Coinbase faces class action for crashing during volatility, listing securities

Quick Take

  • A new class-action lawsuit is asking for $5 million in damages from Coinbase over the exchange’s propensity to crash during market volatility. 
  • “Coinbase’s user growth has outpaced its ability to provide the account services and protections it promises to consumers,” the suit alleges.
  • The suit further says Coinbase doesn’t disclose that the crypto assets on its platform are securities.

A Coinbase user is suing the exchange for failure to provide the secure crypto wallet access that it advertises. 

The plaintiff, George Kattula, filed the class action on behalf of all Coinbase wallet and account holders saying that the company doesn't employ standard practices to secure accounts and it "improperly and unreasonably locks out its consumers from accessing their accounts and funds."

The complaint, filed in a district court in Georgia on Aug. 15, also said Coinbase "does not disclose that the crypto assets (or
“cryptocurrency”) on its platform are securities."

Coinbase's trading platform has historically crashed during periods of market volatility when volumes increase. A representative for the exchange did not immediately respond to a request for comment.

Coinbase has seen business boom amid the interest for crypto assets during the pandemic as prices peaked last year. For the fourth quarter, Coinbase reported 11.2 million monthly transacting users (MTU), the most ever and up from 2.8 million a year earlier. 

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