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On Thursday, Coinbase Global (COIN) confirmed reports that US Securities and Exchange Commission (SEC) officials have been investigating the cryptocurrency exchange over its user metrics. Simultaneously, hackers were found to be bribing non-US Coinbase employees to gain access to customer data; Coinbase is refusing to pay the $20 million ransom and estimates this will cost them $400 million.
Yahoo Finance senior reporter Jennifer Schonberger details the SEC's investigation into whether Coinbase misstated its user numbers in past statements.
Also catch Jennifer Schonberger's full interview with Coinbase CEO Brian Armstrong.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
Coinbase confirming today that the Securities and Exchange Commission has been investigating company about its user metrics. For more we're bringing in Yahoo Finances, Jennifer Schonberger. Hi, Jen.
Hey, Julie. That's right. Securities and Exchange Commission is investigating whether Coinbase misstated its user numbers in past disclosures. This even after the company, rather the agency dropped its lawsuit, accusing the world's largest crypto exchange for not registering with the commission to market alleged securities. Paul Grewal, Chief Legal Officer for Coinbase, told Yahoo Finance in a statement that, quote, "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." He went on to say, while we strongly believe this investigation should not continue, we remain committed to working with the SEC to bring this matter to a close. Now, Grewal said the company has explained that a measure known as the Verified Users measure includes anyone who verified their email address or phone number with the company, and thus may overstate the number of unique customers. He also said Coinbase disclosed and continues to disclose the more relevant measure of monthly transacting users. That's the number of people who actually use Coinbase's platform in a given month. When Coinbase filed with the SEC to become a public company, it disclosed in its S1 form in February of 2021 the difference between verified users, a broader, more encompassing measure that include those registered on the platform along with those who have simply verified their email or phone number, versus the monthly transacting users, or those who transact in one or more products at least once a month. Now, in 2023, Coinbase disclosed to the SEC in a 10k filing that they no longer believed the more all-encompassing verified users metric was an accurate yardstick and said it did not plan to report the number of verified users in future filings beginning in March 2023. Now the SEC did not immediately respond for comment. Separately, today we learned from Coinbase that the company had been hacked by cyber attackers who stole sensitive private customer information, threatening to disclose that publicly unless they were given $20 million in ransom, a request that Coinbase has denied. Meanwhile, Bloomberg reporting just moments ago that Coinbase's system has actually been open to hackers since January. I reached out to Coinbase for comment, but they did not immediately respond, guys.
All right, thank you, Jen.
