Coinbase Faces Class-Action Lawsuit
Coinbase, alongside two of its top executives, is facing a proposed class-action lawsuit due to a significant drop in its stock price following the announcement of a data breach earlier this month. Brady Nessler, a disgruntled investor, filed the lawsuit on May 22 in a federal court in Pennsylvania, arguing that the company’s recent problems, including a data breach and a purported breach of an agreement with the UK’s Financial Conduct Authority (FCA), have led to a substantial decline in the value of Coinbase shares, resulting in considerable financial losses for investors.
Details of the Data Breach
On May 15, Coinbase revealed that it could face liabilities of up to $400 million after a previous $20 million extortion attempt targeted customer support agents, who were allegedly bribed to access sensitive internal data. Following this news, the price of Coinbase stock fell by 7.2% on the very day of the announcement, closing at $244. However, it managed a partial recovery the following day, ending up by nearly 9% to $266.
Impact of FCA Fine
Investor Nessler contends that the situation was exacerbated after the FCA fined Coinbase’s UK division $4.5 million in July 2024 for breaching a prior agreement designed to keep high-risk customers from being onboarded. Reports indicate that Coinbase had allowed 13,416 customers classified as high-risk by the FCA to engage with its services. Nessler asserts that news of this fine negatively impacted the stock price, which dropped by over 5% to $231.52 shortly thereafter.
Allegations of Misleading Practices
Furthermore, the lawsuit alleges that when Coinbase went public on the Nasdaq in April 2021, the company failed to disclose its breach of the FCA agreement, leading to a misleadingly inflated stock price. Nessler claims that had they been made aware of these violations, they would have refrained from purchasing shares at such inflated rates.
The complaint is notable as it appears to be the first to directly link Coinbase’s data breach and subsequent stock decline to investor damages.
Additional Lawsuits and Claims
Coinbase has been embroiled in at least six additional lawsuits following the data breach disclosure, with claims that they mishandled the incident and inadequately protected customer data.
Class-Action Suit Specifications
The class-action suit seeks damages and a jury trial, inclusive of all investors who purchased Coinbase shares between April 14, 2021, and May 14, 2025. Named in the lawsuit are Coinbase CEO Brian Armstrong and Chief Financial Officer Alesia Haas. Additionally, another lawsuit filed on May 13 in Illinois accuses Coinbase of failing to properly inform users about the collection and handling of their biometric data.
