Coinbase security crisis leads to lawsuit: Investors sue for "concealing violations" to compensate for stock losses

After a series of data breaches and regulatory controversies, Coinbase is facing legal pressure once again. A shareholder has filed a class-action lawsuit in the federal court of Pennsylvania, claiming that the company failed to properly disclose significant risks, leading to a stock price plunge and harming investor interests. The case not only highlights the controversial handling of security incidents by Coinbase but also brings focus back to the UK regulatory violation issues that existed before its initial public offering.

Investors Angry Lawsuit: Coinbase Should Be Responsible for Stock Price Decline

On May 22, Coinbase investor Brady Nessler filed a class-action lawsuit in the Pennsylvania federal court, accusing Coinbase, CEO Brian Armstrong, and CFO Alesia Haas of not accurately disclosing the recent user data breach and violations of the agreement with the UK Financial Conduct Authority (FCA):

These oversights led to a "sharp decline" in Coinbase stock in a short period, causing "significant losses" for investors.

According to the lawsuit, Coinbase admitted on May 15 that internal customer service personnel were bribed to help hackers infiltrate the system and steal part of the user data, with potential damages and aftermath costs estimated at up to $400 million. On that day, Coinbase's stock price plummeted 7.2%, closing at $244. However, the stock rebounded 9% the next day, rising to $266.

(Coinbase's Turbulent Period: User Data Leak May Cost $400 Million in Aftermath, SEC Investigating Potential User Number Inflation)

Insider Stealing User Data for Half a Year: Security Mechanism Questioned

Coinbase stated that the data breach occurred on May 11, with hackers bribing customer service personnel to obtain internal permissions, subsequently stealing user account information and initiating a $20 million ransom. Although the company claims only a "small number of accounts" were affected, the incident has triggered a chain reaction in social and legal spheres.

(Coinbase's Cybersecurity Storm Continues: User Data Leaked in December, Disclosed in May, Suspected of Covering Up)

Within just a few days of the information being made public, Coinbase has faced at least six class-action lawsuits, mostly focusing on "data protection negligence" and "improper crisis management". Nessler's lawsuit is the first to directly link the data breach to "stock price losses", further challenging the boundaries of Coinbase's disclosure obligations to investors.

UK Regulatory Violation Case Sparks Controversy: Misjudged Stock Price, Compensation Required

Besides the data breach, Nessler's lawsuit also points out that Coinbase signed an agreement with the FCA in 2020, promising not to include high-risk customers on its platform. However, the FCA fined its UK subsidiary $4.5 million in July 2024 for allowing 13,416 high-risk users:

This violation was not disclosed when Coinbase went public in April 2021, potentially misleading market information and causing the company's stock to be "unreasonably overvalued" at the time.

(Coinbase Payments Fined $4.5 Million by UK FCA: Failure to Effectively Prevent Money Laundering)

Nessler stated, "If I had known about Coinbase's regulatory issues, I would not have purchased the company's stock at the misjudged price."

The lawsuit indicates that Nessler is representing all investors who purchased Coinbase stock between April 14, 2021, and May 14, 2025, seeking unspecified damages:

The company's leadership failed to properly fulfill their information disclosure obligations and should be responsible for the losses investors suffered due to stock price volatility.

COIN Stock Price Volatility: Short-term Rebound Pulls Long-term Concerns

Data shows that Coinbase (COIN) closed at $263 today, dropping over 3.2% during the day and an additional 1.62 dollars after hours. Although the stock has risen nearly 6% year-to-date, investors are inevitably cautious about its future trajectory given the security controversies, legal lawsuits, and regulatory shadows.

Coinbase has not yet made an official response to the lawsuit. Despite the company's long-standing emphasis on compliance and transparency, the current series of controversies shows that relying solely on brand image and market scale, without management and risk control awareness, inevitably raises trust issues.

Risk Warning

Cryptocurrency investment carries high risks, and prices may fluctuate dramatically. You may lose all your principal. Please carefully assess the risks.

