After a Series of Data Breaches and Regulatory Turmoil, Coinbase Faces Legal Pressure Again
After a series of data breaches and regulatory turmoil, Coinbase is facing legal pressure once more. A shareholder has filed a class-action lawsuit in the U.S. District Court for Pennsylvania, claiming that the company failed to adequately disclose significant risks, leading to a sharp decline in stock prices and harming investors’ interests. This case not only reveals the controversy surrounding Coinbase’s handling of security incidents but also brings back into focus the regulatory compliance issues that existed even before its public listing in the UK.
Investors Sue: Coinbase Should Be Held Responsible for Stock Price Decline
On May 22, Coinbase investor Brady Nessler filed a class-action lawsuit in the Pennsylvania federal court, accusing Coinbase, along with CEO Brian Armstrong and CFO Alesia Haas, of failing to accurately disclose recent user data breaches and violations of agreements with the Financial Conduct Authority (FCA) in the UK. These oversights resulted in a “dramatic decline” in Coinbase’s stock within a short period, causing investors to suffer “significant losses.”
According to the complaint, Coinbase admitted on May 15 that internal customer service staff had been bribed to assist hackers in breaching the system and stealing part of the user data, with the incident potentially leading to up to $400 million in damages and remediation costs. On that day, Coinbase’s stock price plummeted by 7.2%, closing at $244. However, the following day, the stock rebounded by 9% to $266.
(Coinbase’s Turmoil: User Data Breach Could Result in $400 Million in Costs, SEC Investigates Whether User Numbers Were Inflated)
Insider Misappropriated User Data for Six Months: Security Mechanisms Questioned
Coinbase stated that the data breach occurred on May 11, where hackers gained internal access through bribed customer service personnel, allowing them to steal user account information and initiate a $20 million ransom. Although the company claimed that only a “small number of accounts” were affected, the incident has triggered a chain reaction in both community and legal realms.
(Coinbase’s Cybersecurity Storm Continues: User Data Breach Revealed in May After Occurring in December, Accused of “Concealment of Knowledge”)
Just days after the information was made public, Coinbase faced at least six class-action lawsuits, most of which focused on “data protection failures” and “poor crisis management processes.” The lawsuit filed by Nessler is the first to directly link the data breach to “stock price losses,” further challenging the boundary of Coinbase’s disclosure obligations to investors.
UK Regulatory Breach Case Causes Waves: Overestimation of Stock Price, Compensation Required
In addition to the data breach, Nessler’s lawsuit also pointed out that Coinbase had signed an agreement with the FCA back in 2020, promising not to allow high-risk clients onto the platform. However, the FCA imposed a $4.5 million fine on its UK subsidiary in July 2024, citing Coinbase’s breach by allowing 13,416 high-risk users. This breach record was never disclosed at the time of Coinbase’s public listing in April 2021, allegedly misleading market information and resulting in the company’s stock price being “unreasonably overestimated” at that time.
(Coinbase Payments Fined $4.5 Million by UK FCA: Failed to Effectively Prevent Money Laundering)
Nessler stated, “Had I known that Coinbase was involved in regulatory disputes, I would not have purchased the company’s stock at the overestimated price.” The complaint indicates that Nessler is representing all investors who purchased Coinbase stock between April 14, 2021, and May 14, 2025, seeking unspecified damages: the company’s management failed to fulfill their disclosure obligations, and they should be held accountable for the losses incurred by investors due to stock price fluctuations.
COIN Stock Volatility: Short-term Rebound Pulls Long-term Concerns
Data shows that Coinbase (COIN) closed at $263 today, down over 3.2% for the day, with an additional drop of $1.62 in after-hours trading. Although the stock has risen nearly 6% year-to-date, investors are understandably cautious about its future trajectory, given the ongoing security controversies, legal lawsuits, and regulatory shadows.
Currently, Coinbase has yet to formally respond to the aforementioned litigation. While the company has long emphasized its commitment to compliance and transparency, the current series of crises indicates that relying solely on brand image and market scale without proper management and risk control awareness is likely to trigger a trust crisis.
Risk Warning
Investing in cryptocurrencies carries a high risk, and their prices can be highly volatile; you may lose all of your principal. Please evaluate the risks carefully.