Coinbase is being sued by investors for misleading the public
A securities class action lawsuit was filed against Coinbase Global Inc. alleging violation of the U.S. securities law, including allegations of false misrepresentation to investors before the company went public and in connection with its IPO. The complaint states that Coinbase failed to disclose that it needed a sizable cash injection and its platform was vulnerable to interruptions of service. Due to these facts, the positive declarations about the company’s business were misleading and lacked a reasonable basis.
The IPO took place on April 14, 2021. However, in May 2021 the company announced its plans to raise about $1.25 billion via a convertible bond sale signaling the market about the company’s cash shortage. Subsequently, Coinbase admitted to technical problems “due to network congestion.” Indeed, many Coinbase users experienced a number of issues with their accounts, including inability to trade and withdraw funds when BTC and other cryptocurrencies were rallying. However, all of that was happening before the company’s IPO and was not disclosed to investors.
The announcements made by Coinbase in May 2021 led to a sharp decline in the stock price. The securities class action lawsuit seeks to recover damages on behalf of all Coinbase Global, Inc. investors who purchased common stock between April 14, 2021 and May 19, 2021.