Coinbase faces lawsuits over insider trading and privacy violations
- Coinbase is facing lawsuits related to insider trading and privacy violations.
- At press time, the exchange’s stock price was down 8% in a 24-hour period.
According to a recent Bloomberg news report, top executives of Coinbase Inc., the largest US-based crypto exchange, have been sued for allegedly utilizing inside information to sell their stock within days of the crypto platform’s public listing. The members successfully avoided over $1 billion in damages.
In April 2021, Coinbase was listed directly on Nasdaq.
An investor named the exchange’s Chairman and CEO, Brian Armstrong, as well as board member Marc Andreessen and other officers, in the lawsuit.
According to an investor who has held Coinbase shares since April 2021, the value of the shares dropped by more than $1 billion within five weeks of the purported sale by Coinbase officials.
According to the lawsuit, the defendants liquidated the stock before negative news coverage related to Coinbase caused it to fall. According to reports, the exchange’s market value fell by more than $37 billion as a result of this.
The lawsuit also alleged that Armstrong sold $291.8 million in Coinbase stock during the direct listing, while Andreessen Horowitz sold $118.6 million. Coinbase dismissed the charges as unfounded, Bloomberg noted.
Coinbase’s market cap topped $100 billion shortly after its launch. Share prices rose to $429 before plummeting to around $310 shortly after the offering.
Privacy violations are also alleged
The exchange is also facing a lawsuit in Illinois over privacy law violations; it is alleged that the exchange is collecting face templates and fingerprints of its customers.
According to the lawsuit, Coinbase collects facial information via copies of government-issued IDs and selfies that users must provide throughout the account sign-up process in accordance with its Know Your Customer (KYC) policies.
There is a proposed class-action lawsuit as the alleged privacy offense reportedly violates the state’s privacy laws.
On 23 March, Coinbase received the Wells Notice as the regulator implied that enforcement action against the exchange was imminent.