Coinbase is facing a class action lawsuit from shareholders accusing the company of "hiding" the data breach incident and violating FCA regulations, leading to a sharp drop in stock prices causing losses for investors.
Coinbase is facing a class action lawsuit for "hiding" a security vulnerability
Allegations of violations with the FCA and "hiding" the data breach incident
The crypto exchange Coinbase is facing a class action lawsuit from shareholders regarding the failure to disclose the user data breach incident and violation of the agreement with the UK Financial Conduct Authority (FCA). The lawsuit was filed on May 22, 2025, in the Eastern District of Pennsylvania federal court by investor Brady Nessler.
According to the lawsuit, Coinbase shareholders have suffered "significant damages" after the company confirmed that this data breach occurred since December 2024, with some employees being bribed to provide users' personal information to hackers. Coinbase estimates that the total cost of remediation and compensation could reach up to 400 million USD. In addition to the security incident, the lawsuit also alleges that Coinbase violated a voluntary agreement with the FCA from 2020 – which required the company not to accept and provide services to customers deemed to be "high risk." However, according to the FCA, the CB Payments branch in the UK accepted more than 13,000 such customers, resulting in a fine of 4.5 million USD in July 2024.
Nessler asserts that Coinbase has not disclosed violation information since its IPO in April 2021, causing the stock price to be "artificially inflated." Had she known this information in advance, she would not have purchased the stock at that price. This class action lawsuit represents all investors who bought Coinbase shares during the period from April 14, 2021, to May 14, 2025, and seeks damages as well as a jury trial.
Nessler's lawsuit is the first to accuse Coinbase of harming shareholders through stock price volatility following the disclosure of the security incident. CEO Brian Armstrong and CFO Alesia Haas are both named in the lawsuit.
Coinbase is also facing at least 6 other similar lawsuits
Additionally, after Coinbase confirmed the incident, the exchange is facing at least 6 other lawsuits for not fully implementing necessary security measures to protect user information, lack of transparency, and poor handling of the consequences of the data breach issue.
Three lawsuits in the federal court of New YorkOn May 16, plaintiff Paul Bender claims that Coinbase exposed sensitive personal data of millions of users and responded ineffectively after being attacked.
The fourth lawsuitadds the argument that Coinbase has "unjustly benefited" by not adequately investing in data security.
The fifth lawsuit in Californiademands the court to compel Coinbase to delete all sensitive data about the plaintiff and hire an independent auditing firm to assess the security system.
A lawsuit in Illinois on May 13 claims that Coinbase collects and stores biometric data without adequately notifying about the purpose and duration of data retention.
Coinbase's COIN stock dropped 3.2% to 263.14 USD after the information about the lawsuits was disclosed.
Stock price volatility of Coinbase (COIN), screenshot from Google Finance at 07:40 PM on May 26, 2025