Coinbase Faces Class-Action Lawsuit Over Data Breach and Regulatory Violations

Cryptocurrency exchange giant Coinbase is under fire after a class-action lawsuit alleges negligence in a recent data breach and violations of financial compliance standards.

The suit claims sensitive user data was exposed due to inadequate security measures—just as regulators ramp up scrutiny of crypto platforms.

Legal experts suggest this could trigger tighter KYC/AML enforcement across the industry. Meanwhile, Coinbase’s PR team is doing damage control while their lawyers prep for battle. Nothing says ‘decentralized future’ like a good old-fashioned courtroom showdown.

Coinbase is under fresh legal fire, this time from investors. Shareholder Brady Nessler filed a proposed class-action lawsuit on May 22, claiming the crypto exchange’s recent data breach and a regulatory violation with the UK’s Financial Conduct Authority (FCA) triggered a sharp stock decline, causing financial harm to shareholders. Nessler asserts that Coinbase withheld vital information that would have impacted the company’s stock value.

Coinbase faces another class-action lawsuit over its data breach, with investors claiming damages from the stock price drop following the disclosure. pic.twitter.com/E0DGDP68Bg

Breach and Extortion Scandal

The data breach occurred months earlier, but was only revealed on May 15, 2025, after Coinbase was targeted by cybercriminals in a $20 million extortion attempt. The attackers bribed overseas customer service agents to gain access to internal systems and steal sensitive user data, including names, addresses, and IDs. Although the company claimed that less than 1% of its monthly active users were affected, the late disclosure led to a 7.2% drop in Coinbase (COIN) shares, closing at $244 on the same day. While the stock rebounded to $266 the next day, it later dipped again, closing at $263 on May 23. Despite these fluctuations, COIN remains up nearly 6% in 2025. 

UK Regulator Violation Adds to Fallout

Moreover, the lawsuit also highlights a $4.5 million fine from the FCA in July 2024. The UK regulator found Coinbase had violated a 2020 agreement by onboarding over 13,000 high-risk users. Nessler claims Coinbase failed to disclose this violation when it went public in 2021, artificially inflating its share price. 

Coinbase in Legal Scoops

The class-action suit seeks damages for anyone who bought Coinbase stock between April 14, 2021, and May 14, 2025. CEO Brian Armstrong and CFO Alesia Haas are also named as defendants. In addition, Coinbase faces at least six other lawsuits tied to the breach, including one filed in Illinois accusing the company of mishandling users’ biometric data without proper notification.

Coinbase has not responded publicly to the latest lawsuit.