Coinbase Faces New Lawsuit Tied to Stock Drop from Data Breach
Coinbase and two of its executives are facing a new proposed class-action lawsuit, this time filed by investors over the company’s recent data breach and its impact on the exchange’s stock price.
The suit was brought on May 22 by investor Brady Nessler in a Pennsylvania federal court. It alleges that Coinbase’s disclosure of a data breach and a separate regulatory issue with the UK’s Financial Conduct Authority (FCA) caused a sharp drop in its stock value, resulting in substantial investor losses.
Coinbase Discloses $400M in Possible Damages
On May 15, Coinbase revealed it may face up to $400 million in damages following a $20 million extortion attempt. According to the company, the breach involved customer support agents who were bribed to access internal systems and obtain user account data.
Following this announcement, Coinbase’s shares (COIN) dropped by 7.2%, closing at $244. However, shares recovered the next day, rising 9% to close at $266. By May 23, the stock slipped again, ending the day at $263 and falling slightly after hours.
Investor Lawsuit Cites Undisclosed FCA Penalty
The new lawsuit claims Coinbase failed to inform investors of a 2024 penalty from the UK’s FCA. The regulator fined Coinbase’s UK branch $4.5 million for violating a 2020 agreement that barred the platform from onboarding high-risk clients.
The FCA alleged Coinbase allowed 13,416 such users onto its platform, offering them crypto services despite the restrictions.
Shares Allegedly Inflated by Withheld Information
Nessler argues that Coinbase’s failure to disclose the FCA breach prior to its April 2021 Nasdaq listing led to artificially inflated share prices. She claims she would not have bought COIN shares at the time had she known about the FCA violation.
Nessler’s case appears to be the first investor lawsuit linking share price damage directly to the recent data breach and UK compliance failure. The complaint also names Coinbase CEO Brian Armstrong and CFO Alesia Haas as defendants.
Multiple Lawsuits Follow Data Incident
This lawsuit joins a growing list of legal actions filed against Coinbase after its data breach disclosure. At least six other cases have alleged the company mishandled user data and failed to protect customers.
Separately, a May 13 lawsuit filed in Illinois accuses Coinbase of failing to notify users about the collection and storage of biometric data, including usage terms and retention schedules.
The latest class-action filing seeks damages for anyone who purchased Coinbase stock between April 14, 2021, and May 14, 2025. A jury trial has been requested.