- Coinbase faces a $5M lawsuit over an exchange crash.
- The lawsuit has been filed in the United States District Court for the Northern District of Georgia, representing 100 people.
- Coinbase users have grown at such a high pace that the exchange is unable to fulfill its promises of security to the customers.
The San Francisco-based crypto exchange, Coinbase‘s problems are going to get tougher as one of the users is suing the exchange for $5 million. The user claims that the exchange is unable to provide security to the customer’s accounts and is “flouting” federal securities laws, among other allegations.
Represented by a total of 100 people, the lawsuit was filed last week, claiming that the biggest crypto exchange in the U.S harmed the users financially by locking their accounts for extended periods of time.
Plaintiff George Kattula claims in a lawsuit filed in the U.S. District Court for the Northern District of Georgia that Coinbase “boldly flouts federal and state laws” by failing to disclose that the digital assets available on its platform are securities.
Contrary to its claims, the lawsuit reads that Coinbase does not effectively employ and follow standard practices to protect users’ accounts. Also, the exchange inappropriately and unreasonably locks out its customers from accessing their accounts and funds, either permanently or for a longer period of duration.
Plaintiffs also alleged the exchange usually crashes when the market is more volatile and which happens to the crypto exchanges, making it very difficult for the users to withdraw or deposit funds according to the requirement.
The lawsuit adds that the number of users on the exchange has grown much faster than the platform’s capacity to provide services and the security to their accounts as the promises they provide to the customers.
In one of the other cases of Coinbase, where its product manager and the other two were charged for insider trading.
Lately, it was reported that their Ex Product Manager was found not guilty in the case of insider trading.
As per U.S. Senator Cynthia Lummis, the SEC is going through all the crypto exchanges under investigation, and Coinbase is just one name out of all.