Popular Bitcoin exchange Coinbase is facing legal challenges on multiple fronts. Two new lawsuits were filed on May 2, 2023, one accusing company executives of insider trading and the other accusing Coinbase of violating customers’ privacy. Here are the details…
Bitcoin exchange Coinbase in trouble with lawsuits
The first lawsuit filed in Delaware Chancery Court accuses Coinbase Chairman and CEO Brian Armstrong, among others, of using insider information to avoid $1 billion in losses during the company’s IPO two years ago. The investor who filed the complaint argues that the company’s board of directors went directly to listing instead of the initial public offering. The lawsuit alleges that Coinbase quickly sold $2.9 billion worth of shares before Coinbase management later released “material, negative information that has destroyed market optimism since the company’s first quarterly earnings release.” The investor is asking Armstrong and other executives to return their “unfair earnings”.
In the second lawsuit filed in federal court in San Francisco, Coinbase is accused of violating Illinois’ biometric privacy law by collecting fingerprints and faces from its customers without their consent. The lawsuit alleges that Coinbase collected facial data from the IDs and selfies customers uploaded during the registration process. It also claims that Coinbase collects fingerprint data after customers log into their accounts using fingerprint scanning technology. Under Illinois law, companies must obtain customer consent before collecting biometric data. It should also inform them how long they will keep the information.
Coinbase exposes its users to great risk
The lawsuit suggested that the company had collected facial information and fingerprints from numerous Illinois residents. Moreover, he claimed that the exchange was hiding this information. It also claims to expose information to “serious privacy risks” such as identity theft in the event of a data breach. These legal challenges come at a time when Coinbase is already entering a legal battle with the US Securities and Exchange Commission (SEC). As we reported on Kriptokoin.com, Coinbase recently told the SEC that it is delaying the rulemaking process. He also sued the agency for not providing enough clarity on crypto regulations. The SEC is also investigating Coinbase for possible violations of securities laws related to its trading platform.
Coinbase has yet to make a statement about the new lawsuits. However, the company has previously stated that it takes customer privacy seriously and complies with applicable laws and regulations. Coinbase also defended the company’s actions during its IPO and denied any wrongdoing. It is not yet clear how these legal challenges will affect Coinbase’s operations and reputation. The company is a leader in the cryptocurrency industry and has seen significant growth in recent years. However, these lawsuits can raise concerns among investors and customers about Coinbase’s practices and governance.
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