Here is the English translation: U.S. President Donald Trump was originally scheduled to impose a 50% tariff on European goods on 6/1, but after a phone call with European Commission President Ursula Gertrud von der Leyen, he decided to postpone it to 7/9. This also reflects the strategic direction described by U.S. Treasury Secretary Scott Bessent in an interview on 5/26 regarding the current U.S. industrial economic landscape. Specifically, through tough negotiations and industrial incentives, he aims to strengthen the domestic technology supply chain and bring it back to the United States. [The rest of the translation follows the same professional and accurate approach, maintaining the original structure and meaning while translating into English.]

"I just had a pleasant phone call with von der Leyen, so I decided to wait a bit longer."

Tariffs on EU up to 50%, Bilateral Trade Totaling $321 Billion Affected

According to Bloomberg estimates, if Trump truly imposes 50% tariffs on the EU:

• Bilateral trade total exceeding $321 billion will be affected

• US GDP will decrease by 0.6%

• Inflation will rise by over 0.3%

Trump Calls for Strengthening Tech Supply Chain, Echoing Treasury Secretary's Policy View

Trump previously stated that the US wants military equipment, AI, and chip supply chains, not bringing clothes and shoes back to the US. This aligns with the view shared by US Treasury Secretary Scott Bessent on 5/26:

"The US must focus on high-tech manufacturing, not waste resources on sunset industries."

New EU Proposal Revealed, Emphasizing Security Cooperation and Technical Barriers Resolution

According to informed officials, the EU has proposed an updated negotiation draft last week, including:

• Resolving non-tariff trade barriers: Such as inspection processes and product certification

• Bilateral economic security cooperation: Focusing on critical technologies like semiconductors and AI

• Joint investment platform construction

• Cooperation mechanisms to address global challenges like climate and energy

Three Major Policy Directions to Promote US Economic Growth, Treasury Secretary: Growth First, Then Deficit

Addressing concerns that tax cuts and tariffs will worsen the US fiscal deficit, Treasury Secretary Bessent emphasized three current economic policy directions:

1. Trade strategy: Including tariffs

2. Extending the 2017 tax reform law until 2034 to provide stability and reassurance to businesses

3. Relaxing regulations to stimulate capital investment and repatriation

Bessent also stated:

"The deficit is not the problem; what matters is whether the economy is growing!"

Currently Implemented Plans: Tariffs, Doge, and Drug Price Reform

Bessent also listed several currently implemented revenue and cost-cutting measures:

• Import tariffs: Can bring in billions of dollars annually

• Doge: Plans to eliminate redundant budgets and inefficient subsidies

• Drug price reform bill: Expected to effectively compress federal medical expenditures

He stated that these results will be reflected in the deficit curve over the next few quarters, with the goal of reducing the fiscal deficit to the 3% range of GDP by 2028.

Stablecoin Implementation, Regulatory Relaxation: US Prepares to Welcome New Capital Wave

Bessent also revealed that the stablecoin bill is about to be implemented:

• Expected to drive up to $2 trillion in US Treasury demand in the short term

• Will tie stablecoins with US Treasuries to consolidate "digital dollar hegemony"

• Simultaneously relaxing bank Supplementary Leverage Ratio (SLR) restrictions to make local banks more willing to hold US Treasuries and help government fundraising

EU Concessions Key, US Policy Direction Still to be Monitored

In summary, four points can be observed:

1. Whether the EU will make concessions on technological openness, non-tariff barriers, and investment cooperation agreements by 7/9

2. Tech supply chain reshoring becomes the US policy main axis

3. Stablecoin bill becomes a new tool to consolidate dollar hegemony

4. Policy effectiveness will be observed through the 2028 fiscal deficit situation

(AI Crypto Czar Sacks: The 'GENIUS Act' could create trillions in US Treasury demand, stablecoins impacting bank profitability)

Risk Warning

Cryptocurrency investment carries high risk, and prices may fluctuate dramatically. You may lose all your principal. Please carefully assess the risks.