tl;dr
Coinbase is facing a lawsuit filed by investor Brady Nessler alleging violations of securities laws and misleading shareholders by failing to promptly disclose a data breach that began in December 2024. The breach, revealed on May 15, led to a 7% drop in Coinbase’s stock price. The lawsuit also accu...
Coinbase faces a lawsuit alleging violations of securities laws and failure to disclose a significant data breach, resulting in notable investor losses.
The complaint, filed by investor Brady Nessler in the U.S. District Court for the Eastern District of Pennsylvania, claims Coinbase withheld information about its 2020 dealings with U.K. regulators prior to going public and delayed disclosure of a data breach that began in December 2024.
Following the May 15 disclosure of the breach, Coinbase’s stock dropped 7%, closing at $244, but later recovered to $263, buoyed by the company’s recent inclusion in the S&P 500 index.
The breach compromised less than 1% of user information, including names, addresses, masked bank details, and identity documents. Coinbase also received a $20 million ransom demand and offered a bounty for information leading to the perpetrators’ capture.
The lawsuit seeks damages and a jury trial, though neither Coinbase nor the plaintiff’s attorneys have issued comments. Legal experts stress that plaintiffs must prove direct harm for such cases to proceed, warning that courts may dismiss claims lacking legal basis despite truthful allegations.
As Coinbase navigates this legal challenge, the stock market response highlights the complex interplay between regulatory disclosure, investor confidence, and cybersecurity risks in the cryptocurrency exchange sector.