Coinbase: SEC investigation and data theft cloud upswing

After its recently celebrated inclusion in the S&P 500, Coinbase is now experiencing its first setbacks. Shares of the largest US crypto exchange operator came under heavy pressure on Thursday, closing down 7.2 percent. The company is facing further SEC investigations and is also struggling with hackers.

This is due to two pieces of damaging news. First, Coinbase confirmed that the U.S. Securities and Exchange Commission (SEC) is investigating whether the company may have overstated its user numbers in the past. The focus is on the number of so-called "verified users," which was stated at over 100 million in official documents and marketing materials. According to the New York Times, the investigation began under the Biden administration and is now continuing under the more crypto-savvy SEC leadership of the Trump administration.

Coinbase General Counsel Paul Grewal explained in a statement to CNBC: "This is a follow-up to a metric we stopped publishing two and a half years ago." At the time, they disclosed that "verified users" also included people who had merely confirmed their email address or phone number. Therefore, an overstatement is possible. Today, the more relevant metric for investors is the "monthly active transacting users," which Coinbase continues to report regularly.

Additional pressure was caused by the news of a cyberattack: According to Coinbase, hackers stole customer data and demanded a ransom of $20 million. The company estimates that the resulting damage could cost up to $400 million.

Just last week, Coinbase made positive headlines with the announcement of an acquisition and the associated inclusion in the S&P 500. CEO Brian Armstrong spoke ambitiously about his goal of making Coinbase the "world's leading financial services app."