Coinbase Global Inc. has been ordered by a federal judge to face a narrowed shareholder lawsuit that accuses the crypto exchange of concealing business risks. The lawsuit, which could potentially involve action by the Securities and Exchange Commission (SEC) and impact bankruptcy proceedings, has been allowed to proceed by U.S. District Judge Brian Martinotti in Newark, New Jersey. While some claims were dismissed, others with specific allegations against individual defendants will move forward.
Shareholders alleged that Coinbase misled them by downplaying the possibility of the SEC accusing the company of operating an unregistered securities exchange. They also claim that Coinbase failed to disclose the risk of customers losing assets in the event of bankruptcy. Judge Martinotti ruled that shareholders cannot pursue a case based on group pleading, stating that claims must provide defendant-by-defendant particularity.
Coinbase’s stock on NASDAQ has seen fluctuations, with a 2.8% increase at the time of publication, trading at $344.23. Following the SEC’s lawsuit in June 2023, which accused Coinbase of allowing trading in tokens deemed unregistered securities, the stock dropped by approximately 12%. Despite these legal challenges, the stock has maintained a positive year-to-date performance of 38.4%, indicating investor confidence in the platform.
Led by Swedish pension fund Sjunde AP-Fonden, the shareholder lawsuit covers those who purchased Coinbase stock between April 14, 2021, and June 5, 2023. The lawsuit alleges that Coinbase disseminated misleading information through regulatory filings, earnings calls, blog posts, and social media over a two-year period.
Coinbase’s legal troubles have deepened with a previous data breach suit and challenges from state-level enforcement actions. The company urged the U.S. Department of Justice to intervene against conflicting state laws, describing the regulatory landscape as a “patchwork” that hinders the cryptocurrency market’s growth. Coinbase faced lawsuits from multiple states, including Oregon, New York, California, Maryland, New Jersey, Wisconsin, and Maine, regarding its services and compliance with regulations.
In addition to the shareholder lawsuit and state enforcement actions, Coinbase faced legal action for exposing nearly 80,000 users in a data breach between May 13 and May 16, 2025. The lawsuits accused Coinbase of failing to safeguard customer data, violating privacy laws, and mishandling the aftermath of the breach. One complaint in New York alleged that Coinbase’s security practices were inadequate, leaving users vulnerable to identity theft and fraud.
As Coinbase navigates these legal challenges, the cryptocurrency industry continues to face regulatory scrutiny and evolving market dynamics. The company’s response to these legal matters and its efforts to enhance security and compliance will be closely monitored as the industry adapts to changing regulatory environments.