Coinbase Suffers New, $350M Legal Threat

  • Coinbase (COIN) is being sued by Veritaseum Capital for allegedly infringing on the company’s software patents.
  • Veritaseum is seeking $350 million from Coinbase as a result of “sustained damages” to the company.
  • The suit is the third one faced by Coinbase since August.
Coinbase - Coinbase Suffers New, $350M Legal Threat

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Coinbase (NASDAQ:COIN) has been in the same tumult trapping the rest of the market. Indeed, it hasn’t been kept safe through the market’s volatility, even as one of the only crypto companies open for retail trading. On the contrary, while the market crash has been raining down fire and brimstone on the crypto world, Coinbase faces perhaps even more turmoil than anybody else.

COIN stock is in a bearish state, and that’s the least of Coinbase’s problems. The company is currently reckoning with the cryptocurrency market’s plummet into the abyss. Over the last year, the global market capitalization of cryptocurrency went from over $2 trillion to under $1 trillion. And while the rapid price drop of coins and tokens is scaring some into selling, the bleak outlook for crypto prices is not bringing in many buyers. As a result, Coinbase’s daily trading volume has continued to trend downward throughout 2022.

While this macroeconomic heel continues to dig into Coinbase, there are more pressing matters on the company’s plate. The Securities and Exchange Commission (SEC) is scrutinizing Coinbase’s practices more than any other crypto company right now. One probe opened up in the company back in July. This probe alleges that Coinbase underwent at least seven different unregistered securities offerings. The investigation began in connection to an arrest made earlier that month accusing a Coinbase employee of insider trading while in his position.

Another probe opened in August delves into Coinbase’s staking products. While the details remain vague, the SEC is subpoenaing Coinbase for a variety of different information pertaining to these services. Not to mention, these staking features have come under fire among Ethereum (ETH-USD) investors recently as Coinbase holds momentous influence over the recently-upgraded layer-1 network.

Coinbase Lawsuit Makes for the Third in Two Months

All of this adds up to an unpleasant time for Coinbase. But it’s not even the end of the company’s woes. A lawsuit initiated this week stands to put the company on the hook for up to $350 million. It’s the third lawsuit the company has faced since early August.

One lawsuit, filed after the first SEC investigation’s opening, looks to force Coinbase to pay damages to users who incurred losses through the company’s securities law violations. The second, filed just after the first, accuses the company of misrepresenting itself and its services to users.

This week, a third lawsuit joins the fold, and unlike the first two class-action suits, this complaint pits Coinbase against a fellow crypto company. Veritaseum Capital, a New York-based blockchain software company, is accusing Coinbase of infringing on its technological patents. Specifically, Coinbase allegedly infringes on a patent for a payment settlement software by using the same technology in its wallets and transaction validation software.

The company says that it had notified Coinbase before of its alleged patent infringement, first sending the company a letter in July. Veritaseum says now in its filing that Coinbase “had prior knowledge, should have known, or at least been willfully blind of the ‘566 Patent.'”

Veritaseum hopes to get a big payday out of this suit, looking for $350 million in damages as a result of the infringement. It says that Coinbase had reeled in “substantial profits” through its patent infringements and caused Vertitaseum “sustained damages” from its own missed revenue.

On the date of publication, Brenden Rearick did not have (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 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.

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