Coinbase hit by revived SEC probe as stock sheds monthly gains in single-day drop

Airdrop Is Live CaryptosHeadlines Media Has Launched Its Native Token CHT. Airdrop Is Live For Everyone, Claim Instant 5000 CHT Tokens Worth Of $50 USDT. Join the Airdrop at the official website, CryptosHeadlinesToken.com A New York Times report has disclosed that the US Securities and Exchange Commission (SEC) is investigating Coinbase. The report published on May 15 stated that the SEC is investigating whether claims of having over 100 million users are misrepresentations.According to the report, the investigation started under the Joe Biden administration when Gary Gensler was the SEC chair and has continued into the Trump administration. Coinbase had claimed 100 million verified users in its initial public offering documents in 2021 and other public filings after.However, Coinbase included a caveat in the filings stating that the metric might be an exaggeration since one user can open multiple accounts using several phone numbers and email addresses. The exchange finally stopped citing the metric in 2023, noting that it no longer reflects the company’s overall performance.Meanwhile, the New York Times report claimed that Coinbase had contacted the SEC to resolve the issue and even hired the Davis Polk & Wardwell law firm to represent it. While the regulator gave no information about the investigation, Coinbase has confirmed it.The company’s chief legal officer, Paul Grewal, said in a statement on CNBC that it was a holdover investigation that should have been suspended. He added that the exchange will continue to work with the SEC to resolve the matter.He said:“This is a holdover investigation from the prior administration about a metric we stopped reporting two and a half years ago, which was fully disclosed to the public. While we strongly believe this investigation should not continue, we remain committed to working with the SEC to bring this matter to a close.”Nevertheless, the SEC has not yet appeared to share this view. The report claims that the agency has reportedly been in contact with former Coinbase employees in recent months over the matter.Coinbase is facing headwinds despite recent milestonesThe news that Coinbase still has a legal issue to contend with represents a major headwind for the exchange that has been basking in the euphoria of a pro-crypto administration. With most regulatory agencies changing their approach to crypto, the exchange has been a big beneficiary.So far this year, the SEC has dropped two lawsuits over unregistered securities and staking against Coinbase. Five US states have also dismissed similar litigations over the exchange staking program.Beyond its legal wins, the company also recently joined the S&P 500, becoming the first crypto company to achieve this and signaling its growth over the past few years. However, news of recently disclosed investigations by the SEC represents a headwind for the company.With a pro-crypto SEC that has dropped dozens of lawsuits and investigations and is choosing to hold on to one against Coinbase, there are concerns that the regulator might have a case against the company.Meanwhile, Coinbase had also revealed that it was the victim of a breach that allowed bad actors to gain access to the data of some of its users. Although the exchange said it affected less than 1% of its monthly users, it estimates that remediation and reimbursements for users may cost between $180 million and $400 million.The disclosure by Coinbase finally confirms the recent concerns raised by cybersecurity experts such as ZachXBT and Tayvano, who have criticized the exchange multiple times for allowing scammers to steal from its users.Tayvano recently condemned Coinbase’s plan to introduce encrypted messaging to the Coinbase Wallet, noting that it would only give scammers direct access to users.Coinbase stock falls 7%With the headwinds that the company is facing, it is unsurprising that its COIN stock fell 7% today to $244.44. This wiped out most of its gains for the past month, when it had gained almost 40%.Following today’s drop, COIN is down 1.55% year-to-date, a performance worse than that of Bitcoin and XRP, which has gained 9.44% and 4.57% YTD but better than that of major altcoins such as Ether and Solana.Interestingly, COIN’s performance contrasts with that of another major crypto stock, MSTR. The Bitcoin treasury company is up 37% YTD.Cryptopolitan Academy: Coming Soon – A New Way to Earn Passive Income with DeFi in 2025. Learn MoreSource link