Coinbase, the world's largest cryptocurrency exchange, is being hit with a class-action lawsuit from customers who had their crypto stolen from their accounts.
The lawsuit alleges that Coinbase failed to adequately safeguard its customers' crypto, leading to the loss of millions of dollars.
According to recent court filings, Coinbase customer George Kattula claims that his account was hacked and his crypto assets were stolen because the platform failed to implement adequate security measures against fraudulent activities.
Kattula alleges that in April, nearly $6,000 worth of digital assets in his account were siphoned to unknown wallets after he attempted to change his password as advised by an email purported to be from Coinbase.
“Coinbase failed to delay the processing or execution of the above suspicious activity on Plaintiff’s account.
Coinbase-authorized unknown parties also attempted to purchase additional cryptocurrency ‘on margin,’ that is with money borrowed from Coinbase.
On April 28, 2022, Coinbase allowed the hackers who breached Plaintiffs’ Coinbase account to withdraw $1,000 from Plaintiff’s bank account.”
The plaintiff, who is filing the class action lawsuit on behalf of other Coinbase customers, also alleges that the exchange locks users out of their accounts, which leads to financial losses due to the volatile price of crypto assets.
He also accuses the firm of not disclosing that it holds securities on its platform.
“Coinbase improperly and unreasonably locks out its consumers from accessing their accounts and funds, either for extended periods of time or permanently. Because of the extreme volatility of cryptocurrencies’ value – with freefalls of 40% within 24 hours not unheard of – the inability to access an account to sell, buy, or trade cryptocurrency leads to severe financial loss to account holders.”
More than 100 Coinbase users, led by Georgia resident George Kattula, filed a class action lawsuit in U.S. District Court for the Northern District of Georgia, accusing the company of arbitrarily locking them out of their accounts. That prevented them from selling off underperforming tokens, leading to financial losses, they allege.
Kattula and his fellow plaintiffs are seeking at least $5 million in damages.
Based in California, Coinbase is one of the few publicly traded crypto exchanges, boasting 103 million users, nearly 5,000 employees and about $96 billion worth of assets on its platform.
The case reminds us how important it is for crypto exchanges to educate users on how to protect their accounts
If you have been a victim of Fraud on Coinbase or another exchange, let us know.