Coinbase faces mounting legal trouble as a new shareholder lawsuit alleges the company concealed damaging incidents that triggered a sharp decline in its stock. The suit, filed by investor Brady Nessler on May 22, follows recent revelations about a $20 million extortion attempt tied to a data breach and a regulatory fine from UK authorities.
The lawsuit claims Coinbase failed to notify its shareholders about a security breach that took place months before it was finally announced on May 15.
According to the report, attackers reportedly bribed third-party team members to gain access to Coinbase’s internal systems. This unauthorized access allowed them to steal customer names, addresses, and identification details.
It wasn’t made public until after the attack that less than 1% of Coinbase’s users were impacted. As a result, the company’s stock fell, ending the trading day at $244.
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The stock’s price fluctuated the next day and came down to $263 on May 23. These fluctuations have fueled investor frustration, especially with Coinbase’s assurance that the breach impact was limited. If the breach had been revealed quickly, the stock’s volatility might have been countered, says Nessler.
Regulatory Fine Adds Fuel to Investor Frustration
Adding to the fallout, the lawsuit highlights a $4.5 million fine Coinbase received from the UK’s Financial Conduct Authority in July 2024. The fine was issued after the regulator found that Coinbase had violated a 2020 compliance agreement by onboarding over 13,000 high-risk users.
Nessler believes disclosing the violation during Coinbase’s public listing in 2021 would have been the right thing to do. He believes that by sticking to this approach, the company misled investors, making the stock price appear higher than it was.
In the lawsuit, shareholders allege damages against Coinbase, Brian Armstrong, and Alesia Haas, who purchased stock from April 14, 2021, to May 14, 2025.
At least six lawsuits have been filed against Coinbase connected to the breach, one in Illinois for the alleged unauthorized use of users’ biometric data.
Lawsuits against Coinbase have become more serious due to the costs of recent cyberattacks and regulators’ penalties. Confidence in the company’s transparency is declining, so investors are asking for accountability.
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