Coinbase Stock Plunges as Shareholders Threaten Lawsuits Over Undisclosed Data Breach and Regulatory Lapses

Coinbase, the largest cryptocurrency exchange in the United States, is facing a series of class-action lawsuits tied to a recently disclosed data breach and alleged violations of a regulatory agreement with the UK’s Financial Conduct Authority (FCA). The lawsuits claim that these incidents caused significant losses to investors due to a sharp decline in the company’s stock price.

Details of the Lawsuits

The lawsuits, filed in the U.S. District Court for the Eastern District of Pennsylvania, allege that Coinbase failed to disclose critical information regarding a data breach that occurred in December 2024. According to the filings, cybercriminals bribed Coinbase employees to access internal systems, stealing sensitive user data. Coinbase disclosed the breach on May 15, 2025, estimating remediation costs between $180 million and $400 million.

As a result of the disclosure, Coinbase’s stock price dropped 7.2% on May 15, closing at $244. Although the stock rebounded slightly the following day, it closed at $263 by May 23.

Regulatory Agreement Violation

The lawsuits also highlight Coinbase’s alleged violation of a 2020 agreement with the FCA. The agreement prohibited Coinbase from onboarding high-risk customers. However, the FCA fined Coinbase’s UK subsidiary $4.5 million in July 2024 for onboarding over 13,000 high-risk customers. Investors claim that Coinbase failed to disclose this violation during its initial public offering (IPO) in April 2021, artificially inflating its stock price.

Investor Losses and Legal Demands

The lead plaintiff, Brady Nessler, stated in the lawsuit that the lack of transparency and the subsequent stock price decline caused “significant losses and damages” to investors. The class-action lawsuit seeks to recover damages for all investors who purchased Coinbase stock between April 14, 2021, and May 14, 2025. CEO Brian Armstrong and CFO Alesia Haas are also named as defendants in the case.

Market Reaction

Despite the legal challenges, Coinbase’s stock has shown resilience, with a year-to-date increase of nearly 6%. However, the lawsuits are expected to bring increased scrutiny to the company’s regulatory compliance and risk management practices.