Cryptocurrency exchange Coinbase has become the target of a new class-action lawsuit. The lawsuit accuses the company's top executives, including CEO Brian Armstrong and CFO Alesia Haas, of delaying the disclosure of major data breaches related to internal misconduct and failing to disclose serious regulatory violations in its UK operations.
These incidents have caused significant financial losses to shareholders due to Coinbase's lack of transparency and seek damages.
Coinbase Faces Lawsuit After Stock Decline
Investor Brady Nestler filed the lawsuit in the Eastern District Court of Pennsylvania. The lawsuit represents shareholders who purchased Coinbase stock (COIN) between April 14, 2021, and May 14, 2025.
The lawsuit alleges that Coinbase concealed critical information about a data breach. BeinCrypto previously reported that Coinbase was extorted for $20 million by cybercriminals who stole sensitive data including customers' names, addresses, and identity information. The criminals had bribed overseas support agents to steal this data.
However, the company emphasized that the breach affected "less than 1%" of monthly active users. According to court documents, the breach was discovered months earlier but was not disclosed until May 15, 2025, after the extortion attempt. Upon this revelation, COIN dropped 7.2%, closing at $244 that same day.
"Due to the defendants' wrongful acts and omissions, and the dramatic decline in the company's common stock market value, the plaintiff and other class members have suffered substantial losses and damages," Nestler claimed.
The lawsuit also highlights another incident that negatively impacted the stock price. On July 25, 2024, the UK Financial Conduct Authority (FCA) fined CB Payments Ltd. (CBPL), Coinbase's UK subsidiary, £3.5 million (approximately $4.5 million) for violating a 2020 regulatory agreement. This agreement prohibited onboarding high-risk customers.
The FCA revealed that CBPL allowed 13,416 high-risk users to use its services and enabled approximately $226 million in cryptocurrency transactions, despite explicit restrictions. The lawsuit claims that Coinbase misled investors about the company's operational integrity by not disclosing these regulatory issues.
"As a result of this news, Coinbase's common stock price declined by $13.52, or 5.52%, closing at $231.52 on July 25, 2024," the lawsuit read.
The plaintiff is now requesting class certification and seeking monetary damages, legal cost reimbursement, and a jury trial. Coinbase has not yet issued an official statement regarding the Nestler lawsuit.
Meanwhile, COIN has slightly recovered from its May 15 low. Nevertheless, according to Yahoo Finance data, Coinbase's stock lost 3.23% of its value at market close on May 23, dropping $8.79 to close at $263.10.
