What exactly are cryptocurrencies? The complaint for this class action argues that they are securities, because their purchasers are hoping for their value to increase. It brings suit against Coinbase Global, Inc. and Coinbase, Inc., with the inciting incident being the breaching of a Coinbase account and the theft of funds, but it also brings in the nature of cryptocurrencies themselves, Coinbase’s actual role, and Coinbase’s sometimes lengthy freezing of accounts and dispute resolution process.
The class for this action is all current and former Coinbase accountholders and/or customers who maintained assets, such as crypto assets, in a Coinbase account, and who subsequently lost or were deprived of access to their assets, their Coinbase account, or their personal data.
The plaintiff in this case, George Kattula, opened an account or “wallet” with Coinbase in January 2022, transferred money into it from his bank account, and bought around $6,000 worth of cryptocurrency.
Some months later, in April, he received an email that purported to be from Coinbase, telling him to change his password. He tried to do so, and on or around April 28, 2022, an unauthorized party stole nearly $6,000 worth of cryptocurrency from his account. The complaint alleges that “Coinbase authorized the complete depletion of [Kattula’s] account” and “failed to delay the processing or execution of the above suspicious activity on [his] account.”
Even worse, the unauthorized party tried to buy more cryptocurrency on margin—that is, through borrowing—by using Kattula’s Coinbase account to withdraw $1,000 from his bank account.
A few hours later, Kattula’s bank reversed this $1,000 transfer. Unfortunately, the complaint alleges that “Coinbase then froze [Kattula’s] account and treated it as having a negative balance.” While the complaint alleges that “Coinbase recovered nearly all of the $1,000” used to buy more cryptocurrency in his account, the company “refused to cover all the cryptocurrency that was stolen from” Kattula’s account.
Kattula filed a formal complaint with Coinbase, but the company rejected in June 2022.
The complaint asserts, “Coinbase’s authorization of the immediate depletion of [Kattula’s] entire account and additional purchase of cryptocurrency were inconsistent with industry standards.”
He now brings this class action, which sets forth a broad range of assertions against Coinbase. The complaint claims that cryptocurrencies are securities; that Coinbase misleads customers about the security of their accounts, including the coverage of users’ funds by insurance; and that its User Agreement, with its “unconscionable” dispute resolution process, is unenforceable and violates the Exchange Act.
Article Type: LawsuitTopic: News
Most Recent Case Event
Coinbase’s Role and the Nature of Cryptocurrency Complaint
August 15, 2022
What exactly are cryptocurrencies? The complaint for this class action argues that they are securities, because their purchasers are hoping for their value to increase. It brings suit against Coinbase Global, Inc. and Coinbase, Inc., with the inciting incident being the breaching of a Coinbase account and the theft of funds, but it also brings in the nature of cryptocurrencies themselves, Coinbase’s actual role, and Coinbase’s sometimes lengthy freezing of accounts and dispute resolution process.
Coinbase’s Role and the Nature of Cryptocurrency ComplaintCase Event History
Coinbase’s Role and the Nature of Cryptocurrency Complaint
August 15, 2022
What exactly are cryptocurrencies? The complaint for this class action argues that they are securities, because their purchasers are hoping for their value to increase. It brings suit against Coinbase Global, Inc. and Coinbase, Inc., with the inciting incident being the breaching of a Coinbase account and the theft of funds, but it also brings in the nature of cryptocurrencies themselves, Coinbase’s actual role, and Coinbase’s sometimes lengthy freezing of accounts and dispute resolution process.
Coinbase’s Role and the Nature of Cryptocurrency Complaint