Coinbase Shares Fall 7% After Cyberattack and SEC Investigation, Analysts Say Market Overreaction
Coinbase (COIN) stock fell 7.2% on Thursday following the company’s announcement of a cyberattack and reports of an ongoing SEC investigation into its 2021 IPO user metrics. The shares briefly dropped nearly 9% during the trading session before recovering some losses.
Analysts from Barclays and Oppenheimer believe the market’s reaction is disproportionate. Barclays described the sell-off as “overblown,” emphasizing that the breach was caused by bribed customer support agents rather than a flaw in Coinbase’s blockchain security.
According to Coinbase, a group of overseas contractors was bribed to leak customer data, including names, addresses, and partially masked Social Security numbers. Scammers used this information to impersonate Coinbase and trick users into sending cryptocurrency.
Coinbase refused to pay the $20 million ransom demanded by hackers and has promised to reimburse affected customers. The company is working closely with law enforcement. Fewer than 1% of active users were affected, and no passwords, private keys, or funds were compromised.
The SEC investigation relates to the accuracy of the “100 million verified users” figure reported in Coinbase’s 2021 IPO filing. Coinbase stopped reporting this metric over two years ago. The probe reportedly started during the Biden administration.
Paul Grewal, Coinbase’s Chief Legal Officer, said the investigation is unlikely to be prolonged and is unrelated to current business operations.
The double negative news coincides with a recent surge in Coinbase’s share price following its announcement of inclusion in the S&P 500, which may have contributed to a short-term pullback.
Barclays noted that investor reaction may be influenced by the stock’s recent rapid rise. Oppenheimer views the price decline as a buying opportunity and maintained its outperform rating.
This incident highlights the ongoing challenges crypto firms face balancing technical security with human vulnerabilities. While the breach is contained, Coinbase’s response and market sentiment will shape the long-term impact.
Benchmark analyst Mark Palmer described the incident as a targeted attack via bribed contractors, not a systemic security failure. He also dismissed the SEC probe as “largely noise” related to an outdated reporting metric.
Despite these developments, Palmer raised his price target on Coinbase from $252 to $301, citing strong growth potential driven by increasing institutional adoption and clearer regulatory guidance.
