Coinbase is facing a proposed class-action lawsuit filed by investor Brady Nessler on May 22 in a Pennsylvania federal court. The lawsuit alleges that Coinbase’s stock price dropped significantly after the company disclosed a data breach and a violation of an agreement with the UK’s Financial Conduct Authority (FCA), claiming that Coinbase made “omissions” in its disclosures.
Here are the key points of the lawsuit
- Data Breach Disclosure: Coinbase revealed on May 15 that it had been targeted in a $20 million extortion attempt. This involved bribing several customer service agents to access limited user data. Coinbase stated the breach could cost up to $400 million. The lawsuit alleges that Coinbase delayed revealing this “major data breach involving insider misconduct,” leading to an artificial inflation of its stock price. On the day of the disclosure (May 15, 2025), Coinbase shares reportedly fell 7.2%.
- FCA Violation and Fine: The lawsuit also points to a $4.5 million fine imposed by the FCA in July 2024. The UK regulator found that Coinbase had onboarded over 13,000 high-risk customers, breaching a 2020 voluntary agreement. The lawsuit claims that Coinbase failed to disclose this FCA breach when it went public in April 2021, which allegedly left the stock price artificially inflated. This FCA fine reportedly caused a 5% drop in Coinbase stock on July 25, 2024.
- Alleged Omissions and Damages: Nessler claims that Coinbase failed to disclose these material facts and risks, which led to investors suffering losses when the truth emerged and the stock declined. The suit seeks damages for anyone who bought Coinbase shares between April 14, 2021, and May 14, 2025.
- Defendants: Coinbase CEO Brian Armstrong and CFO Alesia Haas are also named as defendants in the lawsuit.
- Other Lawsuits: This is not the only legal challenge Coinbase is currently facing. A separate lawsuit filed in Illinois on May 13 accuses Coinbase of mishandling biometric data disclosures.
Coinbase has not yet responded publicly to this specific lawsuit.
