Coinbase stock bounced back on May 16, gaining over 7% during the trading session, following a sharp 7% plunge the previous day due to revelations of a severe cyberattack and news of an ongoing SEC investigation. These setbacks arrived just as Coinbase is preparing for its highly anticipated inclusion in the S&P 500 index.
The cyberattack reportedly involved hackers bribing Coinbase's overseas support staff to gain access to internal systems. The breach resulted in the leak of sensitive customer information including names, emails, addresses, partial Social Security numbers, and images of government-issued IDs. Coinbase confirmed that no passwords or crypto wallets were compromised.
In response, CEO Brian Armstrong revealed that the company had terminated all employees involved in the breach, offered a $20 million bounty for information leading to the perpetrators, and pledged to reimburse affected customers. Estimated damages from the breach, including reimbursements, legal exposure, and technical overhauls, could cost Coinbase as much as $400 million.
Compounding the crisis, Coinbase is also under renewed scrutiny from the U.S. Securities and Exchange Commission. The SEC is reportedly investigating whether the company misrepresented user data in past disclosures. The probe concerns the earlier use of the "verified users" metric, which included anyone who had verified an email or phone number, not necessarily active customers. Coinbase has since shifted to using “monthly transacting users” for its reporting. Chief Legal Officer Paul Grewal stated that Coinbase is cooperating with the SEC but believes the investigation lacks merit and should not move forward.
Despite the chaos, COIN shares rebounded strongly on May 16, climbing to $262 and reflecting a month-to-date surge of over 50%. This recovery comes just ahead of Coinbase's scheduled inclusion in the S&P 500, a move expected to further solidify its standing among institutional investors.
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