Coinbase Faces a New Class-Action Lawsuit Over a $20M Data Breach and Undisclosed UK Regulatory Violations

The lawsuit alleges Coinbase withheld key risk info, impacting investors who bought shares between April 2021 and May 2025.

Coinbase is facing a new class-action lawsuit, this time from investors who claim they suffered financial losses due to the crypto exchange’s recent data breach and a regulatory violation with the UK’s Financial Conduct Authority (FCA), causing a sharp decline in the company’s stock price.

Coinbase Pays $4.5M Fine to UK Regulator

According to the lawsuit filed on May 22 by shareholder Brady Nessler, Coinbase’s failure to disclose key risk information in a timely manner had a material impact on investors who bought shares during the specified period.

The lawsuit arises from a data breach incident that occurred earlier this year when hackers targeted Coinbase, attempting to extort $20 million. To carry out the breach, the attackers bribed overseas customer service agents to gain access to internal systems and steal user data, including names, addresses, and identification documents.

Although Coinbase stated that less than 1% of its monthly active users were affected, the company did not disclose the breach until May 15, 2025. This late disclosure led to a 7.2% drop in Coinbase (COIN) shares, which closed at $244 on the same day. However, the stock rebounded to $266 the next day. It later dipped again, closing at $263 on May 23. Despite these fluctuations, COIN is up nearly 6% in 2025.

Coinbase (COIN) shares are down 3.6%

The lawsuit further reveals that the UK regulator imposed a $4.5 million fine on Coinbase in July 2024 for violating an agreement by onboarding over 13,000 high-risk users. This violation occurred despite a 2020 agreement with the FCA to maintain procedures for handling such users.

However, according to the lawsuit, Coinbase did not disclose this violation when it went public in April 2021, allegedly artificially inflating its share price and causing investors to purchase shares at inflated prices.

Class-action suit seeks damages for those who bought Coinbase stock between April 14, 2021, and May 14, 2025. It includes CEO Brian Armstrong and CFO Alesia Haas as defendants. In addition, Coinbase faces at least six other lawsuits tied to the breach, including one filed in Illinois accusing the company of mishandling users’ biometric data without proper notification.

Coinbase has not yet responded to the latest lawsuit.