Investors File Lawsuit Against Coinbase Execs
Coinbase, along with several of its executives, is facing a shareholder lawsuit accusing them of misleading investors about the company’s bankruptcy risks and violating securities laws.
Filed by Coinbase shareholder Wenduo Guo in a New Jersey federal court on February 18, the complaint alleges that Coinbase and its leadership did not disclose that customer assets could potentially become part of Coinbase’s bankruptcy estate, thereby classifying retail customers as unsecured creditors.
The lawsuit highlights that prior to Coinbase’s public listing in April 2021, over 75 cryptocurrency exchanges had collapsed, leaving customers unable to retrieve their digital assets.
It argues that despite repeated assurances from management to the contrary, Coinbase was similarly vulnerable to the risk of digital asset loss in the event of bankruptcy.
