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Coinbase takes a hit as old SEC probe resurfaces

PLUS: Top Airdrops of the week

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Cryptopolitan News
May 16, 2025 • Estimated Reading Time: 10 minutes

📬 Today’s Byte

• Coinbase takes a hit as old SEC probe resurfaces

• PayPal says Stablecoins need banks — and rules

• BlackRock enters DeFi — sBUIDL now live on Avalanche

• Top Airdrops of the week

Coinbase takes a hit as old SEC probe resurfaces

Just when things were looking up for Coinbase — a spot in the S&P 500, legal wins piling up, and a pro-crypto administration in place — an old SEC investigation has resurfaced and knocked the wind out of its momentum.

On May 15, The New York Times reported that the U.S. Securities and Exchange Commission (SEC) is actively probing Coinbase over claims it made in 2021 about having “over 100 million users.” The SEC is reportedly looking into whether that figure, cited in IPO filings, was misleading.

The issue? One user could open multiple accounts, which Coinbase admitted back then. The company stopped reporting that metric altogether in 2023 — but the SEC isn’t letting it go just yet.

Coinbase’s Chief Legal Officer, Paul Grewal, says this is a “holdover investigation” from the previous administration and that the exchange is working to close it. But according to the report, the SEC has been speaking with former Coinbase employees — suggesting the agency may be digging in deeper.

And that’s not all…

Coinbase also disclosed a recent security breach that exposed user data — potentially affecting up to 1% of monthly users. The exchange estimates it may have to spend up to $400 million on remediation and reimbursements.

While the company says it's handling it, critics like ZachXBT and Tayvano have long warned about weak user protections. Tayvano even called out Coinbase for rolling out encrypted wallet messaging — saying it just gives scammers another entry point.

The market reaction was fast:

  • COIN stock dropped 7% to $244, wiping out nearly all its monthly gains

  • It’s now down 1.55% YTD, underperforming Bitcoin and XRP

  • Meanwhile, MicroStrategy (MSTR) — with its Bitcoin-heavy strategy — is up 37% this year

The takeaway: Coinbase has had a solid run lately, but this week was a reminder that regulatory clouds still hang over even the most polished names in crypto. A revived SEC investigation, a data breach, and a $400M potential bill? That’s a lot to digest — and Wall Street is reacting accordingly.

📜 Regulation Watch: 

According to PayPal, stablecoins won’t go mainstream without the help of banks — and clear regulations.

Speaking at Consensus 2025, PayPal’s head of digital currencies, Jose Fernandez da Ponte, said the full potential of stablecoins can’t be unlocked unless banks are involved in custody, rails, and infrastructure.

PayPal’s own stablecoin, PYUSD, launched in 2023 and is fully backed by U.S. dollars and short-term Treasuries — but adoption has been modest so far.

The comments come as the GENIUS Act — a U.S. stablecoin bill — heads to a Senate vote on May 19. Lawmakers are pushing for stricter oversight, clear licensing requirements, and full 1:1 backing with dollars or Treasuries.

MoneyGram’s CEO also weighed in, saying the bill could finally answer the trust questions that have held back stablecoin adoption globally.

The takeaway: Regulation may be the missing piece for stablecoins to move beyond crypto-native users and become a real force in global payments.

📊 Market Watch: 

BlackRock just took another big step into crypto — and this time, it’s going straight into DeFi.

The world’s largest asset manager announced that its tokenized treasury fund, BUIDL, is now integrated with the Euler protocol on Avalanche. Through this move, investors can now mint sBUIDL, a yield-bearing ERC-20 token, and use it directly in DeFi — earning yield and incentives without sacrificing liquidity.

Why this matters:

  • BlackRock is now bridging traditional finance with permissionless DeFi

  • Users can lock BUIDL to mint sBUIDL, which maintains full 1:1 redeemability

  • sBUIDL can now be used as collateral on Euler for borrowing USDC or AUSD

  • Participants will also earn AVAX rewards, in addition to treasury yield

  • All of this is happening on Avalanche, chosen for its low fees and fast settlement

sBUIDL is issued via Securitize’s vault system, with backing from Re7 Labs and Merkl, which is layering on additional yield incentives. The move is being positioned as a way to activate “sleeping” capital like fiat or stablecoins — putting it to work on-chain in a safe, compliant wrapper.

BlackRock’s BUIDL fund already manages $500M+, investing exclusively in short-term U.S. Treasuries, cash, and repos. With this integration, traditional yield meets composable DeFi, without the friction that’s kept institutions on the sidelines.

The bigger picture:

Avalanche says this is just the beginning. The chain has already hosted institutional deployments from J.P. Morgan, Citi, Franklin Templeton, and now BlackRock. More are expected as financial heavyweights explore scalable, low-cost environments for digital assets.

The takeaway: This isn’t just about another token going live — it’s BlackRock turning U.S. Treasuries into building blocks for DeFi. Quietly, the lines between Wall Street and on-chain finance are disappearing.

🎁 Airdrop Watch: 5 big drops you can still claim


Here are five active airdrops making noise this week — from Bybit’s gold trading promo to PIXEL rewards for MMORPG fans.

Top Picks:

  1. Bybit Gold Trading Zone
    Prize pool: $800,000 in USDT, gold rings, and coins
    How to join: Trade gold pairs to earn rewards and lucky draw entries
    Why it’s worth it: Real-world gold meets crypto rewards.

  2. Forgotten Runiverse x PIXEL Airdrop
    Reward: 5,000,000 $PIXEL tokens
    How to join: Play the MMORPG and spend in-game currency
    Why it’s worth it: A play-and-earn campaign with a popular game title.

  3. OpenZK Network (OZK) Airdrop
    Reward: 33.7 million OZK tokens + $50,000 in USDT
    How to join: Deposit, trade futures, and invite users
    Why it’s worth it: Big prize pool and strong DeFi ecosystem ties.

  4. X365 AI Labs Airdrop
    Reward: 47.5 billion $X365 tokens
    How to join: Sign up for free tokens and refer others to earn more
    Why it’s worth it: AI + airdrop buzz, with massive token volume.

  5. Garden Finance Airdrop
    Reward: 80 million $SEED tokens
    How to join: Stake, complete quests, and use the DeFi platform
    Why it’s worth it: Designed for early community growth with staking rewards.

Market-moving headlines 🔥

Warren Buffett, who Google names as the greatest investor to ever live, didn’t use the first quarter dip to go shopping. He unloaded more than he bought, slashing Berkshire Hathaway’s exposure to banks while keeping his cash untouched.

Trump’s crypto fund World Liberty Fi acquired EOS tokens for the first time. The asset, which is soon to be rebranded with a new ticker, makes up a small portion of the WLFI portfolio, but may serve as an endorsement for the project.  

JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou, reported that Bitcoin could outperform gold in the year’s second half. The analysts argued that the digital asset will gain ground against gold, driven by rising corporate demand and growing support from U.S. states.

Legendary crypto trader Arthur Hayes said on Thursday that he still believes Bitcoin will hit $1 million, but he’s not riding that train with his eyes closed.

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