Coinbase (NASDAQ: COIN), the world’s best-known digital currency exchange, has officially been hit with a class action lawsuit in California’s Northern District Court. It’s the latest legal concern for a company fraught with worries over regulations, SEC action, and unhappy customers across the globe. Let’s dig into what the company stands accused of since we are getting tons of inquiries of people looking to join the Coinbase class action lawsuit.
Coinbase class action lawsuit—what we know
- The case (Alfia vs Coinbase Global, Inc) was brought by McCathern LLP and is over Coinbase’s handling of customer balances. It is case number 3:21-cv-08689.
- The suit alleges that Coinbase failed to safeguard customer accounts and took unreasonable measures such as freezing accounts when dealing with breaches.
- The official court docket shows the following complaints: breach of contract, negligence, fraud, and negligent misrepresentation.
- The plaintiff, Adam Alfia, alleges that an unauthorized purchase of $50,000 of Ethereum was made in his Coinbase account. He claims he did not make the purchase and did not give consent to anyone else to make it.
- After complaining to Coinbase, Alfia claims the company locked him out of his account for two months, making it impossible for him to reverse the $50,000 transaction taken from his Bank of America account.
- Alfia is bringing this suit on behalf of himself and all other similarly situated persons.
For those who follow CoinGeek’s news on Coinbase, these accusations will come as no surprise. The company is renowned for freezing accounts, abysmal customer service, and questionable actions of all kinds.
Coinbase – A brief overview of its dubious conduct
This isn’t Coinbase’s first run in with the law, and it’s certainly not its first disgruntled customer. The firm has a long history of taking action that’s both legally and ethically problematic. Here’s some of what we’ve reported on over the years.
- Coinbase is renowned for its atrocious customer support. The neutral and user-generated review site Trustpilot has its customer support rated at 1.6/5. It can take weeks or months to get a reply to even the most basic questions.
- In March 2021, Coinbase was fined $6.5 million and ordered to cease and desist from certain behavior by the CFTC. It was charged with reckless, false, misleading, and inaccurate reporting and wash trading.
- It has repeatedly ignored customer pleas for help when their accounts are hacked or otherwise taken over. CNBC interviewed Coinbase users who were victims of this.
- Earlier this year, it had to quickly backtrack on launching its LEND product when the SEC threatened action against it. This caused Coinbase CEO Brian Armstrong to launch a tirade of conspiratorial accusations against the SEC on social media platform Twitter.
- Coinbase also participated in the delisting attack against Bitcoin SV. Dr. Craig Wright (aka Satoshi Nakamoto) has vowed legal action against the exchange if the situation is not remedied in the immediate future. Coinbase has so far failed to respond and has not warned its investors about the pending legal action.
- Coinbase also went ahead and listed Tether, the largest so-called stablecoin by market cap. Even though several of its executives are under investigation for bank fraud, it has repeatedly failed to prove it is backed 1:1 to the USD, and it has been banned from New York after being found guilty of “recklessly and unlawfully covering up massive financial losses” and “illegally trading virtual currencies in the state of New York.”
For many, the fact that Coinbase is listed on the Nasdaq lends it legitimacy and credibility that the above facts suggest it does not deserve. But then again, Bernie Madoff was the chairman of the particular stock exchange for many years, and Enron was also listed on the NYSE before its investors and customers got the wake-up call they needed.
CoinGeek will keep you posted on the progress and outcome of the Coinbase Class Action Lawsuit. Until then, users who wish to trade digital currencies should be extra careful when selecting an exchange. Feel free to visit our contact page to tell us if you have experienced issues with this cryptocurrency exchange.
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