The U.S. Securities and Exchange Commission (SEC) is investigating the cryptocurrency exchange Coinbase (Nasdaq: COIN) regarding potential misreporting of "verified users"
The U.S. Securities and Exchange Commission (SEC) is conducting an investigation to determine whether Coinbase – the largest digital asset trading platform in the U.S. – has provided misleading information about the "verified users" metric in public documents, according to a report from The New York Times.
This investigation was initiated during the Biden administration and is still ongoing, despite the SEC withdrawing a major lawsuit against Coinbase in 2023, after President Donald Trump took office.
This metric – which Coinbase had previously promoted as exceeding 100 million users – was removed from reports since 2023. In its 2021 IPO filing, Coinbase had presented "verified users" as an important indicator, but by 2023, the company declared this metric "no longer reflects a meaningful performance value for the business".
The reason given was that this metric included individuals who only needed to verify an email address or phone number, potentially exaggerating the number of unique users.
However, this data was still cited by senior executives like CEO Brian Armstrong in public statements and social media posts, raising concerns that investors might have been misled. The SEC is examining whether the use of this metric violated disclosure and investor protection regulations.
Responding to media, Paul Grewal – Coinbase's Chief Legal Officer – stated: "This is an investigation pending from the previous administration, related to a metric we have stopped reporting for over two and a half years, and have clearly explained that this metric could include non-active customers." He emphasized that the company now only uses metrics reflecting actual usage, such as "monthly trading users".
Coinbase is also reported to have contacted the SEC multiple times this year and hired the law firm Davis Polk & Wardwell for legal support. "Although we believe this investigation should be closed, we remain ready to cooperate with the SEC to resolve it definitively," Grewal affirmed.
The investigation occurs against the backdrop of Coinbase recently revealing a potential loss of up to 400 million USD due to a cyber attack, where bad actors allegedly exploited customer support staff to access data. This event happened just before Coinbase was set to be included in the S&P 500 index – a significant milestone for a tech company.
Although in 2025 the SEC has reduced the frequency of enforcement actions for some cryptocurrency-related lawsuits, misleading disclosure practices are still being closely monitored. The agency's continued investigation suggests that digital asset sector oversight strategy shows no signs of retreating, even after the cryptocurrency-dedicated unit was dissolved.
Currently, Coinbase is the largest cryptocurrency exchange in the U.S., with a market capitalization of over 60 billion USD. At the time of reporting, COIN stock was trading at 246.39 USD, a 6.43% decrease from the previous session.
