Coinbase Faces Class-Action Lawsuit Over Data Breach Disclosure Delay

Coinbase, a leading cryptocurrency exchange, is currently embroiled in a class-action lawsuit filed by investor Brady Nessler in a Pennsylvania federal court. The lawsuit alleges that Coinbase failed to disclose a significant data breach and regulatory violations in a timely manner, resulting in substantial financial harm to investors. The data breach, which occurred months prior, was only revealed on May 15, 2025, after the company was targeted by cybercriminals in a $20 million extortion attempt. The attackers bribed overseas customer service agents to gain access to internal systems and steal sensitive user data, including names, addresses, and IDs. Although Coinbase claimed that less than 1% of its monthly active users were affected, the late disclosure led to a 7.2% drop in Coinbase shares, closing at $244 on the same day.

The lawsuit also highlights a $4.5 million fine imposed by the UK’s Financial Conduct Authority (FCA) in July 2024. The FCA found that Coinbase had violated a 2020 agreement by onboarding over 13,000 high-risk users. Nessler claims that Coinbase failed to disclose this violation when it went public in 2021, artificially inflating its share price. The class-action suit seeks damages for anyone who bought Coinbase stock between April 14, 2021, and May 14, 2025. CEO Brian Armstrong and CFO Alesia Haas are also named as defendants. In addition to this lawsuit, Coinbase faces at least six other legal actions tied to the breach, including one filed in Illinois accusing the company of mishandling users’ biometric data without proper notification.

The lawsuit underscores the importance of transparency and regulatory compliance in the cryptocurrency industry. The allegations against Coinbase raise concerns about the security and regulatory adherence of cryptocurrency exchanges. The outcome of this legal battle could set a precedent for future actions against exchanges that fail to meet regulatory standards or disclose data breaches promptly. The lawsuit serves as a reminder to investors and industry participants of the risks associated with investing in cryptocurrencies and the importance of due diligence in selecting exchanges. Coinbase has not responded publicly to the latest lawsuit, leaving the industry to speculate on the potential implications for the company and the broader cryptocurrency market.