Coinbase faces another data breach lawsuit claiming stock drop damages

Coinbase and two executives have been hit with another proposed class-action lawsuit over the crypto exchange’s stock price drop after disclosing a user data breach earlier this month and for allegedly failing to disclose a violation of an agreement with a UK regulator.

Coinbase investor Brady Nessler said in a May 22 lawsuit filed in a Pennsylvania federal court that the data breach and the alleged broken agreement with the UK’s Financial Conduct Authority resulted in a “precipitous decline in the market value of the Company’s common shares,” causing stockholders to suffer “significant losses and damages.”

Coinbase said on May 15 that its damages bill could run up to $400 million after it was hit with a $20 million extortion attempt four days earlier, with several of its customer support agents bribed to access internal systems and steal a limited amount of user account data.

Nessler claimed Coinbase (COIN) shares dropped by 7.2% to close at $244 on May 15 as a result of the disclosure. However, the stock did stage a comeback, spiking 9% and hitting $266 by the closing bell on May 16, according to Google Finance.

Coinbase stock closed down over 3% on May 23 at $263, falling another $1.62 after the bell. COIN is up nearly 6% so far this year.

*Coinbase is down from the May 23 trading session. Source:* *Google Finance*

Nessler’s complaint is seemingly the first to argue damages caused by Coinbase’s stock drop following its breach disclosure in a series of recent class-action lawsuits over the incident.

The crypto exchange was hit with at least six lawsuits in the days after disclosing the data breach, all accusing it of mishandling the incident and failing to protect their data.

UK agreement breach hurt stock, suit says

The FCA fined Coinbase’s UK arm $4.5 million in July 2024 for breaching a 2020 voluntary agreement preventing the exchange from onboarding customers considered high risk by the regulator.

The FCA said Coinbase onboarded 13,416 customers that the regulator considered high-risk and offered them crypto services.

Nessler said in the suit that the fine saw Coinbase’s stock fall by over 5%, closing at $231.52 on July 25, 2024.