Coinbase has been accused of plummeting share price due to user data leak

What’s new? Leading US centralized crypto exchange (CEX) Coinbase has been hit with another class action lawsuit following a user data leak in early May. This time, it was accused of dropping COIN’s share price as a result of the incident, as well as covering up a breach of its agreement with the UK regulator.

Text of the lawsuit

What else is known? Investor Brady Nessler said in a May 22 lawsuit for a Pennsylvania federal court that the data leak and alleged breach of an agreement with the UK Financial Conduct Authority (FCA) caused a “precipitous decline in the market value of the Company’s common shares,” resulting in “significant losses and damages” to shareholders.

Coinbase has been hit with at least seven lawsuits this month after revelations surfaced of instances of its tech support staff being bribed to obtain customers’ personal data. An article about it appeared in the NYT, and later its authenticity was confirmed by the exchange itself. Coinbase said its bill for damages could reach $400 million.

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Nessler said that as a result of the incident disclosure, COIN shares fell 7,2% to $244 on May 15. However, on May 16, the shares recovered, jumping 9% to $266 by the close of trading. On May 23, trading closed with a daily decline of more than 3% (to $263); since the beginning of the year, COIN has gained almost 6%.

In addition, in July 2024, the FCA fined Coinbase’s UK unit $4,5 million for breaching a 2020 voluntary agreement prohibiting the exchange from serving customers deemed by the regulator to be high risk. According to the FCA, Coinbase attracted 13 416 customers deemed high-risk by the regulator and offered cryptocurrency services to them.

In the lawsuit, Nessler said the fine caused Coinbase’s stock to fall more than 5%, closing at $231,52 on July 25, 2024. She added that Coinbase failed to disclose its breach of the agreement when it first listed its shares on Nasdaq in April 2021, and as a result, “the market price of the Company’s securities had been artificially inflated.”

Nessler alleges that had she known of the breach of the agreement, she would not have purchased shares at “artificially inflated prices.”

The class action lawsuit was filed on behalf of all purchasers of Coinbase stock between April 14, 2021, and May 14, 2025, and seeks damages and a jury trial. Coinbase CEO Brian Armstrong and CFO Alesia Haas are listed as defendants, along with the company itself.