By
Steve Muchoki
April 25th, 2024
The complaint uses a 2019 event in which the exchange apparently took more than six months to allow a customer back into their own account, to describe some of these alleged problems.
Coinbase is facing a class action lawsuit that alleges that the crypto exchange failed to adequately secure the accounts of its customers, leaving them exposed to theft and unauthorized transfers.
According to the complaint filed last week in the US District Court for the Northern District of Georgia, the company is also accused of causing financial harm to its customers by locking them out of their accounts permanently or for an extended period of time, as well as breaking federal law by listing securities on its trading platform.
The latest lawsuit represents a class of more than 100 people, including the lead plaintiff and Georgia resident, George Kattula. However, Kattula’s attorneys assert that there may be additional victims.
The complaint uses a 2019 event in which the exchange apparently took more than six months to allow a customer back into their own account, to describe some of these alleged problems. The lawsuit also claims that this was a trend that Coinbase repeated.
Additionally, the suit again alleges that some of the assets listed on Coinbase match the definition of security provided by the U.S. Securities and Exchange Commission (SEC), adding that the company itself may be an “exchange” under federal law, which requires it to register with the regulator.
“Coinbase first requires customers to use its support team, and if the issue is not resolved that way, customers then have to go through the “Formal Complaint Process,” the complaint stated.
“If that fails to resolve the customer’s dispute, only then can customers attempt to resolve disputes through arbitration. But Coinbase systemically fails to follow those pre-arbitration dispute resolution mechanisms as outlined in the User Agreement, thereby rendering the provision, including its delegation provision, void,” the filing added.
John Herman of Herman Jones LLC, the Georgia-based law firm representing Kattula, told reporters that the firm is aware of a large number of fraudulent transactions in the accounts of Coinbase customers.
“We are encouraging all Coinbase account holders to review their accounts carefully and advise us promptly of any irregular activity,” he stated.
The latest lawsuit adds to an already long list of lawsuits filed against Coinbase after it went public last year. The crypto exchange has also been served with a class action lawsuit filed in New Jersey which accused the company of allowing US customers to trade unregistered securities.
Earlier this month, a shareholder of the company also accused the company of misleading investors about last year’s public listing.
Coinbase Global Inc’s (NASDAQ: COIN) second-quarter earnings posted on August 19, revealed a year-on-year 60% decline in revenues as it slipped further down the drain.