, Coinbase revealed it had been targeted in a cyberattack involving a $20 million ransom demand. The perpetrators allegedly collaborated with foreign customer service contractors to access sensitive user data.
“These individuals misused their positions to extract account details belonging to a limited number of users,” the company explained.
Coinbase declined to meet the ransom demand and announced it would reimburse impacted users for phishing-related losses. The expected cost of these reimbursements is estimated between $180 million and $400 million.
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