Coinbase drops 7% on customer breach, SEC probe into user numbers

Coinbase's stock dropped about 7% following two major negative developments: a customer data breach and an ongoing SEC investigation into its past reporting of user numbers.

Hackers bribed overseas Coinbase customer support staff to steal private customer data, affecting less than 1% of daily transacting users.

The attackers demanded a $20 million ransom to prevent public disclosure of the breach.

Coinbase refused to pay and pledged to fully reimburse customers who lost funds due to fraud, estimating remediation costs between $180 million and $400 million.

The company fired the compromised employees and set up a $20 million reward fund to catch the perpetrators.

The U.S. Securities and Exchange Commission (SEC) is probing whether Coinbase misstated its user numbers in securities filings and marketing materials several years ago, specifically the claim of having over 100 million "verified users".

This investigation began under the previous administration and has continued under the current SEC leadership.

Coinbase stopped reporting the "verified users" metric in 2022 and has emphasized the "monthly transacting users" metric as more relevant.

Coinbase's Chief Legal Officer Paul Grewal described the probe as a "hold-over investigation" and said the company is cooperating to resolve the matter.

These combined issues rattled investors, causing Coinbase shares to fall sharply amid concerns over regulatory scrutiny and cybersecurity vulnerabilities.

It's me, @justmythoughts, an ordinary Hive user looking to make the most of the platform. I will appreciate your support. Follow me for more. Thanks, Gracias :)