Abraham Jewett  |  August 10, 2022

Category: Legal News

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Coinbase mobile app running at smartphone screen with trading candlestick chart at background.
(Photo Credit: Iryna Budanova/Shutterstock)

Coinbase IPO class action lawsuits overview: 

  • Who: Donald Kocher has filed a class action lawsuit against certain current and former Coinbase officers and directors, while Vijay Patel has filed a class action lawsuit against Coinbase Global and its CEO and CFO. 
  • Why: Coinbase is being accused of misleading investors about the strength and compliance of its company prior to its initial public offering. 
  • Where: The class action lawsuits were filed in Delaware and New Jersey federal courts.

Coinbase is being accused of misleading investors about the strength of its platform and compliance with federal securities laws prior to its initial public offering (IPO), in a class action lawsuit and separate derivative complaint. 

Plaintiff Donald Kocher claims in a derivative complaint that Coinbase, along with several of its officers and directors, misrepresented the company’s growth strategy and other “cornerstones” of its operations, including its customer outreach strategies.  

Kocher argues Coinbase made statements which were false and/or materially misleading and failed to mention that the company had been “materially weakened and disrupted” by its own promotion campaign prior to its IPO. 

“Coinbase cultivated an image of stability and security based on its proprietary and trusted ‘platform’ and proven ‘flywheel’ growth strategy,” states the Coinbase derivative action. 

Plaintiff Vijay Patel, meanwhile, claimed in a proposed class action filed against Coinbase and its CEO and CFO that the company failed to disclose to investors that it held cryptocurrency assets which could end up being subjected to bankruptcy proceedings. 

Coinbase accused of misleading investors by omitting details

Patel argued that Coinbase also misled investors by not disclosing that its customers would become unsecured creditors in the event of a bankruptcy proceeding.

“Coinbase custodially held crypto assets on behalf of its customers, which assets Coinbase knew or recklessly disregarded could qualify as the property of a bankruptcy estate, making those assets potentially subject to bankruptcy proceedings in which Coinbase’s customers would be treated as the Company’s general unsecured creditors,” states the Coinbase class action. 

Coinbase stock dropped by around 26% in May after the company disclosed the risks of a potential bankruptcy and another 21% after the U.S. Securities Exchange Commission announced it was investigating the company to see if it was allowing digital assets to be traded that weren’t properly registered as securities, reports Law360. 

Kocher and Patel are both demanding a jury trial and seeking an award of damages.

A separate class action lawsuit was filed against Coinbase in March over claims the company was operating as an unauthorized securities exchange

Have you invested in Coinbase stock? Let us know in the comments! 

Kocher is represented by Ryan M. Ernst of Bielli & Klauder LLC and Joshua M. Lifshitz of Lifshitz Law PLLC.

Patel is represented by Thomas H. Przybylowski, Jeremy A. Lieberman, and J. Alexander Hood II of Pomerantz LLP, and Joshua E. Fruchter of Wohl & Fruchter LLP.

The Coinbase IPO class action lawsuits are Kocher v. Armstrong, et al., Case No. 1:22-cv-01031, in the U.S. District Court for the District of Delaware and Patel v. Coinbase Global Inc., et al., Case No. 1:22-cv-04915, in the U.S. District Court for the District of New Jersey. 


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20 thoughts onCoinbase lawsuits allege company lied about problems prior to IPO

  1. Steven England says:

    I’ve got a Coinbase account still. Please add me.

  2. Steven says:

    I’ve got a Coinbase account still. Please add me.

  3. Khalid S. says:

    please Add me.

  4. hongjin an says:

    I lost a lot by investing in this stock on the IPO day. Please add me.

  5. Missy Cannon says:

    I do have a Coinbase account and would like to be added to this claim.

  6. Gileane says:

    Add me I’ve lost a lot

  7. Linda Alverio says:

    Please add me.

  8. Kelly Beals says:

    Add me please

  9. Aboubaker Bouktab says:

    I lost a lot and I still have assets that i can’t sell.

    Add me.

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