Investor Sues Coinbase Over Stock Drop Linked To Data Breach And Regulatory Issue

According to reports, Coinbase and two of its senior executives are facing a lawsuit filed by investor Brady Nessler. Nessler claims the company’s stock dropped significantly after it disclosed a data breach and a compliance issue involving a deal with the UK’s financial regulator.

Coinbase revealed that hackers attempted to extort $20 million from the company. Some customer support agents were allegedly bribed, and limited user data was accessed. The company estimated the incident could lead to financial losses in the hundreds of millions. Following the disclosure, Coinbase’s stock price initially fell, saw a slight recovery, and then declined again.

Lawsuit Questions Coinbase’s Transparency Amid Trust-Building Efforts

The lawsuit also highlights a fine issued by the UK’s financial authority, which stated that Coinbase breached a prior agreement by allowing thousands of high-risk users to access its platform. This incident reportedly triggered another stock decline.

Nessler alleges that Coinbase failed to disclose this regulatory issue when it first offered shares to the public. He argues that the omission gave investors a misleading view of the company’s stability. The lawsuit seeks compensation for those who purchased Coinbase shares within a specific time period.

Coinbase Chief Executive Officer Brian Armstrong and Chief Financial Officer Alesia Haas are also named in the suit. As of now, the company has not publicly commented on the legal action. In a separate case, Coinbase is also facing allegations related to improper handling of user biometric data.

Coinbase Aims To Broaden Global Access To Crypto Through User-Focused Services

Coinbase is a U.S.-based cryptocurrency platform that allows users to buy, sell, and manage digital assets. It serves tens of millions of users and is the largest crypto exchange in the United States. It is also the world’s biggest custodian of bitcoin.

The company operates in more than 100 countries and manages hundreds of billions in assets, including a significant share of all bitcoin and staked ether. Coinbase provides services for individual users, institutional investors, businesses, and developers. It is a remote-first company with no central headquarters.

Founded by Brian Armstrong, a former Airbnb engineer, Coinbase began with support from a startup accelerator. He later partnered with Fred Ehrsam, a former Goldman Sachs trader. The two initially connected online. Another early contributor, Ben Reeves, left before launch due to differing views on the platform’s wallet design.

The company is named after a type of blockchain transaction that introduces new cryptocurrency into circulation. At launch, Coinbase allowed users to buy and sell bitcoin using bank transfers.