Coinbase hit with shareholder lawsuit over bankruptcy risks and securities violations

A Coinbase shareholder brought the scholarship before the courts, alleging that he had misleaded investors on the risk of bankruptcy and engaged in risky negotiation practices.

According to February 18 trial Placed by a federal court of New Jersey, the applicant Wenduo Guo says that Coinbase has not revealed that customer assets could be considered as part of his succession of bankruptcy, leaving users of detail as a guaranteed creditors .

The applicant maintains that even if Coinbase positioned himself as a guardian of trust, he minimized the critical risks associated with the custody of digital assets. The costume highlighted the collapse of more than 75 exchanges of cryptography before Coinbase was made public in 2021, which left the customers without funds.

Despite repeated insurance from the company’s management, the pursuit maintains that Coinbase offered no greater protection against these risks.

Beyond bankruptcy problems, the trial accuses Coinbase of engaging in proprietary trade – using business funds to commercial assets – without correctly disclosing this with investors. Guo claims that it was a desperate attempt to counter the drop in cryptography prices, exposing the company to subsequent financial instability.

In addition, the complaint alleys that the best Coinbase leaders, including the CEO of Coinbase, Brian Armstrong, took advantage of the knowledge of the initiates, selling millions in stock while being aware of the vulnerabilities of the company.

The other leaders appointed in the complaint are the co-founder Fred Ehrsam, the financial director Alesia Haas, the COO Emilie Choi, the legal director Paul Grewal and the accounting director Jennifer Jones. Several members of the board of directors, including Fred Wilson, Mark Andreessen, Kelly Kramer, Gokul Rajaram and Tobias Lütke, are also listed, as well as the former member of the board of directors Kathryn Haun.

The trial also links the problems of Coinbase to the SEC 2023 trial Against the company, which alleged that it indicated unregistered securities and worked without appropriate regulatory approval.

Guo maintains that these growing legal and regulatory pressures, combined with unhappy internal risks, have led to substantial losses for the shareholders of the company. The trial requires damage and governance reforms to prevent future faults and required a trial by jury.

At the time of the press, Coinbase did not publish an official declaration. Crypto.News contacted comments but has not heard.

Coinbase legal misfortunes

In addition to the last trial, Coinbase is currently fighting against a collective appeal in New York for alleged violations of titles. Earlier this month, an American judge judge This coinbase must face a legal action by customers accusing the exchange of sales illegally of titles. The case, originally rejected in 2023, was partially relaunched last year by a court of appeal, allowing key accusations to move forward.

The New York affair is not the only trial linked to the titles that Coinbase is confronted. In May 2024, California and Florida customers heard The exchange and CEO Brian Armstrong on similar allegations, identifying tokens like Solana, Polygon, near the protocol, Decentraland and Algorand as unregistered titles.

However, the Battle of Coinbase with the dry, which has been dragging for almost two years, could see a turning point soon. In a February 14 depositSEC asked 28 additional days to examine Call of Coinbasenoting that the newly established Crypto working group could play a role in the end of the legal dispute.

Despite legal problems, the exchange reported Managed in the fourth quarter stronger than expected in 2024, its revenues increasing by 138% compared to 2023.