Coinbase Shares Slide 7% Amid Cyberattack Disclosure and SEC Investigation; Analysts Say Market Reaction ‘Overblown’
Shares of Coinbase (COIN) fell sharply—dropping 7.2% on Thursday—after the crypto exchange revealed a cyberattack involving social engineering and the resurfacing of a Securities and Exchange Commission (SEC) probe into its 2021 IPO user metrics. The stock briefly plunged nearly 9% intraday before regaining some ground.
Analysts at Barclays and Oppenheimer caution that the market’s reaction may be excessive, describing the sell-off as “somewhat overblown.” Barclays highlighted that the breach was caused by bribed customer support agents, not a failure in Coinbase’s blockchain security systems.
According to Coinbase’s official statement, a group of overseas customer support contractors were paid to leak sensitive customer information—including names, addresses, and partially masked social security numbers. Scammers then used this data to impersonate Coinbase and trick users into sending cryptocurrency.
Importantly, Coinbase refused to pay the $20 million ransom demanded by the hackers. The company pledged to reimburse affected customers and is actively cooperating with law enforcement. The breach impacted fewer than 1% of active transacting users, and no passwords, private keys, or direct customer funds were compromised.
Separately, the SEC investigation centers on the accuracy of the “100 million verified users” figure reported in Coinbase’s S-1 filing during its 2021 IPO. Coinbase discontinued reporting this metric over two years ago. Analysts believe the probe has been ongoing since the Biden administration took office.
Paul Grewal, Coinbase’s Chief Legal Officer, stated that the investigation is not expected to be prolonged and has no bearing on the company’s current business performance.
The dual negative headlines follow a recent surge in Coinbase’s share price after news of its inclusion in the S&P 500, which may have contributed to the stock’s vulnerability to a pullback.
Barclays suggested that investors’ reaction is partly driven by the recent sharp price gains, not just the incidents themselves. Oppenheimer described the price weakness as “a buying opportunity,” maintaining its outperform rating on Coinbase shares.
This episode highlights the delicate balance crypto firms must maintain between technological security and human factors. While the breach’s immediate impact appears contained, Coinbase’s response and the market’s memory will influence the long-term reputation effects.
Benchmark analyst Mark Palmer also minimized the breach’s significance, describing it as a targeted incident involving bribed contractors rather than a systemic security flaw. He noted that Coinbase’s core systems and customer assets remain secure.
Palmer also downplayed the SEC’s user metrics inquiry, calling it “little more than noise” tied to a metric no longer in use.
Despite headline risks, Palmer raised his price target on Coinbase to $301 from $252, emphasizing the company’s strong growth potential fueled by expanding institutional adoption and clearer regulatory frameworks.
