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Coinbase Lawsuit Filed Over Data Breach, UK Fine, Stock Losses

Coinbase is facing a new class-action lawsuit, but from an investor claiming the company’s actions caused its stock to drop and shareholders to lose money.

The lawsuit, filed on May 22 in a Pennsylvania federal court by Coinbase investor Brady Nessler, claims that the exchange failed to properly inform the public about two serious issues: a recent data breach and an earlier violation of a regulatory agreement in the UK. Nessler argues that both events led to a sudden drop in Coinbase’s stock value, causing major financial harm to investors.

Source: Courtlistner 

Breach and UK Fine Blamed for Stock Drop

According to the complaint, the exchange's disclosure of the data breach earlier this month caused its stock to fall by 7.2%, closing at $244 on May 15. While the price rose the next day, investors like Nessler say the damage had already been done.

Nessler also pointed to a previous issue involving the UK’s Financial Conduct Authority (FCA). In July 2024, the FCA fined the platform $4.5 million for violating a 2020 agreement not to onboard high-risk customers. The regulator found out that the platform allowed more than 13,000 high-risk customers to use crypto services even after the agreement. 

The suit says that the platform should have been informed about the FCA breach quite earlier, especially when it was initially listed on the Nasdaq in April 2021. Nessler said that since the company kept this data under wraps, the price of the organisation's shares was artificially boosted. She continued that if she had realized the FCA problem, she would not have purchased the stock at those levels.

The legal complaint demands financial compensation for all shareholders who purchased Coinbase stock between April 14, 2021, and May 14, 2025. Coinbase CEO Brian Armstrong and CFO Alesia Haas are also named as defendants.

Background: A Series of Setbacks

While the lawsuit focuses on the most recent breach and the UK issue, it comes at a time when Coinbase is already under pressure. Earlier this month, hackers gained access to some user data by bribing overseas customer support contractors. The platform refused to pay the $20 million ransom demanded and instead offered a reward to help catch the attackers. The company estimated potential costs of up to $400 million.

The U.S. Securities and Exchange Commission and the Department of Justice are currently investigating the exchange's customer data management and internal controls. The investigations join the firm's expanding list of legal and regulatory woes.

Why It Matters

This new lawsuit indicates that the problems with Coinbase are no longer technology or regulation-based, but now even directly impact shareholders. Proven allegations of manipulating stock prices and a failure to be transparent could have serious repercussions for the company.

To the wider crypto community, the case serves as a reminder that investor protection, disclosure, and trust matter just as much as innovation. The growth of the industry depends on making the large players accountable, in order to instill long-term confidence among users and investors.