Coinbase Faces New SEC Investigation Over User Numbers
According to breaking news, Coinbase, the largest cryptocurrency exchange in the United States, received some good news shortly after President Donald Trump took office: The Securities and Exchange Commission (SEC) dropped a lawsuit against the company alleging that it illegally marketed digital assets to the public.
Legal Troubles Continue for Coinbase
However, this development may not be the end of Coinbase’s legal troubles. The SEC is now investigating whether Coinbase misrepresented its user numbers in past public filings, according to sources familiar with the matter. This investigation, which began during the Biden administration and continues under Trump, focuses on Coinbase’s claim of having “100 million+ verified users” in its 2021 IPO documents and marketing materials.
Preparation for Defense
Coinbase has been in communication with the SEC throughout the year and has enlisted the law firm Davis Polk & Wardwell to prepare its defense, as per insiders. The SEC, however, has not confirmed the existence of this investigation.
Company’s Response
Paul Grewal, Coinbase’s chief legal officer, stated that the investigation pertains to a metric from the previous administration that has not been reported on for over two years. He emphasized that Coinbase is cooperating with the SEC to resolve the matter.
Continued Scrutiny of the Crypto Sector
This investigation highlights that despite the SEC disbanding its dedicated crypto unit, scrutiny of the crypto sector in Washington is ongoing. Since Trump assumed office, the SEC has dropped multiple investigations and lawsuits against crypto firms, including one against Coinbase in 2023. With the SEC’s new chairman, Paul Atkins, known for supporting crypto initiatives, and Trump’s involvement in various crypto ventures, the regulatory landscape remains dynamic.
*This is not investment advice.