Coinbase Faces Class Action Lawsuit Over Alleged Lapses in Security

[FMCPAY_GLOBAL]

A class action lawsuit filed in a federal court in Georgia alleges the crypto exchange failed to secure users' accounts against theft and hacks, and seeks damages upwards of $5 million.

Coinbase, which last year became the first cryptocurrency exchange to go public in the U.S., is facing a string of lawsuits from unhappy investors. In addition to another aspiring class action lawsuit filed in New Jersey alleging the company allowed U.S. persons to trade unregistered securities, earlier this month, a Coinbase shareholder accused the company of misleading investors about last year's public listing. The platform is also trying to settle two separate lawsuits filed by investors through arbitration.

The suit alleges Coinbase’s failure to "establish and maintain adequate cybersecurity measures" caused investors to lose their "wallet and account access, the assets and investments in those accounts" as well as "sensitive personally identifiable information stored in their Coinbase accounts, and, among other things, their investment opportunities."

(Source: Coindesk)

[mk4]

It seems like the issue is a lot more due to very bad customer service, rather than bad security. As far as I know Coinbase hasn't had a major breach yet, and the "hacks" are mostly due to user error, rather than problems with the Coinbase platform.

[buwaytress]

It seems like the issue is a lot more due to very bad customer service, rather than bad security. As far as I know Coinbase hasn't had a major breach yet, and the "hacks" are mostly due to user error, rather than problems with the Coinbase platform.

Yeah, don't think they've ever been hacked themselves, it's always individual accounts getting phished perhaps -- though to be fair, I suppose Coinbase, or perhaps any exchange for that matter, do need, as part of licensing agreements, to do enough to educate users about the dangers and risks of these hacks, or perhaps implement safeguards that prevent simple hacks like that from happening.

Binance, for example, doesn't send out any sort of info or awareness but I do get a lot of mails from other licensed exchanges (and also the 2fa limit).

[hugeblack]

All of these lawsuits will be good for the platform since the compensation can be paid and will force them to improve adequate cyber security measures although I think all of these problems will be reduced if they spend more money on an educational platform with an active and multinational support team.

In general, the wording of the news is misleading, as the lawsuit filed in New Jersey is completely different from the lawsuit in federal court in Georgia.

[mk4]

Yeah, don't think they've ever been hacked themselves, it's always individual accounts getting phished perhaps -- though to be fair, I suppose Coinbase, or perhaps any exchange for that matter, do need, as part of licensing agreements, to do enough to educate users about the dangers and risks of these hacks, or perhaps implement safeguards that prevent simple hacks like that from happening.

All of these lawsuits will be good for the platform since the compensation can be paid and will force them to improve adequate cyber security measures although I think all of these problems will be reduced if they spend more money on an educational platform with an active and multinational support team.

I'm not 100% sure as I'm not a Coinbase user, but if I remember correctly I've seen a good chunk of security articles from Coinbase in the past. Even if they get emailed to users, people in general just don't like reading articles that much; unfortunately.

[Pmalek]

It's on the users to secure their Coinbase accounts just like any other online accounts. If you get phished, hacked, social engineered into revealing something about you to someone else, that's your fault. I am pretty sure they have all agreed through the TOS that they can't hold Coinbase responsible for having their accounts hacked or losing access to them. There is surely a clause in the agreements that allows the platform to freeze, lock, or require security checks from their users whenever they want to.

There is only a case if they are found guilty of trading what the SEC considers crypto securities.

[royalfestus]

It seems like the issue is a lot more due to very bad customer service, rather than bad security. As far as I know Coinbase hasn't had a major breach yet, and the "hacks" are mostly due to user error, rather than problems with the Coinbase platform.

Has coinbase made any public response on the allegation? I dont know of any hack and that baffles me, I smell a plan to make some money from the exchange, If the exchange is guilty they are likely to settle out of court. 5million is a small fund to afford such rigmarole in the media by coinbase. Chances are likely that the lawyers wants make money from the prosecutor

[hugeblack]

Has coinbase made any public response on the allegation? I dont know of any hack and that baffles me, I smell a plan to make some money from the exchange, If the exchange is guilty they are likely to settle out of court. 5million is a small fund to afford such rigmarole in the media by coinbase. Chances are likely that the lawyers wants make money from the prosecutor

I do not expect Coinbase to pay $ 5 million because they are afraid of a media campaign, especially since there is no clear security bug, so this will push them to spend more on developing the support team and account security more than useless settlements out of court that can open the door to more settlements by other individuals.

In general, I do not know the details of the story, but the chances of their success seem weak.

[DaveF]

So if you put in a lot of tight security and people get themselves locked out they sue.
If you don't have enough security and people get hacked they sue..
If you add coins that people don't like they sue.
If you let people invest in something they don't understand and loose money they sue.

Got it.

-Dave

[PrimeNumber7]

(Source: Coindesk)

According to the article:

Coinbase (COIN) failed to properly secure customers' accounts, leaving them vulnerable to theft and unauthorized transfers, a putative class action lawsuit filed against the crypto exchange last week alleges.

The complaint, filed in the U.S. District Court for the Northern District of Georgia, also accuses the company of causing financial harm to users by locking them out of their accounts permanently or for long periods of time<>
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The above two statements are in consecutive paragraphs. It appears that Coinbase is accused of *both* having too little and too much security for their customers' accounts.

Anyone can file a lawsuit for any reason. There are many class action lawsuits that are meritless and are often filed by greedy lawyers whose intent is to shake down a company for a settlement that involves nearly nothing for the plaintiffs and a large fee for themselves.

[mk4]

The above two statements are in consecutive paragraphs. It appears that Coinbase is accused of *both* having too little and too much security for their customers' accounts.

Anyone can file a lawsuit for any reason. There are many class action lawsuits that are meritless and are often filed by greedy lawyers whose intent is to shake down a company for a settlement that involves nearly nothing for the plaintiffs and a large fee for themselves.

Quite weird, ain't it? Honestly account locks suck but it's better for Coinbase to be overly strict with their security rather than the opposite. People just look at it too much as a hindrance rather than a security measure.

[DaveF]

The above two statements are in consecutive paragraphs. It appears that Coinbase is accused of *both* having too little and too much security for their customers' accounts.

Anyone can file a lawsuit for any reason. There are many class action lawsuits that are meritless and are often filed by greedy lawyers whose intent is to shake down a company for a settlement that involves nearly nothing for the plaintiffs and a large fee for themselves.

Quite weird, ain't it? Honestly account locks suck but it's better for Coinbase to be overly strict with their security rather than the opposite. People just look at it too much as a hindrance rather than a security measure.

Part of the issue IMO is the lack of good customer service and lack of physical locations to deal with some issues.

Had an issue with a bank starting in late July, spent hours on the phone and progress was VERY slow. But, after a few evenings of making slow progress I drove my ass down to the local branch and after about 90 minutes of the person I was dealing with and their manager working their way up the internal CoC the issue was fixed. Partly my fault, partly the banks fault and since the bank had bought the bank I was dealing with before partly the old banks fault. BUT, the issue was fixed since there were people who could handle it.

You can't do that with Coinbase so you are stuck dealing with offshore support. To make matters worse, there are a lot of people who are just starting in crypto and wind up at Coinbase and just don't understand how it's done. So it's not just a new thing (crypto) it's an entirely new way of dealing with money and they have issues.

-Dave