The Securities and Exchange Commission (S.E.C.) is investigating Coinbase, the largest U.S. cryptocurrency exchange, over whether it accurately reported its user numbers in past disclosures. This investigation, which began during the Biden administration and continued under the Trump administration, focuses on a metric previously used by Coinbase that claimed over 100 million “verified users.”
The inquiry came to light after Coinbase stopped citing the “verified users” metric in its securities filings and marketing materials two years ago, following its original public offering document in 2021. Coinbase has been in contact with the S.E.C. this year and has hired the law firm Davis Polk & Wardwell to assist with its response.
Coinbase’s chief legal officer, Paul Grewal, described the S.E.C.’s inquiry as “a holdover investigation from the prior administration about a metric we stopped reporting two and a half years ago.” The S.E.C. declined to comment on the existence of the investigation.
This development comes after Coinbase received positive news when the S.E.C. dropped a lawsuit accusing the company of illegally marketing digital currencies to the public shortly after President Trump took office. The investigation into user numbers disclosure adds to the company’s legal challenges.
