According to breaking news, Coinbase, the largest cryptocurrency exchange in the United States, received some good news shortly after President Donald Trump took office: The Securities and Exchange Commission (SEC) dropped a lawsuit against the company alleging that it illegally marketed digital assets to the public.
However, this development may not be the end of Coinbase’s legal troubles.
The SEC is investigating whether Coinbase misrepresented its user numbers in past public filings, according to four people familiar with the matter. The investigation began during the Biden administration and continues under Trump.
The investigation, which has not been previously made public, focuses on Coinbase’s statement of “100 million+ verified users” in its 2021 IPO documents and marketing materials. The company stopped using that metric by 2023.
Coinbase has been in contact with the SEC throughout this year and has retained the law firm Davis Polk & Wardwell to prepare its defense, according to two people familiar with the matter.
A spokesperson for the SEC said they “will not comment on the existence or absence of an investigation.”
Coinbase chief legal officer Paul Grewal said in a statement that the investigation “relates to a metric from the previous administration that they have not reported on for two and a half years.” “We strongly believe that this investigation should not have proceeded, but we are committed to working with the SEC to bring closure to this matter,” Grewal said.
This investigation shows that, despite the SEC largely dismantling its dedicated crypto unit, scrutiny of the crypto sector in Washington is not completely over.
Since Trump took office in January, the SEC has dropped more than a dozen investigations and lawsuits against crypto firms, including a lawsuit against Coinbase that it filed in 2023. The SEC’s new chairman, Paul Atkins, is known to be a crypto ally, and Trump himself is known to be involved in several crypto ventures.
*This is not investment advice.
