Coinbase Hit With $5 Million Suit From Customers

A disgruntled Coinbase user is suing the popular cryptocurrency exchange for $5 million, citing the company's failure to properly secure customer accounts and “flouting” federal securities laws, among other allegations.

The lawsuit, filed last week, represents over 100 individuals claiming that the San Francisco-based cryptocurrency exchange locked U.S users out of their accounts at the most critical of times, leading to financial losses.

Suer George Kattula filed in the U.S. District Court for the Northern District of Georgia. He alleged that Coinbase does not divulge that the crypto assets on its exchange are securities, which “boldly flouts federal and state laws.”

“Contrary to its representations, Coinbase does not properly employ standard practices to keep consumers’ accounts secure,” the lawsuit reads. “And Coinbase improperly and unreasonably locks out its consumers from accessing their accounts and funds, either for extended periods of time or permanently.”

The plaintiffs claim that withdrawing their funds at points of volatility in the market was impossible due to the exchange's constant crashes. “Coinbase’s user growth has outpaced its ability to provide the account services and protections it promises to consumers,” the lawsuit adds. The suit further alleges that user assets were “vulnerable to theft.”.

These past months have been tumultuous for America's number one crypto exchange, as it was hit with multiple suits from customers and an SEC investigation. The SEC investigation pertains to the company's alleged allowance of US users to trade unregistered securities,

At the beginning of this month, Coinbase asked the Supreme Court to stall two ongoing lawsuits launched against the crypto exchange by account holders just after appealing the cases in Federal court.

This story comes just a week after the Department of Justice and the SEC launched civil and federal charges against former Coinbase employee Ishan Wahi accusing him of insider trading. Inside the suit, the SEC claims that the exchange currently offers multiple unregistered securities inside the suit.

Coinbases continued streak of lawsuits and investigations does not bode well for the crypto company's image, as this crypto winter has brought much speculation and scrutiny from the public. Though the firm should not be dismissed as we should remember how fast it climbed to the top.