- Coinbase does not effectively protect customer assets from unlawful transactions, according to a submitted class action lawsuit.
- The lawsuit was filed by George Kattula to the US District Court for the Northern District of Georgia.
- Coinbase allegedly allowed hackers to withdraw $1,000 from his account per the lawsuit.
A class action lawsuit was recently filed against cryptocurrency exchange Coinbase in a federal court in Georgia by a man who claims that thousands of dollars worth of cryptocurrencies were stolen from his account due to inadequate cybersecurity protections used by the company.
On August 15, 2022, Herman Jones LLP filed a class action lawsuit in the Northern District of Georgia federal court on behalf of Coinbase cryptocurrency account holders in the case of George Kattula v. Coinbase Global, Inc. and Coinbase Inc. (together, “Coinbase”).
The lawsuit alleges that Coinbase’s rapid expansion has outstripped its capacity to provide the account services and safeguards it guarantees to customers.
After receiving what looked like an official-looking email from Coinbase in April, Kattula allegedly reset his password. The next day, he alleges approximately $6,000 worth of cryptocurrencies disappeared from his account and was transferred to unknown third parties.
The lawsuit also states that Coinbase operates as an unregistered securities exchange, deals in unregistered securities, and operates as an unregistered broker-dealer, all of which are violations of the Securities Exchange Act of 1934 and the Securities Act of 1933.
It also claims that the hackers were able to take $1,000 from his bank account with Coinbase’s help.
Coinbase reportedly locked Kattula’s account and refused to reimburse him for the stolen cryptocurrency, despite having successfully revoked the $1,000 unauthorized transfer.
Herman Jones LLP is investigating possible lawsuits on behalf of anyone who may have been harmed by Coinbase’s activities.
As a federal securities law firm, Herman Jones LLP routinely assists clients in recouping damages. In the case, the plaintiff claims that Coinbase had enough opportunity to prevent further financial harm from the unauthorized activity.
The lawsuit states that multiple “obvious red flags” pointed to suspicious activity, such as the fact that the transaction originated from a different IP address and a site Kattula had never been to before.
Kattula also has another issue with the cryptocurrency exchange platform’s mandatory arbitration clause in the terms of service. His lawsuit claims that the arbitration agreement has already been deemed unenforceable by at least one court.