Coinbase class action lawsuit overview
- Who: A Coinbase customer filed a class action lawsuit against the cryptocurrency exchange Coinbase Global Inc. and its subsidiary Coinbase Inc.
- Why: The customer alleges that Coinbase does not keep its customers’ accounts secure and that it runs its business without being a registered broker-dealer.
- Where: The class action lawsuit was filed in Georgia federal court.
A Coinbase customer filed a class action lawsuit against the cryptocurrency exchange for allegedly failing to keep customers’ accounts secure and therefore allowing financial losses from account breaches and unauthorized transfers.
The Coinbase platform allows customers to store their money in a digital “wallet” and to buy, sell, spend, and trade cryptocurrency on exchanges. The lead plaintiff, George Kattula, opened a Coinbase account in January 2022. In April, Coinbase allowed unknown parties to transfer almost $6,000 worth of cryptocurrency from his account and withdraw $1,000 from his bank account, according to the complaint. Kattula says that in June, Coinbase rejected his complaint and refused to reimburse him for the unauthorized transactions.
Kattula seeks to represent a nationwide class of all current and former Coinbase account holders and/or customers who maintained assets in a Coinbase account and who subsequently lost or were deprived access to their assets, their Coinbase account, and/or their personal data.
Coinbase supposedly allows ‘severe financial loss’ for customers
After the breach of Kattula’s account, Coinbase “admitted the unauthorized transfers… were from an IP address that has never been associated with [Kattula] and was located far away from the physical location and IP address from which [Kattula] always accessed his account.” Coinbase “failed to delay the processing or execution of” the suspicious activity, the complaint claims.
Coinbase “recovered nearly all of the $1,000 used to make the unauthorized purchase of cryptocurrency,” but “refused to cover all the cryptocurrency that was stolen,” the complaint says. It also froze Kattula’s Coinbase account and “treated it as having a negative balance.”
Locking customers out of their accounts leads to “severe financial loss,” the class action lawsuit argues. Coinbase’s long response time to complaints only makes matters worse, Kattula says.
More seriously, the Coinbase class action complaint alleges the company violates federal law by not being registered as either a securities exchange or as a broker-dealer, despite brokering the sale of crypto securities, maintaining custody over customers’ crypto securities, selling crypto from its inventory, and more.
Kattula seeks actual, statutory, and punitive damages; equitable and declaratory relief; injunctive relief, including improvements to Coinbase’s data security systems and protocols; restitution; and attorneys’ costs.
If you have faced issues with your Coinbase account, you could be a part of this class action lawsuit!
The plaintiff is represented by John C. Herman and Serina M. Vash of Herman Jones LLP.
The Coinbase Class Action Lawsuit is Kattula v. Coinbase Global Inc., et al., Case No. 1:22-cv-03250-TWT, in the US District Court for the Northern District of Georgia Atlanta Division.
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