One of the Coinbase users has filed a class action lawsuit against Coinbase after finding out that accounts of multiple users including him were breached and they incurred loss due to unauthorized transactions.
The complaint, filed in the United States District Court for the Northern District of Georgia, represents a class of more than 100 people, including Georgia resident and lead plaintiff George Kattula.
Coinbase has been accused of causing financial harm to users by locking them out of their accounts permanently or for an extended period of time. The accusations also include violating federal law by listing securities on its trading platform and failing to respond to customers’ support and help requests in a timely manner.
Coinbase is not a broker-dealer or a securities exchange. Thus, it is also accused of engaging in the unauthorized transfer of “crypto” securities listed on its platform.
Also Read: Reports reveals Coinbase has a Big Insider Trading Problem
The plaintiff’s assets are also said to be “vulnerable to theft”, according to the lawsuit. The lawsuit goes into detail about some of the alleged issues, citing a 2019 incident in which the exchange allegedly took over six months to let a customer back into their own account, a pattern the suit claims the company repeated.
According to the documents, Coinbase has attempted to immunize itself from liability for its wrongful conduct by burying a purported arbitration agreement and class action waiver in a “User Agreement.”
The suit claims that some of the assets listed on Coinbase meet the Securities and Exchange Commission’s (SEC) definition of security. It said, “Indeed, Coinbase boldly flouts federal and state laws by proclaiming it does not need a registration statement for those securities and by refusing to register as a securities exchange or as a broker dealer.”
It also states that Coinbase Global maintains executive offices in San Francisco, California, which are shared with Coinbase. Brian Armstrong, Coinbase’s founder, is the CEO of both Coinbase and Coinbase Global. “Users have little or no visibility into which entity they are transacting with.”
Kattula’s lawsuit seeks damages in excess of $5 million (excluding his legal costs and fees), a binding judgment, and injunctive relief, which is an order prohibiting the parties involved from engaging in certain activities.
