CoinbaseCOIN-3.06%) Is Being Investigated by the SEC Over Its User Count Metric

The Securities and Exchange Commission is investigating if CoinbaseCOIN-3.06%) previously claimed to have more than 100 million “verified users”

The Securities and Exchange Commission is investigating if Coinbase(NASDAQ:COIN)

has been fibbing about its user count, according to The New York Times.

Coinbase previously claimed to have more than 100 million “verified users” in several pieces of content, including its original public offering document in 2021. However, the company ceased to quote it two years later.

The SEC’s probe, which began during the Biden administration and has continued under President Donald Trump, is focused on whether that metric is accurate, the Times reports.

Shares in Coinbase Global Inc (NASDAQ:COIN)dropped 6% on Thursday.

The investigation comes as the SEC is juggling leadership changes and a busy agenda that includes several cases against crypto firms and the roll-out of new crypto regulations.

The new leadership at the SEC comes after a period of intense scrutiny of the crypto industry.

The investigation began during the Biden administration and has continued under President Trump, sources told the Times. Paul Grewal, Coinbase’s chief legal officer, said that the inquiry is “a holdover investigation from the prior administration about a metric we stopped reporting two and a half years ago,” in a statement.

“While we strongly believe this investigation should not continue, we remain committed to working with the S.E.C. to bring this matter to a close.”

The report from the Times comes amid a period of significant change at the SEC.

Earlier this month, crypto-friendly Paul Atkins was sworn in as chair of the SEC after Gary Gensler stepped down from the role in January.

Shortly after Trump’s return to office, the agency published a statement titled the “SEC Crypto 2.0.” whereby it announced a new task force to draft the first-ever regulations for digital assets. The agency has also dropped dozens of lawsuits against crypto companies in recent months and issued guidance on “meme coins,” which classified the tokens as non-securities.

The inquiry also comes to light on the same day that the company announced it had been the victim of a cyberattack.

Coinbase thinks it will be on the hook for $180 million to $400 million after hackers breached a “small subset” of its customers’ accounts.