In brief
- Coinbase is fielding a lawsuit from an investor that claims to have suffered “significant losses and damages” due to the company’s alleged “misleading” statements.
- The investor took issue with Coinbase’s revelation in mid-May that it had suffered a data breach, several months after the leak of the company’s user data began.
- Coinbase stock is up 7% since it revealed that “less than 1%” of its customers’ data had been stolen on May 15.
Coinbase is facing a lawsuit over allegations it violated securities laws and issued “misleading” statements to its shareholders, roughly a week after the crypto exchange drew criticism for revealing it had suffered a large data breach.
In a legal complaint filed on May 22 in the U.S. District Court for the Eastern District of Pennsylvania, Coinbase investor Brady Nessler alleges he suffered “significant [financial] losses and damages” due to the public company’s “wrongful acts and omissions.” Coinbase failed to promptly disclose that its customers’ data had been leaked, beginning in December 2024— a revelation that finally came to light on May 15 and caused the company’s stock to immediately drop 7% and close at $244 later that same day, according to the lawsuit.
The lawsuit also alleges Coinbase similarly declined to disclose information related to its dealings with U.K. regulators in 2020, roughly a year before the trading platform went public in the U.S.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common shares, Plaintiff and other Class members have suffered significant losses and damages,” Nessler’s lawyers said in the filing.
Coinbase did not immediately respond to Decrypt’s request for comment, which was sent on a U.S. public holiday. Nessler’s attorney likewise did not respond to a request for comment.
In the U.S., anyone can file a lawsuit, and it is relatively easy and inexpensive to do so.
“While almost anyone can try to sue for many reasons, there are important rules and limits,” Andrew Rossow, a reputation management attorney and founder of legal firm Rossow Law, told Decrypt. “For example, courts can quickly dismiss cases that have no legal basis, even if everything the person says is true.”
Rossow added that individuals who bring lawsuits against others must “show that [they] are directly affected by the problem and have suffered a real injury” in order for their cases to be heard in court.
The allegations come as Coinbase stock continues to recover following the trading platform’s revelation almost two weeks ago that its customers’ data had been compromised. The company’s shares are trading at $263 as of writing time, up 7% since Coinbase first publicized its data leak.
Coinbase reported the data breach in a May 15 blog post, noting that “less than 1%” of its users’ names, addresses, masked bank details, identity documents and other sensitive information had been leaked. The exchange revealed it had received a demand for $20 million in exchange for the stolen data, prompting it to publicize the leak and offer a bounty for information leading to the arrest of those behind it.
Although Coinbase shares experienced a near-double-digit drop following the publication of the blog post, the stock’s price quickly recovered. The negative impact of the data breach on Coinbase stock was largely buffeted by the firm’s announcement earlier that week that it had joined the S&P 500—a major milestone for publicly traded companies in the U.S.
Nessler’s lawyers did not specify the amount of damages their client is seeking. The complaint calls for a trial by jury.
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