- Coinbase is being sued by a shareholder who claims that the company made “false and misleading statements” in public filings relating to its Nasdaq listing
- COIN listed on the Nasdaq in April 2021, but the lawsuit accused the company of failing in several areas
- Allegations include that Coinbase failed to deal with the users it had gone to great pains to onboard
Coinbase has been accused of making “false and misleading statements” in public filings relating to the 2021 listing of COIN on the Nasdaq, according to a new lawsuit from a shareholder. The lawsuit, filed with the U.S. District Court in Delaware by Coinbase shareholder Donald Kocher, alleges that the company failed in executing its own growth strategy and violated the 1933 Securities Act.
Coinbase’s Growth Plans “Backfired”
Coinbase’s COIN shares hit the Nasdaq in April 2021, peaking at $430 before tanking as low as $40 just over a year later. The lawsuit alleges that Coinbase attracted a huge amount of new users in the lead up to the listing, but this influx was handled badly:
These new users created an unprecedented spike in volume and trading activity, causing a breakdown in its operations, “platform” disruptions, and a rupture in the “flywheel” cycle that had been responsible for the company’s historical growth.
The lawsuit also alleges that Coinbase’s efforts to increase its numbers in advance of the direct listing “backfired, leaving the Company and its newfound investors damaged and vulnerable to the competition.”
Platform Couldn’t Cope With Influx
In addition to this, the lawsuit claims that the Coinbase platform itself failed to cope with the extra demand on its systems, citing several occasions when the exchange collapsed under the strain of its newly enlarged user base. However, given these incidents all occurred before Coinbase went public makes it something of a moot point.
Coinbase is already being sued by Satoshi Nakamoto cosplayer Craig Wright who claims that the exchange is passing off BTC and Bitcoin, although on its surface it would seem that this new lawsuit has just as much merit.