Coinbase executives, including CEO Brian Armstrong and CFO Alesia Haas, are being sued in a class action lawsuit for intentionally delaying disclosure of a serious data breach and for failing to disclose significant regulatory infractions in its UK operations.
Brady Nessler has filed a lawsuit in the US District Court for the Eastern District of Pennsylvania with the goal of obtaining financial compensation for shareholders who suffered significant losses due to what it calls a lack of transparency.
The lawsuit represents all those shareholders who purchased Coinbase (COIN) shares between 14 April 2021 and 14 May 2025. The main accusation alleges that Coinbase concealed vital information about a data breach.
The cybercriminals, who managed to steal sensitive customer data from Coinbase, attempted to extort the company for USD 20 million. According to the information, the data was allegedly obtained by bribing overseas technical support employees.
"As a result of the defendants' wrongful acts and omissions, and the drastic drop in the market value of the company's common stock, the plaintiff and other class members suffered significant losses and damages," Stated Brady.
The court documents indicate that Coinbase disclosed the breach on 15 May 2025, only after discovering it months earlier, when an extortion attempt made it apparent. After the disclosure, COIN's share price fell 7.2%, closing at $244.
"Upon news of the disclosure, Coinbase's common stock price declined $19.85 per share, or 7.2%, closing at $244 on 15 May 2025," according to the lawsuit.
The complaint also refers to another event that caused the share price to fall. On 25 July 2024, the UK's Financial Conduct Authority (FCA) imposed a penalty of £3.5m (about $4.5m) on Coinbase's UK subsidiary, CB Payments Ltd. (CBPL).
CBPL was fined for breaching a 2020 agreement with regulators, which prohibited the registration of high-risk customers. The FCA revealed that CBPL allowed 13,416 high-risk customers to use its services, generating nearly $226 million in cryptocurrency transactions, despite the restrictions in place.
The lawsuit alleges that Coinbase misled investors about its operational integrity by failing to disclose these regulatory issues.
The plaintiff seeks class recognition, monetary damages, reimbursement of legal fees, and a jury trial. Coinbase has made no public comment on the lawsuit filed by Nessler.
After the low point on 15 May, COIN showed a moderate recovery. According to Yahoo Finance, Coinbase's share price fell 3.23%, or $8.79, on 23 May, closing at $263.1.
