SEC Probes Coinbase Over Misrepresentation of User Data: Report

Coinbase is reportedly facing an investigation by the SEC over the accuracy of its reported user numbers.

The SEC has focused on a figure Coinbase included in its public filings and marketing materials, claiming it had over 100m “verified users,” the New York Times reported Thursday. This data point was initially presented in the company’s 2021 public offering document, but was later omitted in 2023.

The SEC’s inquiry, which began during the Biden administration, has continued under President Trump.

According to NYT, the SEC has contacted former Coinbase employees to gather information about the controversial user metric. Although the company no longer reports this figure, it is still under scrutiny. As a result, Coinbase has sought legal assistance from Davis Polk & Wardwell.

According to NYT, the SEC is investigating whether Coinbase misstated its user numbers in past disclosures. The inquiry began during the Biden administration and has continued under the Trump administration, focusing on the ‘verified user’ data disclosed before and after…

— Wu Blockchain (@WuBlockchain) May 15, 2025

Paul Grewal Urges End to SEC Inquiry, Stresses Coinbase Dropped Metric Over 2 Years Ago

In response, Coinbase’s Chief Legal Officer, Paul Grewal, stated that the SEC’s investigation was a holdover from the previous administration. He said that the metric in question had been dropped two and a half years ago, adding that the company believes the inquiry should be concluded.

The probe is separate from the SEC’s 2023 charges against Coinbase for operating its crypto asset trading platform as an unregistered exchange. Despite regulatory challenges, the SEC’s mission to prevent misleading statements in public filings remains unchanged.

Despite Regulatory Challenges, Coinbase’s Growth Continues with $60B Valuation

Although the SEC has relaxed its enforcement actions under the Trump administration, including dropping several investigations into crypto firms, the agency’s mission to prevent misleading statements in public filings remains unchanged.

In recent years, Coinbase has grown significantly, now valued at over $60b and added to the S&P 500 index.

The company has faced additional challenges, including a recent data breach that exposed customer information. A $20m ransom demand later became a bounty after Coinbase disclosed this week that bribed foreign support staff had leaked partial data from less than 1% of its users.

Despite these setbacks, Coinbase has maintained its leadership in the crypto industry. Moreover, its relationship with the SEC continues to be a key aspect of its operations as it navigates legal hurdles while expanding into the mainstream financial sector.