Coinbase Faces New Class-Action Lawsuit After Stock Drop Linked to Data Breach and UK Regulatory Issue

Coinbase revealed on May 15 that a cyberattack led to an internal breach involving bribed customer service agents. The attackers reportedly gained access to internal systems and made off with a small amount of user account data before launching a $20 million extortion demand.

Coinbase is facing a new proposed class-action lawsuit following a stock drop linked to a recent data breach and a UK regulatory issue. The suit, filed on Monday in a Pennsylvania federal court, claims that Coinbase’s stock declined after it disclosed the breach and a violation of a British regulator’s agreement.

The legal action seeks damages for shareholders who purchased Coinbase stock between April 14, 2021, and May 14, 2025.

Data Breach Triggers Legal Trouble for Coinbase

Coinbase revealed on May 15 that a cyberattack led to an internal breach involving bribed customer service agents. The attackers reportedly gained access to internal systems and made off with a small amount of user account data before launching a $20 million extortion demand. Following the announcement, Coinbase shares dropped 7.2% and closed at $244 on the same day.

While the stock recovered 9% the following day, it didn’t make back all its former losses. On May 23, Coinbase stock closed at $263, down over 3% compared to its mid-May rebound. The suit claims this fluctuation caused financial harm to shareholders, blaming Coinbase’s breach handling for the volatility.

The suit said the company’s response and late disclosure of the issue damaged confidence in the company’s operations. Plaintiff Brady Nessler argues that the value of Coinbase shares declined directly due to the news of the data breach. But the disclosure has already led to several lawsuits charging sources, ranging from poor data security practices to negligence.

UK Agreement Breach Hurt Stock, Suit Says

Coinbase also faces scrutiny over a breach of a 2020 voluntary agreement with the UK Financial Conduct Authority. In July 2024, the FCA fined Coinbase’s UK arm £3.3 million ($4.5 million) after it onboarded over 13,000 high-risk customers. Earlier, they reached an agreement where the FCA prohibited Coinbase from offering services to such customers.

The class-action complaint alleges Coinbase failed to disclose this regulatory breach during its 2021 Nasdaq listing. Plaintiff Brady Nessler has argued that the omission resulted in the stock’s inflated price. When the breach was made public and the share value was adjusted, shareholders lost out, the lawsuit claims.

The complaint argues that Coinbase concealed the FCA issue to maintain its market reputation during and after its IPO. The filing names Coinbase CEO Brian Armstrong and CFO Alesia Haas as co-defendants. Through a jury trial, the plaintiffs seek damages for the financial harm occasioned by the share price drop.

Multiple Lawsuits Follow Breach

The Pennsylvania suit is one of at least six legal challenges Coinbase has to deal with due to the breach. Another lawsuit in Illinois accuses Coinbase of mishandling user biometric data without giving users notice or consent. This suit alleges the company did not disclose what biometric data was collected, why it was collected, and for how long it was not retained.

As legal scrutiny deepens, operational and compliance issues continue to grow for Coinbase across various regulatory domains. More material events and discussion of Coinbase’s handling of the user data feature in each case.

Legal challenges continue, and Coinbase shares are up nearly 6 percent for the year. Yet, recent events may impact future investor confidence and regulatory oversight. After the most recent complaint, Coinbase has yet to respond publicly