Not long after President Trump took office, Coinbase, the largest U.S. cryptocurrency exchange, got some good news: The Securities and Exchange Commission was dropping a lawsuit that had accused the company of illegally marketing digital currencies to the public.
But that case may not be the end of the company’s legal troubles.
The S.E.C. has also been investigating whether Coinbase misstated its user numbers in past disclosures — an inquiry that began during the Biden administration and has continued under Mr. Trump, according to four people familiar with it.
The investigation, which has not been previously reported, has focused on a metric that Coinbase included in securities filings and marketing materials, claiming that the company had more than 100 million “verified users,” said the people, who spoke on the condition of anonymity. The data point appeared in Coinbase’s original public offering document in 2021, but the company stopped citing it two years later.
Coinbase has been in touch with the S.E.C. over the course of this year, two people familiar with the inquiry said, and has hired the law firm Davis Polk & Wardwell to assist with its response.
A representative for the S.E.C. said the agency would not comment on “the existence or nonexistence of a possible investigation.”
Paul Grewal, Coinbase’s chief legal officer, said in a statement that the S.E.C.’s inquiry was “a holdover investigation from the prior administration about a metric we stopped reporting two and a half years ago.”