Coinbase has been hit with another lawsuit. This time, a group of investors are claiming that the company made misleading statements about their token (COIN) which caused it’s price to plummet heavily between 14th April 2021 and July 2022.
Coinbase was listed on NASDAQ on 24th April 2021. The company started trading at $400 but closed the first trading 24H at $328. Since then, COIN has fallen in price and is currently trading at $88.90 which is a 74% decline from it’s All Time High.
The class action lawsuits filed in the district of New Jersey in the United States claimed that Coinbase “made materially false and misleading statements regarding the Company’s business, operations, and compliance policies” since it went public.
According to Bragar Eagel & Squire, P.C., a stockholder rights law firm, any long-term stockholders and investors who suffered losses during the “Class Period” can join the suit at no extra charge or obligation. The class action announcement highlighted two events that resulted in the downward spiral of COIN’s price. The first was Coinbase’s controversial risk disclosure, while the second was the Securities and Exchange Commission probe.
Coinbase released its Q1 earnings report on May 10, 2022, revealing that it had lost $430 million between January and April. While the numbers were worse than estimated, a risk disclosure in their earnings report caused a serious uproar among their customers.
According to the risk disclosure filed with the United States Securities and Exchange Commission (SEC), Coinbase customers might lose access to all their crypto assets stored on the exchange if the company files for bankruptcy like other crypto companies that have gone bankrupt in the past few months because of the crypto winter.
This is because Coinbase users would be classed as “general unsecured creditors,” so they would be the last to make any claims if it comes down to insolvency. Following the revelation of the disclosure, Coinbase’s CEO Brian Armstrong apologized to customers, noting that the disclosure was something the exchange should have earlier revealed.
After May’s controversy, Coinbase was in the news again last month when the SEC began probing whether the exchange offered unregistered securities to investors in the U.S.
The SEC launched the probe after a former Coinbase product manager was accused of participating in an insider trading scheme worth $1.5 million in profits. Although the employee pleaded not guilty, the SEC claimed that nine of the tokens involved in the insider trading scheme were classed as unregistered securities.
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