Coinbase will have to face a court case again. A class action lawsuit accuses the crypto exchange, among other things, of temporarily or even permanently blocking legitimate users and thus denying them access to their own assets.
Coinbase Legal Proceedings: False Security Promises?
In a recently filed class action lawsuit, victims accuse the US exchange Coinbase of making false security promises. Legitimate users have been repeatedly locked out of their own accounts.
At the same time, Coinbase failed to protect accounts from unauthorized access. The crypto exchange, founded in 2012, is now one of the most established in the industry, but has recently been confronted with legal problems more often.
After it became known that a leading employee of the company was engaged in insider trading, allegations were made claiming that Coinbase has a systemic problem with insider trading.
In addition, the US Securities and Exchange Commission is bringing charges against the exchange for accusing it of unlicensed securities trading. Admittedly, this accusation points to the unclear legal situation and affects a wide variety of companies in the crypto industry.
Coinbase Blocks Legitimate Users: 5 million Damages
The class action lawsuit, which was joined by over 100 people, is about damages in the amount of over five million US dollars. Here, too, one criticizes a lack of a license to trade in securities. The injured are therefore demanding:
A declaratory judgment, damages, injunctive relief and other equitable claims.
In an incident from 2019, Coinbase blocked a user’s account after unauthorized access attempts had occurred. When the legitimate owner wanted to log in, they also blocked his access.
In this case, the security check lasted for more than six months. Only then did the customer regain access to his cryptocurrencies managed by Coinbase.
Coinbase improperly and inappropriately blocks its customers from accessing their accounts and funds – either for long periods of time or permanently.
It is stated in the indictment. These are not isolated cases, but a frequently recurring problem. At the same time, other customers are failing to comply with basic safety standards.
Contrary to its assurances, Coinbase does not properly apply standardized procedures to protect consumers’ accounts.
The plaintiffs clarify why they want to make claims for damages:
“Due to the extreme volatility of the value of cryptocurrencies – with price drops of 40% within 24 hours – the inability to access an account to sell, buy or trade cryptocurrencies leads to serious financial losses for account holders.”
If victims demanded an urgent clarification from the customer service, it was not reachable quickly enough. Customers were therefore denied the opportunity to exercise control over their own property.
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