Shares of cryptocurrency exchange Coinbase Global (COIN) are down 6% on reports the U.S. Securities and Exchange Commission (SEC) is investigating the company for potentially misstating its user numbers.
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The New York Times (NYT) was the first to report that the SEC is examining figures previously disclosed by Coinbase Global that claim the crypto trading platform has more than 100 million verified users. The SEC’s investigation is focused on whether Coinbase provided accurate user metrics in its securities filings and marketing materials.
The verified user number was first highlighted in Coinbase’s initial public offering (IPO) document back in 2021. However, Coinbase stopped referencing the figure in 2023. Management at Coinbase Global have acknowledged the situation and hired the law firm Davis Polk & Wardwell to help with the investigation.
Resolving the Issue
News of the SEC investigation pours cold water on COIN stock, which had been riding high in recent trading sessions on news that the company is being added to the benchmark S&P 500 index. Coinbase’s Chief Legal Officer Paul Grewal stated that the company is committed to cooperating with the SEC to resolve the investigation and any related issues.
The SEC investigation casts a cloud over COIN stock at a time when cryptocurrency firms have been expecting regulatory oversight to ease under the administration of U.S. President Donald Trump, who has pledged to maker America the “crypto capital of the planet.” Reports of the SEC probe also come on the same day that Coinbase disclosed a major data breach of its crypto exchange.
COIN stock has declined 1% this year.
Is COIN Stock a Buy?
The stock of Coinbase Global has a consensus Moderate Buy rating among 23 Wall Street analysts. That rating is based on 12 Buy and 11 Hold recommendations assigned in the last three months. The average COIN price target of $262.10 implies 6.48% upside from current levels.
