Coinbase and its two executives have been named in a class action lawsuit due to a recent data breach incident that caused the company's stock price to drop. The lawsuit claims that the company did not disclose its violations of agreements with UK financial regulators.
Coinbase investor Brady Nessler filed a lawsuit on May 22 in the Pennsylvania federal court, stating that the data breach incident and the violation of agreements with the UK Financial Conduct Authority (FCA) led to a 'significant decline' in the company's stock market value, causing shareholders to suffer 'substantial losses.'
Coinbase previously disclosed that it suffered losses of up to $400 million due to a $20 million extortion attempt. An agent was bribed to enter the internal system and steal a small amount of user data, leading to a 7.2% drop in stock price to $244 after the incident was exposed, but rebounding 9% the next day to $266.
On May 23, Coinbase's stock closed at $263, with poor trading conditions that day. Nessler's lawsuit is the first case claiming damages due to stock price decline since the incident was exposed.
UK agreement violations affecting stock price
The FCA imposed a $4.5 million fine on Coinbase's UK subsidiary in 2024 for allowing high-risk users to access cryptocurrency services in violation of regulations. The lawsuit claims that the failure to disclose this violation led to inflated stock prices.
Nessler stated that if she had known about the violation, she would not have bought the stock at an 'inflated price.' Coinbase did not immediately comment on this.
The class action lawsuit targets investors who purchased Coinbase stock between April 14, 2021, and May 14, 2025, seeking compensation and a jury trial. Coinbase CEO Brian Armstrong and CFO Alesia Haas are also named as defendants.
On May 13, another lawsuit in Illinois accused Coinbase of failing to inform users about the collection and storage of their biometric data.