Coinbase hit with class action suit over hacked accounts

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Coinbase’s growing cohort of aggrieved former customers are taking action against the company, according to a class action suit filed in California this week.

The suit names Coinbase Global Inc (NASDAQ: COIN) and up to 50 as-yet unnamed executives and employees as defendants over data breaches by Coinbase which the suit says led to consumers losing their digital assets to hackers.

The plaintiff bringing the suit is Adam Alfia, a trader who was the victim of a hack which led to $50,000 worth of Ethereum purchased using his account without his knowledge. Coinbase’s response was to lock Alfia out of their platform for two months—a pattern of behavior that has become common to Coinbase over the years.

Alfia expects the number of potential plaintiffs to be large:

“Members of the class are so numerous that their individual enjoinder is impractical. Plaintiff estimate that there are no less than 1,000 persons in the identified class.”

The suit accuses Coinbase of breach of contract, negligence, fraud, negligent misrepresentation.

The breach of contract claim relates to Coinbase’s failure to adhere to the terms of their service agreement, both the express and implied provisions contained therein.

The negligence claim accuses Coinbase of failing to fulfil their duty to customers to “properly secure Plaintiff and the putative class’s private information and cryptocurrency from unauthorized transactions and dissemination.”

The fraud and negligent misrepresentation claims are offered as alternates to one another. In other words, the plaintiff is accusing Coinbase of falsely claiming that it “maintains appropriate physical, technical and administrative safeguards to protect the security and confidentiality of the personal information” of its account holders—either knowingly or negligently.

Coinbase has created a growing class of aggrieved former customers, so the potential plaintiffs and their claims could be large. Earlier this year, CNBC ran an expose on Coinbase’s problem with hacked accounts and their unwillingness to do anything about it. According to CNBC:

“[The customer’s complaints] reveal a pattern of account takeovers, where users see money suddenly vanish from their account, followed by poor customer service from Coinbase that made those users feel left hanging and angry.”

The suit comes just days after it was revealed that Dr. Craig Wright had sent warning notices out to a number of digital asset companies, Coinbase included, over their use of the Bitcoin name and database. Coinbase, which is a publicly listed company, never disclosed the pending legal action to the U.S. Securities and Exchange Commission (SEC), which itself may be grounds for further class action suits.