Coinbase Global, Inc., a leading cryptocurrency exchange, today confirmed its cooperation with a U.S. Securities and Exchange Commission (SEC) probe regarding the company’s historical reporting of user metrics. The disclosure comes shortly after Coinbase revealed it was targeted in an extortion attempt involving stolen user data.
Paul Grewal, Coinbase’s Chief Legal Officer, stated, “The SEC’s investigation is a hold-over from prior reporting practices concerning ‘verified users.’ We addressed this metric more than two years ago by discontinuing its use, as it overstated the number of unique customers and did not accurately reflect business performance.” Grewal added, “While we believe this investigation should not continue, Coinbase remains committed to working closely with the SEC to resolve this matter promptly.”
Coinbase continues to report the number of “monthly transacting users,” which Grewal described as the more relevant and accurate metric for measuring platform activity.
Separately, Coinbase disclosed that it recently faced an extortion threat demanding $20 million in exchange for not releasing stolen customer information. The breach stemmed from corrupt overseas customer support agents who allegedly sold access to sensitive user data. Fortunately, no login credentials or private keys were compromised.
In response, Coinbase has allocated the ransom amount to a reward fund for information leading to the perpetrators’ arrest and conviction. The company has terminated the implicated employees and referred the case to both domestic and international law enforcement authorities.
Coinbase estimates remediation costs related to the breach will range between $180 million and $400 million, including reimbursements to customers affected by resulting scams. The company emphasized its ongoing cooperation with law enforcement and collaboration with industry partners to recover stolen assets.
“The Company plans to aggressively pursue all available remedies to protect its users and uphold the integrity of its platform,” the SEC filing stated.
