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Coinbase Facing Yet Another Lawsuit Over Platform Security

  • Coinbase (COIN) just became the target of yet another lawsuit.
  • A class-action lawsuit in Georgia accuses the company of leaving users vulnerable by not securing accounts.
  • The suit is the third legal action levied against Coinbase by investors in recent weeks.
COIN stock Coinbase logo on screen with Bitcoin coins
Source: 24K-Production / Shutterstock.com

Coinbase (NASDAQ:COIN) just can’t seem to catch a break this summer. Amid the crypto crash and an increase in government scrutiny over the market, the crypto exchange is turning out to be one of the biggest losers. This week, the company is facing yet another lawsuit from users, making for its third of the month. The suit speaks to the greater trend of hardship washing over Coinbase, be it from the lawsuits, poor earnings, bad PR or government probes.

Even as the second-largest exchange in the world by volume, Coinbase couldn’t escape the worst of the market crash. Bad publicity emerged when it promised not to cut new hires, then ended up doing so to save costs. Of course, this is not exclusive to Coinbase; many companies have been laying off employees as a result of the bear market.

However, Coinbase also had the misfortune of publicly reporting its second-quarter earnings — something no other crypto exchange must do, as the company is the only publicly traded exchange stock. It ended up reporting a $1.1 billion net loss on the quarter and many other unappealing figures, which stood as a massive detriment to the price of COIN stock.

The market crash has also brought crypto under the lens of regulators more than ever before. Of course, this makes sense given that so many investors were negatively affected by an unregulated market. The U.S. Securities & Exchange Commission (SEC) is homing in on Coinbase via several of its probes. One former Coinbase employee also thrust the company into the center of the first-ever crypto insider trading investigation.

Not to mention, Coinbase is in the sights of two other probes by the SEC. One of these probes delves into whether the company misled investors during its initial public offering (IPO). The other questions the legal validity of its token offerings.

Coinbase Woes Continue to Pile High With Another Lawsuit

Coinbase is down-beaten, both fiscally and in publicity. The SEC probes it can do nothing about; the company needs to simply comply and wait for a ruling. In the meantime, though, Coinbase can distract itself by fighting off the many lawsuits challenging it in court. In fact, another one just joined the pack today.

A class-action suit is being filed in a Georgia court this week against the exchange. The lawsuit asserts that Coinbase caused users financial harm by permanently locking them out of their accounts. The suit, which represents over 100 users, also alleges the company put user funds in danger by improperly securing accounts, risking theft and other criminal activity.

First reported by CoinDesk, the lawsuit is calling on Coinbase users to pool together their grievances. “We are encouraging all Coinbase account holders to review their accounts carefully and advise us promptly of any irregular activity,” reads a statement from Herman Jones LLC, the legal team representing users.

This new legal action is the third suit opened against Coinbase in August alone. Earlier this month, one suit alleged that Coinbase knowingly misled investors with statements around its IPO last year. Another charges the company with hosting a grip of unregistered security offerings. This second suit is very similar in nature to an ongoing SEC probe related to unregistered security offerings.

On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.


Article printed from InvestorPlace Media, https://investorplace.com/2022/08/coinbase-facing-yet-another-lawsuit-over-platform-security/.

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