Coinbase Reveals U.S., State Probes as It Seeks to Go Public

Coinbase Global Inc. said it’s facing federal and state investigations as the biggest U.S. crypto exchange seeks to go public through a direct listing.

The company, reported to be valued at more than $100 billion in recent private transactions, has been under investigation since 2017 by the Commodity Futures Trading Commission, Coinbase said Thursday in a filing. Coinbase also received a Securities and Exchange Commission subpoena as recently as December, for information about its operations. It’s common for firms seeking to go public to disclose any regulatory probes as potential risks.

The legal headaches come as Coinbase seeks to ride Bitcoin’s meteoric rise to what’s expected to be one of the biggest initial public offerings in years. Coinbase’s revenue more than doubled last year from 2019 as it swung to a profit amid a boom in cryptocurrency trading.

U.S. regulators have brought high-profile cases against cryptocurrency platforms since the nascent industry began taking off in 2017. A possible lawsuit or settlement with Coinbase, which says it has 43 million verified users, would probably be one of the most significant regulatory actions to date.

Coinbase, the SEC and the CFTC declined to comment.

Coinbase detailed a range of topics that interest CFTC investigators. The firm said the three-year probe covers areas including an event in the Ethereum market, trades in 2017 by an employee who has since left the firm, the listing of the Bitcoin Cash product and how the platform manages liquidity using algorithms.

Coinbase said the company, executives, former employees and some directors have received CFTC subpoenas, and it’s cooperating with all investigations.

The exchange also received an investigative subpoena from California’s attorney general in 2019 seeking documents related to business practices, customer complaints and other issues. The firm said it received a similar request from Massachusetts’s top lawyer. California’s AG declined to comment while the Massachusetts office didn’t return a message requesting comment.

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