SEC’s Coinbase Probe Persists, Questioning Trump’s Crypto Promises

Donald Trump’s return to the presidency in January 2025 brought a wave of optimism to the crypto world. His campaign’s bold pledge to transform the U.S. into the “global crypto hub” promised relief from the Biden administration’s heavy-handed regulations.

With Paul Atkins, a crypto advocate, tapped as the new SEC chair, many expected lawsuits against firms like Coinbase to quietly disappear. However, as May 2025 unfolds, the SEC’s investigation into Coinbase Global Inc., America’s largest crypto exchange, is not only ongoing but gaining steam.

The probe, which questions whether Coinbase overstated its “verified user” numbers in its 2021 IPO, has rattled investors and cast shadows over Trump’s deregulation rhetoric.

Coinbase’s Chief Legal Officer, Paul Grewal, has dismissed the investigation as a relic of former SEC Chair Gary Gensler’s era, when crypto firms faced relentless scrutiny. Grewal insists the user metric, once touted as 100 million, was transparently reported and later replaced with clearer monthly transacting user data in 2023. He’s called for the SEC to close the case, arguing it’s outdated.

• Coinbase’s stock (COIN), a crypto market bellwether since its 2021 debut, launched at $250 per share and peaked at $342 in November 2021 amid a Bitcoin boom.
• A 2022 crypto winter and regulatory woes drove it to a low of $31.55 by December.
• By early 2025, shares rebounded to $187, fueled by Bitcoin’s recovery and Trump’s election.
• On May 13, 2025, Coinbase’s S&P 500 inclusion and a $2.9 billion acquisition of Dubai-based Deribit sparked a 24% surge to $225.

However, a revived SEC probe triggered a 7% drop to $209, wiping out most of the week’s gains.

The SEC probe raises concerns over possible penalties or restated financials, threatening Coinbase’s credibility. On the same day, a cyberattack exposed customer data through third-party vendors, with losses estimated between $180 million and $400 million. A New York class-action suit accuses Coinbase of failing to protect users, adding legal pressure. Meanwhile, a 12% drop in Dogecoin in May 2025 amid regulatory turmoil further dampens sentiment, especially given Coinbase’s reliance on retail trading.

If Coinbase overstated users, it might signal broader issues in crypto exchange reporting, especially for retail-driven tokens. Earlier this year, the SEC dropped a separate Coinbase case, fueling optimism. But the current probe’s persistence, despite Trump’s pro-crypto executive order in February 2025, suggests the agency isn’t fully pivoting.

President Trump’s crypto push seemed ironclad. He launched a Digital Asset Task Force led by SEC Commissioner Hester Peirce in March 2025 and repealed Biden-era accounting rules that restricted crypto firms’ banking access. Coinbase, which funneled $46 million to pro-crypto PACs in 2024, expected smoother sailing.

CEO Brian Armstrong’s post-election meeting with Trump reinforced that hope. Yet, the SEC’s refusal to shelve this probe feels like a page from Gensler’s playbook, not the deregulatory script Atkins pitched. Even the agency’s rebranded Cyber and Emerging Technologies Unit, formerly its crypto enforcement arm, remains active, hinting at continued oversight.

Analysts are divided. Oppenheimer argues the probe won’t derail Coinbase’s growth, citing its $1.4 billion Q1 2025 revenue. But consumer groups, like Americans for Financial Reform, warn that weak oversight could amplify risks when markets sour.

The SEC’s pause on a Kraken lawsuit in April 2025 shows flexibility, yet Coinbase’s case stands out, fueling doubts about whether Trump’s vision will fully materialize.

Coinbase is digging in, backed by legal firepower from Sullivan & Cromwell. Its shift to transparent metrics and cooperation with the SEC signals confidence, but the agency’s tight-lipped stance leaves uncertainty. Will Atkins, once confirmed, will push for closure, or is this probe a sign that deregulation is more promise than reality? Coinbase’s S&P 500 status and global ambitions hang in the balance, as does its ability to rebuild trust after the cyberattack.

A harsh outcome could tighten rules for exchange data, impacting meme coin traders and institutional players alike. A resolution in Coinbase’s favor might prove that Trump’s agenda is taking hold.

Either way, the saga highlights a stark reality: regulatory relief is only as good as the actions behind it.