Coinbase is being sued by its stockholders over a recent drop in its share price. The U.S. District Court for the Eastern District of Pennsylvania received the lawsuit on Thursday.
Investors allege that Coinbase violated an agreement with a UK regulator and delayed disclosing a user data breach. They contend that shareholders suffered significant financial damages as a result of these omissions.
Breach Uncovered and Stock Impact
On May 15, Coinbase disclosed that it could face a damages bill of up to $400 million. This came four days after a $20 million extortion attempt in which several customer service representatives were bought off to get access to internal systems and steal a small amount of user account information.
When Coinbase made this announcement, its stock price fell by 7.2%, closing at $244. However, the next day saw a rebound, with shares jumping 9 percent to $266 by market close.
Despite this recovery, the share price slipped again on May 23, falling 3% to close at $263, a further loss of $1.62 after hours.
Allegations in the Lawsuit
Investor Brady Nessler filed the class action suit, stating that Coinbase’s failure to disclose the data breach promptly harmed shareholders. The complaint asserts that the company also violated an agreement it had with a UK regulator.
Along with Coinbase, the lawsuit names CFO Alesia Haas and CEO Brian Armstrong as defendants. For all investors who purchased Coinbase stock between April 14, 2021, and May 14, 2025, it aims to recoup losses.
According to the lawsuit, the defendants’ “wrongful acts and omissions” caused the market value of Coinbase shares to fall sharply, leading to “significant losses and damages” for the class members.
Also Read: Coinbase Under Fire as Recent Data Breach Triggers Nearly 6 Lawsuits From Users
Estimated Costs and Financial Exposure
Coinbase warned that remediation efforts and customer reimbursements could total between $180 million and $400 million. This estimate reflects costs related to securing internal systems, compensating affected users, and addressing any regulatory fines.
The company’s acknowledgment of these potential expenses likely contributed to volatility in its share price. Despite these challenges, Coinbase has risen nearly 6 percent year to date, reflecting broader optimism in the cryptocurrency market.
Regulatory and Security Concern
The lawsuit highlights growing scrutiny of how crypto firms handle security and work with regulators. By naming top executives, investors are signaling that they expect accountability at the highest levels.
Coinbase had earlier revealed that its agents were bribed to access user data, underscoring vulnerabilities in its internal controls. The alleged breach of an agreement with a UK regulator further raises questions about the company’s compliance practices.
As regulatory bodies worldwide increase their oversight of digital asset firms, Coinbase will need to demonstrate stronger safeguards and transparency.
As this class action proceeds, Coinbase must balance the costs of legal defense, user remediation, and ongoing security upgrades. Investors will watch closely to see how the company addresses these challenges and restores confidence.
Also Read: Sequoia Capital’s Roelof Botha Hit in Coinbase Data Hack, Personal Data Exposed