Coinbase is being sued by one of its users for failing to keep its customers’ accounts accessible in periods of high market volatility.
Acting on behalf of all Coinbase wallet and account holders, plaintiff George Kattula alleges that the exchange “does not properly employ standard practices to keep consumers’ accounts secure”.
According to the plaintiff’s filing, Coinbase “improperly and unreasonably locks out its consumers from accessing their accounts and funds.” This, he alleges, goes against the company’s promise of providing customer technology that helps deal with the “real-time, global, and 24/7/365 nature of the crypto asset markets.”
The inconsistency in freely accessing one’s account can contribute to significant financial harm in the highly volatile digital asset market. For Kattula, this resulted in him being locked out of his account for an “extended period,” preventing him from conducting any trade, and thus losing him money.
The plaintiff also claimed that Coinbase both fails to safeguard its customers’ assets or respond to customers’ complaints in a timely fashion.
“Coinbase’s failures have prevented Plaintiff and Class Members from having “full control of [their] crypto” and from being able to “invest, spend, save, earn, and use,” or withdraw their funds as Coinbase promises,” reads the filing.
The allegations didn’t stop there: Kattula argued that Coinbase “boldly flouts federal and state laws” by refusing to register as a broker-dealer and denying that it needs to so do. Indeed, the exchange published a blog post in July claiming that it “does not list securities.”
The plaintiff concluded that he and class members had been harmed by Coinbase through losing exclusive access to their accounts, crypto, investment opportunities, and personally identifiable information.
Coinbase stock crashed last month after reports emerged that it was under investigation by the Securities and Exchange Commission. The commission, too, believes Coinbase is guilty of having listed nine securities in the form of tokens. The exchange also faced pressure from the commission last year after attempting to launch a lending service.
Another pair of lawsuits were filed last month by other customers. One requested compensation for $31,000 lost at the exchange, while the other claimed that Coinbase violated California law after withholding $1.2 million from Dogecoin sweepstake event.