A Coinbase customer is suing the San Francisco-based exchange for $5 million for failing to properly secure customer accounts and “flouting” federal securities laws, among other allegations.
The lawsuit, filed last week and representing more than 100 people, complaints that the largest cryptocurrency exchange in the United States blocked users from their accounts for long periods of time, causing them financial harm.
Filed in U.S. District Court for the Northern District of Georgia, plaintiff George Kattula also alleges that Coinbase fails to disclose that crypto assets on its platform are securities, which “boldly flout federal and state laws.”
“Contrary to its representations, Coinbase does not properly employ standard practices to secure consumer accounts,” the lawsuit states. “And Coinbase improperly and unreasonably prevents its consumers from accessing their accounts and funds, whether for long periods of time or permanently.”
The plaintiffs allege that the stock market crashed during periods of market volatility, which does it happen to crypto exchanges, which makes it difficult for the user to withdraw money. “Coinbase’s user growth has outpaced its ability to provide the account services and protections it promises consumers,” the lawsuit adds.
The lawsuit further claims that the plaintiff’s assets were “vulnerable to theft.”
America’s Largest Crypto Exchange Has Been hit with a number of lawsuits from disgruntled customers in recent times. Earlier this month, the exchange asked the United States Supreme Court for emergency intervention to send two recently filed lawsuits to arbitration.
Meanwhile, the SEC is currently investigating the company for allowing U.S. residents to trade in unregistered securities, according to a Bloomberg report at the end of July.
The news follows civil and federal charges filed against a former Coinbase product manager who is accused of organizing insider trading. In its complaint against the former Coinbase employee, the SEC claimed that the exchange currently lists several non-nominative titles.
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