Wednesday, August 24, 2022

Coinbase Facing Yet Another Lawsuit Over Platform Security

Coinbase Facing Yet Another Lawsuit Over Platform Security

Coinbase (NASDAQ:COIN) doesn't appear to be taking a break this summer. Amid the cryptocurrency collapse and increasing government control of the market, cryptocurrency exchanges are among the biggest losers. This week, the company faced another user lawsuit that has been unfolding for a third of a month. The lawsuit points to a broader pattern of Coinbase money laundering, whether due to court cases, low pay, poor public relations, or government investigations.

Even as the second largest exchange in the world by volume, Coinbase isn't immune to the worst of the market. Bad publicity surfaced when she vowed not to cut any new hires, then fired them to save money. Of course, this is not limited to Coinbase; Many companies have laid off employees due to the bear market.

However, Coinbase has also had the misfortune of releasing Q2 results publicly -- something no other crypto exchange is required to do as the company is the only publicly traded exchange. He reported a net loss of $1.1 billion for the quarter and several other disappointing numbers that hit COIN's stock price hard.

The stock market crash has put cryptocurrency under the radar of regulators more than ever. Of course, it makes sense that many investors would be affected by the unregulated market. The United States Securities and Exchange Commission (SEC) is working to gain access to Coinbase with several investigations of its own. A former Coinbase employee also put the company at the center of the initial investigation into cryptocurrency insider trading.

Not to mention, Coinbase is the subject of two other investigations by the Securities and Exchange Commission. One such investigation examines whether the company deceived investors during its initial public offering (IPO). More questions about the legality of token offerings.

Coinbase is in shock both financially and publicly. The SEC can't do anything about their investigation; The company will simply obey and wait for the verdict. At the same time, Coinbase could be dragged into the abyss by the numerous lawsuits it is filing in court. Another person joined the group today.

A class action lawsuit was filed against the exchange in a Georgia court this week, alleging that Coinbase caused financial harm to users by permanently closing their accounts. The lawsuit, representing more than 100 users, alleges that the company failed to properly secure accounts, leaving users' funds at risk of theft and other criminal activity.

As CoinDesk first reported, the lawsuit urges Coinbase users to consolidate their grievances. Herman Jones LLC, the legal team representing users, said in a statement, "We encourage all Coinbase account holders to monitor their accounts carefully and to report any irregular activity to us immediately."

This new lawsuit is the third filed against Coinbase in August alone. Earlier this month, a lawsuit alleged that Coinbase intentionally misled investors with statements about its IPO last year. Another accused the company of hosting numerous unregistered security offerings. This second lawsuit is very similar to the SEC's investigation into unregistered securities offerings.

At the time of publication, Brendan Roerick has no position (direct or indirect) in any of the securities mentioned in this article. The opinions expressed in this article are those of the author in accordance with's disclosure guidelines.

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