According to Decrypt, the ongoing SEC review of Coinbase, along with the news of a major internal data breach, has caused new concerns about the transparency and cybersecurity at one of the crypto industry’s most prominent firms.
The SEC review is focused on past user data that might have misled investors, while the data breach happened because some employees were bribed to leak the information during a failed Bitcoin ransom attempt.
Though Coinbase says that everything is under control, its falling stocks and public image suggest a different story.
A Lingering Investigation Comes Back Into Focus
The SEC review of Coinbase started under the previous leadership at the SEC and has now come up again. The main issue is about an old number called “verified users” that Coinbase shared during its 2021 IPO and in 2022.
Critics think that this number made it look like more people were using Coinbase than they really were.
In a 2023 statement, Coinbase admitted that the “verified users” number included anyone who just confirmed their phone number or email, which might have made users’ activity seem higher than it really was.
Coinbase has stopped using that number and has switched to showing monthly active users, but the SEC review is still ongoing.
Internal Breach Deepens Scrutiny
Along with regulatory issues, Coinbase is also dealing with a serious data breach. CEO Brian Armstrong has confirmed that some overseas support staff were bribed by an outsider to share customers’ information, which includes part of their bank details and ID documents.
$20 million in Bitcoin was demanded by the attackers from the company. Coinbase declined to pay and instead offered a $20 million reward for any information that might help to catch those responsible.
Although less than 1% of users were affected, the incident has raised concerns about the company’s internal security systems.
Philip Martin, Coinbase’s head of security, said the breach was under control. However, some experts, like Phil Mataras from AR.IO, believe that this incident shows a bigger problem with centralized Web3 systems.
Market Impact
The market quickly responded. After the news of the SEC probe and the data breach came out, Coinbase’s stock dropped by 7.2% in after-hours trading.
The SEC review might have made investors more worried than the company admits.
Legal expert Jack Graves from Syracuse University said that a data breach might be more serious, but the SEC review is still important.
He said that if the investigation turns out to be bigger than what has been shared so far, then it might become a bigger issue than people think.
Coinbase’s legal team, which is led by David Polk and Wardwell, is handling the company’s strategy during the SEC review process, showing that Coinbase is preparing for a long fight with regulators.
Experts Downplay Long-Term Impact
Despite the problem, some experts think that Coinbase’s future is still strong. Nick Cote, CEO of Secondlane, said many companies have gone through similar challenges and came out okay.
The important thing is that Coinbase can learn from this experience.
Peter Chung of Presto Labs said that worries about the SEC reviews are exaggerated. He explained that Coinbase has changed the way it reports numbers as the industry’s rules have improved.
He said that it is not about bad intentions; it is just a young industry that is learning how to measure things properly.
Coinbase’s recent addition to the S&P 509 shows its strength. Legal experts say that if the SEC review was a serious threat to the company’s survival, it probably wouldn’t have been included in the index.
Conclusion
Coinbase is facing a serious SEC review and a data breach. Although the company claims these problems are under control, this shows its weaknesses in following rules and protecting data.
The SEC review is now the main challenge for the company. While leaders had promised to be open and work with regulators, the market is still worried.
FAQs
1. When did Coinbase face an SEC review?
Coinbase, during the Biden administration, faced an SEC investigation.
2. Under what reasons is the SEC reviewing Coinbase?
The SEC is reviewing Coinbase based on past user data that may have misled investors during its IPO.
3. When did Coinbase face a data breach?
Coinbase faced a data breach in May 2025, with the company receiving an email from the attackers on May 11, 2025.
4. What reasons counted towards Coinbase’s recent data breach?
Some overseas staff were bribed to leak user data.
5. How much did the hackers demand in ransom?
They demanded $20 million in Bitcoin.
Glossary
Data Breach- When private info leaks out without permission.
Verified Users- People who have just confirmed their email or phone.
Bribery- Paying someone to break the rules.
Stock Drop- When the price of a company’s shares goes down.
Sources
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