Coinbase Stock Drops 6% Amid SEC Probe, Data Breach

Coinbase Global Inc. has been under scrutiny by the United States Securities and Exchange Commission (SEC) for allegedly misstating user data in past filings. The investigation, which began during the Joe Biden administration under Gary Gensler and continued under the Donald Trump administration, focuses on a marketing metric that Coinbase stopped reporting over two years ago. This metric claimed that the firm had more than 100 million verified users.

Paul Grewal, the Chief Legal Officer at Coinbase, acknowledged the investigation but expressed the company's belief that it should not continue. He stated, "While we strongly believe this investigation should not continue, we remain committed to working with the S.E.C. to bring this matter to a close."

Despite the ongoing investigation, Coinbase has been a significant player in the mainstream adoption of digital assets and web3 protocols. The crypto exchange has been instrumental in onboarding institutional investors into the crypto space, particularly through providing liquidity for spot Bitcoin (BTC) and Ethereum (ETH) ETFs. However, the company has also faced legal and security challenges. Earlier this week, Coinbase reported a data breach that resulted in the theft of some users' data and an extortion attempt. The potential cost of this data breach could be as high as $400 million.

In response to the recent negative news, including the data breach and the SEC investigation, Coinbase's stock (COIN) dropped over 6 percent to trade at approximately $247 during the mid-North American trading session on Thursday, May 15. This decline highlights the impact of regulatory scrutiny and security incidents on the company's market performance.