Coinbase Faces Lawsuit Over Data Breach & Compliance Failures

Key Takeaways

• $400M Potential Loss: Coinbase estimates the May 2025 data breach could cost up to $400 million in damages and reimbursements.

• Class-Action Filed: Investor Brady Nessler has filed a class-action lawsuit in Pennsylvania, accusing Coinbase of failing to disclose critical information.

• Stock Impact: Coinbase’s stock (COIN) dropped 7.2% on May 15, 2025, following the breach disclosure.

• Regulatory Scrutiny: The lawsuit also highlights Coinbase’s alleged breach of a 2020 UK regulatory agreement.

Coinbase is under increased legal scrutiny following a class-action lawsuit filed by investor Brady Nessler in Pennsylvania federal court on May 22nd, 2025.

The lawsuit alleges that the crypto exchange failed to disclose significant information regarding a recent data breach and a violation of a 2020 U.K. regulatory agreement, leading to substantial financial losses for investors.

Bradly Nessler Filing A Class-Action Lawsuit Against Coinbase

Source: CourtListener

Data Breach Allegations

According to the complaint, Nessler and other investors suffered significant losses after Coinbase publicly acknowledged a user data breach on May 15th, 2025.

The breach involved hackers bribing customer support agents to access internal systems, compromising user data. Coinbase estimates the potential damages from the breach could reach up to $400 million, including remediation and customer reimbursements.

COIN Plummets

Following the disclosure, Coinbase’s stock (COIN) experienced a 7.2% drop, closing at $244 on May 15th. The shares rebounded the next day, rising 9% to finish at $266 on May 16th. As of May 23rd, COIN shares closed at $263, reflecting a 3% drop for the day.

COIN’s Price As Of May 23rd, 2025

Source: Google Finance

U.K. Regulatory Breach

In addition to the data breach, the lawsuit highlights Coinbase’s alleged failure to disclose another breach of a 2020 voluntary agreement with the U.K.’s Financial Conduct Authority (FCA).

In July 2024, the FCA fined Coinbase’s U.K. subsidiary, CB Payments Limited (CBPL), $4.5 million for onboarding 13,416 high-risk customers in violation of the agreement. The regulator had specifically prohibited Coinbase from engaging with such clients due to concerns over money laundering and risk exposure.

Nessler claims that had investors known about the breach of the U.K. agreement, they would not have purchased Coinbase stock at the time of its Nasdaq listing in April 2021.

Broader Legal Challenges

The class-action lawsuit is one of several legal actions Coinbase is facing in the wake of the May 2025 data breach. At least six separate class-action lawsuits have been filed, each accusing the company of mishandling the breach and failing to safeguard user data adequately.

In another lawsuit filed in Illinois on May 13th, Coinbase is accused of violating state biometric data laws by collecting, storing, or sharing users’ biometric data without proper written notice or a defined retention policy.

Coinbase ID Verification Procedures

Source: CourtListener

Coinbase’s Response

As of now, Coinbase has not issued an official statement regarding the latest class-action filing. The company typically refrains from commenting on ongoing litigation.

However, the exchange has pledged to strengthen its security measures and fully reimburse affected customers. Coinbase is also cooperating with law enforcement agencies and has established a new U.S. support hub to address the breach.

FAQ

What is the class-action lawsuit against Coinbase about?
The lawsuit alleges that Coinbase failed to disclose a significant data breach and a violation of a U.K. regulatory agreement, leading to financial losses for investors.

How did the data breach occur?
Cybercriminals bribed customer support agents to access internal systems, compromising user data.

What is Coinbase’s response to the lawsuit?
Coinbase has not issued an official statement regarding the lawsuit but has pledged to strengthen its security measures and fully reimburse affected customers.

How has the breach affected Coinbase’s stock?
Following the breach disclosure, Coinbase’s stock dropped 7.2% on May 15th.

Is Coinbase facing other legal challenges?
Yes, Coinbase is facing multiple lawsuits related to the data breach and alleged violations of regulatory agreements.