It’s raining lawsuits in the crypto world, and Coinbase, along with a few of its top brass, has found itself under a deluge. A shareholder lawsuit, filed with all the flair of a late-night infomercial, claims that Coinbase and its executives were less than forthcoming about the company’s risk of bankruptcy. 🤑
The complaint, a veritable masterpiece of legal prose, was filed in a New Jersey federal court on Feb. 18 by Coinbase shareholder Wenduo Guo. According to the document, Coinbase and its leadership were allegedly as transparent as a brick wall when it came to the risk of customer assets being swept up in a bankruptcy estate, leaving retail customers as unsecured creditors. 🤷♂️
The lawsuit also pointed out that, prior to Coinbase’s public listing in April 2021, at least 75 cryptocurrency exchanges had gone belly-up, leaving their customers with nothing but a digital IOU. “Despite repeated statements by Company management to the contrary, Coinbase was no different with respect to the risk of digital asset loss in the event of bankruptcy,” the complaint reads, with all the subtlety of a sledgehammer. 🛠️
“Despite repeated statements by Company management to the contrary, Coinbase was no different with respect to the risk of digital asset loss in the event of bankruptcy.”
As if that weren’t enough, the lawsuit claims that Coinbase engaged in proprietary trading to prop up its own finances, a practice that the suit describes as “risky” and “involving trading assets using the Company’s money.” It’s like a financial version of juggling chainsaws. 🔥
Guo’s lawsuit also takes a jab at the Securities and Exchange Commission’s June 2023 lawsuit against Coinbase, alleging that the company listed unregistered securities and failed to register with the agency. It’s a bit like running a lemonade stand without a permit, but on a much grander scale. 🍋
The suit alleges that executives, including CEO Brian Armstrong — who was named in the suit — sold millions in stock and made hundreds of millions in personal profits. It’s a classic case of “heads I win, tails you lose.” 🎲
Guo claimed these actions led to substantial losses, regulatory penalties, lawsuits, and reputational damage for Coinbase. It’s enough to make you wonder if the company’s name should be changed to “Coinbase: The House of Cards.” 🏢
The complaint demanded a trial by jury and is seeking damages and corporate governance reforms to prevent similar misconduct. It’s like asking for a refund after the house has already burned down. 🔥🏠
The suit also names co-founder Fred Ehrsam, financial chief Alesia Haas, operating chief Emilie Choi, legal chief Paul Grewal, accounting head Jennifer Jones, along with board members Fred Wilson, Mark Andreessen, Kelly Kramer, Gokul Rajaram, and Tobias Lütke, as well as former board member Kathryn Haun. It’s a veritable who’s who of the crypto world, all facing the music. 🎶
Meanwhile, Coinbase is also facing another class-action lawsuit in New York for allegedly selling securities without registering as a broker-dealer. It’s a tough time to be a crypto giant, it seems. 🤦♂️
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2025-02-19 06:59