- A class action has been filed against Coinbase alleging misleading disclosures about anti-money laundering compliance
- UK subsidiary CB Payments Limited reportedly violated a 2020 agreement with the Financial Conduct Authority
- Over 13,000 high-risk customers allegedly accessed services despite regulatory restrictions
Coinbase has been hit with a federal class action lawsuit accusing the company and its top executives of securities fraud by concealing regulatory breaches in the United Kingdom. The complaint, filed May 22 in the Eastern District of Pennsylvania, alleges that investors were misled over several years regarding the compliance efforts of Coinbase’s UK arm, CB Payments Limited (CBPL), particularly in relation to anti-money laundering (AML) controls. The plaintiffs allege that Coinbase failed to disclose that CBPL went on to breach that agreement, allowing over 13,000 high-risk individuals to use its services.
Lawsuit Claims Regulatory Failures Were Hidden
Filed on behalf of investors who purchased Coinbase securities between April 2021 and May 2025, the suit targets Coinbase CEO Brian Armstrong and CFO Alesia Haas, alleging that public filings and earnings reports falsely represented Coinbase’s compliance status, omitting “heightened regulatory risk” stemming from CBPL’s failures.
According to the suit, CBPL entered into a “voluntary requirement” agreement with the UK’s financial regulator, the Financial Conduct Authority (FCA), in October 2020 following findings of deficient AML systems. Despite this, Coinbase allegedly failed to disclose that CBPL breached that agreement, allowing over 13,000 high-risk individuals to use its services, a failure that triggered a £3.5 million FCA fine in July 2024.
At the time, the FCA noted that the breaches were “the result of CBPL’s lack of due skill, care and diligence, stating that “Repeated and material breaches went undiscovered for almost two years.” Coinbase achieved full UK regulatory clearance in February 2025.
Shareholders Want Damages
The plaintiff, Brady Nessler, argues that these omissions violated the Securities Exchange Act of 1934. Citing certifications under the Sarbanes-Oxley Act, the complaint claims Armstrong and Haas attested to the accuracy of Coinbase’s disclosures despite knowing about—or recklessly ignoring—CBPL’s compliance issues.
The suit argues that key assertions made to the SEC were “materially false and misleading” because CBPL had been found by the FCA to have “inadequate anti-money laundering focused systems to prevent high-risk individuals from using its platform, and then breached the Agreement designed to address those deficiencies, creating legal exposure.”
The lawsuit seeks compensatory damages for investors who purchased Coinbase securities between April 2021 and May 2025, alleging they suffered financial losses as a result of Coinbase’s actions. In addition to damages, plaintiffs have demanded repayment of legal costs and interest, and call for a jury trial to determine liability.
