Coinbase couldn’t catch a break this week. The crypto giant’s stock sank 7% in after-hours trading to $244 on May 15 after two major blows hit the company within hours of each other. First came a data breach. Then came a fresh shot from regulators. Investors didn’t like either.
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Insider Cyberattack Sparks $400 Million Fallout
On May 15, Coinbase confirmed it had suffered a cyberattack involving compromised customer support agents who leaked user data. “These insiders abused their access to customer support systems to steal the account data for a small subset of customers,” Coinbase said. After stealing the information, the attackers demanded $20 million in ransom. Coinbase refused to pay. Instead, the company pledged to reimburse affected customers. The cost? Somewhere between $180 million and $400 million, according to its latest SEC filing. The breach comes just days after Coinbase was added to the S&P 500 — a major milestone now overshadowed by crisis management.
SEC Targets Coinbase Over “Verified Users” Claim
The data breach wasn’t the only storm cloud. The New York Times also reported the SEC is investigating Coinbase’s 2021 claim of having “100+ million verified users”. That figure featured heavily in the company’s marketing and IPO pitch deck. But in 2022, Coinbase stopped reporting it altogether, saying it no longer reflected meaningful business performance.
“This is a hold-over investigation from the prior administration about a metric we stopped reporting two and a half years ago,” said Coinbase chief legal officer Paul Grewal to Cointelegraph. He added that the exchange has instead shifted to reporting monthly transacting users, which better reflects platform activity. “While we strongly believe this investigation should not continue, we remain committed to working with the SEC to bring this matter to a close,” Grewal said. Coinbase has tapped law firm Davis Polk & Wardwell to handle the probe.
Is Coinbase a Good Stock to Buy?
Despite the turbulence, analysts still see upside. On TipRanks, Coinbase stock holds a Moderate Buy rating based on 23 analyst reviews. The average COIN price target sits at $264.19, which implies an 8.08% upside from current levels. The most bullish forecast calls for $400, while the lowest drops to $169. Out of the 23 analysts, 12 say Buy, 11 say Hold, and none recommend selling.
