Coinbase Faces Class-Action Lawsuit Over Delayed Data Breach Disclosure
- Coinbase delayed disclosing a major data breach and a UK regulatory violation, impacting its stock price and shareholders.
- Multiple lawsuits and a Justice Department probe target Coinbase’s cybersecurity failures and transparency practices.
Coinbase, the major cryptocurrency exchange, is now the target of a class-action lawsuit brought by investors following its late disclosure of a significant data breach and a breach of regulatory compliance. The suit, filed in the U.S. District Court for the Eastern District of Pennsylvania, claims that Coinbase failed to disclose key risks promptly, causing a steep decline in its stock price and resulting in financial losses for shareholders.
Lawsuit Details and Allegations
Investor Brady Nessler alleges that Coinbase kept shareholders uninformed about two critical issues. The first is a data breach in December 2024, where hackers bribed customer service staff to access and steal personal data from tens of thousands of users.
The second involves Coinbase’s UK subsidiary, CB Payments, violating a 2020 agreement with the UK’s Financial Conduct Authority (FCA). Nessler argues that these failures breached federal securities laws by delaying disclosure, which inflated the company’s stock price artificially.
The complaint covers shareholders who purchased Coinbase stock between April 14, 2021, and May 14, 2025. The suit seeks damages linked to the stock price drop after Coinbase announced the breach on May 15, 2025.
Stock Impact Following Breach Announcement
After Coinbase made its announcement about the breach and violation on May 15, the stock price fell 7.2%, ending at $244. According to a report by TheNewsCrypto, the company projected that the program could cost it between $180 million and $400 million in reimbursements and cleanup.
Although the stock rebounded slightly, closing at $263.16 on May 23, it has yet to recover fully from the drop caused by these revelations.
The breach involved hackers accessing data from nearly 97,000 accounts. Among the compromised information were government-issued IDs and email addresses.
Hackers demanded a $20 million ransom, which Coinbase refused. Instead, the company offered a $20 million bounty for information leading to the hacker’s capture. Coinbase later confirmed data from 69,461 customers was compromised.
Coinbase Series of Lawsuits, Regulatory Violations and FCA Fine
In July 2024, Coinbase’s UK arm received a $4.5 million fine for violating a voluntary FCA agreement. The agreement prohibited onboarding customers deemed high-risk by the regulator. Nevertheless, Coinbase onboarded 13,416 such customers. This violation caused the company’s stock to drop more than 5%, closing at $231.52 on July 25, 2024.
Nessler’s lawsuit states Coinbase did not disclose this regulatory breach when it first listed on Nasdaq in April 2021. This omission, he claims, kept the stock price artificially inflated during that period. Besides this lawsuit, Coinbase faces at least six other class-action suits accusing it of negligence and weak cybersecurity. The U.S. Justice Department has launched an investigation into the data breach.
Coinbase responded by firing implicated employees and promising stronger internal controls. Investors and regulators have doubted the timing of Coinbase’s public announcement, adding more attention to the case. A separate lawsuit filed in Illinois claims that Coinbase did not properly tell users about how it is collecting and storing biometric data and what it intends to do with it.
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Coinbase Faces Class-Action Lawsuit Over Delayed Data Breach Disclosure
- Coinbase delayed disclosing a major data breach and a UK regulatory violation, impacting its stock price and shareholders.
- Multiple lawsuits and a Justice Department probe target Coinbase’s cybersecurity failures and transparency practices.
Coinbase, the major cryptocurrency exchange, is now the target of a class-action lawsuit brought by investors following its late disclosure of a significant data breach and a breach of regulatory compliance. The suit, filed in the U.S. District Court for the Eastern District of Pennsylvania, claims that Coinbase failed to disclose key risks promptly, causing a steep decline in its stock price and resulting in financial losses for shareholders.
Lawsuit Details and Allegations
Investor Brady Nessler alleges that Coinbase kept shareholders uninformed about two critical issues. The first is a data breach in December 2024, where hackers bribed customer service staff to access and steal personal data from tens of thousands of users.
The second involves Coinbase’s UK subsidiary, CB Payments, violating a 2020 agreement with the UK’s Financial Conduct Authority (FCA). Nessler argues that these failures breached federal securities laws by delaying disclosure, which inflated the company’s stock price artificially.
The complaint covers shareholders who purchased Coinbase stock between April 14, 2021, and May 14, 2025. The suit seeks damages linked to the stock price drop after Coinbase announced the breach on May 15, 2025.
Stock Impact Following Breach Announcement
After Coinbase made its announcement about the breach and violation on May 15, the stock price fell 7.2%, ending at $244. According to a report by TheNewsCrypto, the company projected that the program could cost it between $180 million and $400 million in reimbursements and cleanup.
Although the stock rebounded slightly, closing at $263.16 on May 23, it has yet to recover fully from the drop caused by these revelations.
The breach involved hackers accessing data from nearly 97,000 accounts. Among the compromised information were government-issued IDs and email addresses.
Hackers demanded a $20 million ransom, which Coinbase refused. Instead, the company offered a $20 million bounty for information leading to the hacker’s capture. Coinbase later confirmed data from 69,461 customers was compromised.
Coinbase Series of Lawsuits, Regulatory Violations and FCA Fine
In July 2024, Coinbase’s UK arm received a $4.5 million fine for violating a voluntary FCA agreement. The agreement prohibited onboarding customers deemed high-risk by the regulator. Nevertheless, Coinbase onboarded 13,416 such customers. This violation caused the company’s stock to drop more than 5%, closing at $231.52 on July 25, 2024.
Nessler’s lawsuit states Coinbase did not disclose this regulatory breach when it first listed on Nasdaq in April 2021. This omission, he claims, kept the stock price artificially inflated during that period. Besides this lawsuit, Coinbase faces at least six other class-action suits accusing it of negligence and weak cybersecurity. The U.S. Justice Department has launched an investigation into the data breach.
Coinbase responded by firing implicated employees and promising stronger internal controls. Investors and regulators have doubted the timing of Coinbase’s public announcement, adding more attention to the case. A separate lawsuit filed in Illinois claims that Coinbase did not properly tell users about how it is collecting and storing biometric data and what it intends to do with it.
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