Coinbase shares fall 7% amid customer data breach and SEC investigation

Date:

The 2021 assertion by Coinbase regarding its count of over 100 million “verified users” has been brought into question by the Securities and Exchange Commission(SEC) as part of its continuing investigation.

A decline in Coinbase stock was recorded following revelations of a cyberattack that compromised customer information, along with an active investigation by the Securities and Exchange Commission concerning allegedly misstated user figures from 2021.

Investors were unsettled by the dual blow of negative developments, as Coinbase stock (COIN) was driven down by 7%, reaching $244 during after-hours trading on May 15, as reported by Google Finance.

The report by The New York Times, which revealed that the SEC has been conducting an investigation into whether Coinbase inaccurately reported its user figures in earlier disclosures, has been confirmed by Coinbase. The inquiry was initiated under the Biden administration and has been carried forward into the Trump administration.

It was confirmed by Coinbase’s chief legal officer, Paul Grewal, that the investigation is a continuation from the previous administration concerning a metric that ceased being reported two and a half years ago and had been fully disclosed to the public.

It was also stated by him that the more pertinent metric, referred to as “monthly transacting users” — representing the number of individuals actively using the platform each month — had been disclosed previously and continues to be reported.

While we strongly believe this investigation should not continue, we remain committed to working with the SEC to bring this matter to a close.

he said before adding: 

Particular objection was taken by the regulator to Coinbase’s statement of having “100+ million verified users,” which had been included in its 2021 marketing materials and IPO filings. However, this metric was no longer reported by the exchange starting in 2022.

The investigation has been sustained even though the SEC’s 2023 enforcement lawsuit against Coinbase was withdrawn during the Trump administration.

Ransom Demand Rejected by Coinbase

It was reported by Coinbase on May 15 that a $20 million extortion attempt had been launched against the company, following a cyberattack in which foreign support agents were enlisted by hackers to expose user data.

It was stated by the firm that access to customer support systems had been misused by these insiders to obtain account information belonging to a limited group of customers.

The ransom demand was declined by Coinbase; however, it was announced that compensation would be provided to victims affected by phishing attacks resulting from the data breach, with estimated costs for remediation and reimbursement projected between $180 million and $400 million.

Marton K.
Marton K.https://thecoingraph.com
Marton is seasoned crypto and finance journalist with over four years of experience. He has contributed to several high-profile outlets.

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