Coinbase Faces $400M Lawsuit Over Data Breach Disclosure Delay

Coinbase, a prominent cryptocurrency exchange, is currently facing legal action following a data breach that has resulted in significant financial losses for investors. The latest class action lawsuit, led by Brady Nessler, seeks compensation for investors who purchased Coinbase’s stock (COIN) between April 14 and May 14, 2025. These investors claim that the exchange's lack of transparency regarding the data breach and other incidents led to their financial losses.

The lawsuit alleges that Coinbase was aware of the data breach as early as January 2025, when hackers gained access to the exchange's system and users' personal data. However, the breach was only publicly disclosed on May 15, 2025. This delay in disclosure is cited as a key factor in the investors' losses, as the stock price of COIN fell by 7.25% on the day of the disclosure, closing at $240.

In addition to the data breach, the lawsuit also references a regulatory issue from July 25, 2024, when Coinbase's U.K. subsidiary, Coinbase Payments Ltd (CBPL), was fined approximately $4.5 million for violating anti-money laundering laws. The UK regulator found that CBPL allowed over 13,000 high-risk individuals to transact more than $220 million, which is against the law. On the day of the fine announcement, the shares of COIN dropped by 5.5% and closed at $226.5.

The investors argue that Coinbase's failure to disclose these regulatory issues in a timely manner exposed them to unnecessary risks and losses. According to the lawsuit, "Defendants failed to take reasonable steps to secure Plaintiff’s account from unauthorized access, despite knowing the risks of hacking and unauthorized transactions in the cryptocurrency industry."

For the recent breach, Coinbase has stated that claims may exceed $400 million. This legal action comes at a time when the exchange is already under investigation for allegedly falsifying its user base in its 2021 IPO filing. Despite these challenges, the stock has rallied by 28% from $200 to $263, boosted by the rebound in Bitcoin and the broader crypto market.

This legal action highlights the importance of transparency and timely disclosure in the cryptocurrency industry. Investors rely on accurate and timely information to make informed decisions, and any failure to disclose critical information can result in significant financial losses. Coinbase's handling of the data breach and regulatory issues has raised questions about its commitment to transparency and investor protection.