The SEC investigates whether coinbase inflated user data before going over

The US Stock Exchange and Securities Commission (SEC) He is checking yes Coinbase He cheated investors by inflating his number of users verified at the time of going to the public market in 2021.

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• Coinbase He claimed to have more than 100 million verified users for his stock debut
• The Sec maintains an investigation inherited from the Biden era
• The metric was eliminated from the public report two years after the list

The US stock and securities commission (sec) He is investigating yes Coinbase provided deceptive information to investors on their user basis at the time of its IPO in April 2021. The information was revealed by the New York Times (NYT)citing anonymous sources close to the case.

According to the report, the focus of the investigation is the number of “Verified users” that Coinbase included in his registration statement during his direct listing in the stock market Nasdaq. In that documentThe company declared more than 100 million verified users. However, this metric was eliminated from public reports less than two years later.

The investigation began during the mandate of President Joe Biden and has continued under the current administration of Donald Trump, considered more friendly with the crypto industry. Despite this political change, the case remains active within the Sec.

Paul Grewal, Legal Chief of Coinbase, He said to NYT that it is a “Research inherited from the previous administration on a metric that we stopped reporting two and a half years ago.”

“While we firmly believe that this research should not continue, we remain committed to collaborating with the SC to close this matter,” Grewal added.

The price of the Coinbase action (COIN) 6.6% fell at the time of the report, according to market data.

Changes in metrics and communications

In 2023, Coinbase He modified his reports to focus on a new metric: “Users operating monthly” (Mtu), instead of “Verified users”. According to the company, this new figure offered a more faithful panorama of economic activity within the platform.

“The number of verified users no longer provides a valuable vision of our business performance,” declared Coinbase in a document consigned to the Securities Regulator last year.

Despite this change, until 2022 CEO himself Brian Armstrong publicly held that the platform had up to 103 million verified users, consolidating its place as the largest cryptocurrency exchange house in the United States.

The cryptocurrency industry has lived years of friction with financial regulators, especially during Gary Gensler’s management as president of the Sec. Under their leadership, multiple demands and regulatory actions against ecosystem companies began, including Coinbase.

Nevertheless, the Sec already dismissed a separate demand that accused Coinbase to operate as a stockbroker and compensation chamber without a license. This decision was given in the middle of a series of reversals in compliance actions initiated during that same administration.

Within the framework of a security gap

The report on the research by the SEC occurs within the framework of an unfortunate event for coinbase, since the Exchange was the victim of a hacking that resulted in the KyC data theft belonging to its users.

After revealing that cybercriminals managed to steal data from their users, Coinbase Now it has estimated expenses for up to USD $ 400 million related to the security gap of which he was a victim.

It turns out that the attackers managed to obtain data from users of Coinbase As names, addresses, telephone numbers, images of identity documents, among others, after having bribed members of the Exchange customer service staff.

Coinbase He said in the brief that the dishonest employees behind the rape were dismissed immediately after the discovery, although without revealing when the escape occurred or how many employees were involved.

Although it is still a developing story, recent events point out that the relationship between Coinbase and regulators will continue to be a source of tension and uncertainty in the medium term.

Written article with the help of an AI content editor, edited by Angel Di Matteo / Diariobitcoin

Original image of Diariobitcoin, created with artificial intelligence, for free use, licensed under public domain

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