SEC probe into Coinbase IPO weighs on COIN stock

The U.S. securities regulator SEC has launched an official investigation into Coinbase to determine whether Coinbase misled investors.

The U.S. securities regulator SEC has opened an official investigation into Coinbase to determine whether the company misled investors. The New York Times reports this. The largest cryptocurrency exchange in the United States is suspected of inflating its user numbers around its 2021 IPO.

According to the report, the SEC is examining, among other things, the registration statement Coinbase filed at the time for the direct listing. In it, the company claimed to have more than 100 million "verified users".

Paul Grewal, Coinbase's chief legal officer, told CNBC say that this is a remnant of an earlier probe under the previous SEC leadership, which focused on a user statistic Coinbase had not used for two and a half years. "We fully disclosed this statistic," Grewal said. He stressed that Coinbase continues to cooperate with the regulator, though he believes that "this investigation does not warrant further continuation."

Notably, the SEC recently dropped another indictment against Coinbase. That case also dates back to the Gary Gensler era and centered on offering unregistered securities via the trading platform.

Yet the news about the ongoing investigation is Coinbase's second setback in a short period. Yesterday it was revealed that cybercriminals managed to persuade Coinbase’s offshore support staff to gain access to customer data.

The COIN share price fell by more than 7 percent and traded around $244 in premarket. That drop comes after a strong run of more than 80 percent since its April low, driven largely by Coinbase’s inclusion in the prestigious S&P 500 index.