Coinbase Lawsuit Alleges Unauthorized Transfers of Funds

Key Takeaways:

  • According to a newly filed proposed class action,  Coinbase Inc. does not adequately safeguard users’ funds from unauthorized transfers.
  • In a lawsuit submitted on Monday to the US District Court for the Northern District of Georgia, George Kattula makes this claim.
  • The lawsuit states that Coinbase permitted the hackers to withdraw $1,000 from his bank account.

Per a proposed federal class action filed in federal court in Georgia by a man who claims that lax cybersecurity measures allowed thousands of dollars worth of cryptocurrency to be snatched from his account, Coinbase Inc. does not protect users’ funds from unauthorized transfers.

Herman Jones LLP filed a class action lawsuit on behalf of holders of Coinbase cryptocurrency accounts on August 15, 2022, in the Northern District of Georgia federal court, under the name George Kattula v. Coinbase Global, Inc. and Coinbase Inc. (collectively, “Coinbase”).

According to the lawsuit, Kattula changed his password in April as instructed by an email that purported to be from Coinbase. After that, he claims his account was depleted of nearly $6,000 worth of cryptocurrency, and the funds were relocated to unidentified parties.

Additionally, the complaint alleges that Coinbase violates the Securities Exchange Act of 1934 and the Securities Act of 1933 by acting as an unregistered securities exchange, trading unregistered securities, and acting as an unregistered broker-dealer.

According to the lawsuit, Coinbase also permitted the hackers to withdraw $1,000 from his bank account.

Even though Coinbase managed to remove the $1,000 unauthorized transfer, it allegedly froze Kattula’s account and refused to compensate him for all the stolen cryptocurrency.

Herman Jones LLPcSS is looking into potential claims on behalf of people who might have been affected by Coinbase’s actions.

With offices in Atlanta, Newark, and Seattle, Jones is a well-known high-stakes civil lawsuit firm on the national scene.

Along with antitrust, intellectual property, customer class actions, venture fund transaction processing work, and shareholder derivative and securities class action lawsuits, Herman Jones LLP represents individual and institutional investors.

Herman Jones LLP frequently helps clients recover losses after breaking federal securities laws.

The lawsuit asserts that Coinbase easily could have discovered and stopped losses brought on by the unauthorized activity.

The lawsuit claims several “obvious red flags” indicated unusual behavior and suspicious activity, including the operation coming from a new IP address in a spot that Kattula had never visited. 

The arbitration provision in terms of service for the cryptocurrency exchange platform is another issue raised by Kattula. According to his lawsuit, at least one court has ruled that the arbitration agreement is impossible to enforce.

Coinbase was recently accused of operating as an “unregistered securities exchange” in March. This claim was made by three customers who suggested a class activity after buying cryptocurrency through the platform.

Aadrika Sharma
Aadrika Sharma

I enjoy writing and try to learn new things every passing day!

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