Coinbase has been subjected to massive scrutiny over the last few weeks with the company in the media over not-so-good reasons. According to a recent update, the company is now being sued by two firms. Notably, regulators have targeted the San Francisco-based company in a potential disciplinary action, with the SEC currently looking into its activities.
Users claim that the firm lied to them
The firms in question, Bratar Eagle & Squire and Pomerantz, are suing the company over different grounds. While the former claims Coinbase made ill remarks about its business, the latter claims it should be compensated for all losses, it incurs if the company is guilty of breaking any securities law. Notably, the lawsuit was filed to offer compensation for users on the platform that would suffer losses should the regulatory agency find the crypto exchange guilty.
In the lawsuits, users claimed that Coinbase had been deceptive, making false claims about its business to customers on the platform from April 2021 to July 2022. The suit claimed that Coinbase did not disclose to users that most parts of their funds were kept in a safe lock in San Francisco. This will mean that users on the platform are unsecured creditors should the company ever file for bankruptcy.
SEC investigation spell doom for Coinbase
Coinbase has also been hit with claims that it knowingly onboarded users from the US on its platform without the knowledge of the SEC. This was carried out even with the knowledge that for that to happen, the platform must officially be registered under the regulatory body as securities. With those in review, it showed that the front that the company has been trying to hold up has been false and misleading to users. Coinbase has been the subject of several lawsuits over the last few years.
These two lawsuits highlight the activities inside the company as it is coming off the back of the investigation by the federal agency. Aside from this lawsuit, a former company employee is currently in hot waters after he was accused of insider trading. Although the ex-employee has since pleaded not guilty to the counts, it remains to see the court’s verdict. However, a lawyer has chipped his opinion on the company’s current issues. The lawyer mentioned that the investigations could have burning effects on both the exchange and the token owners even if they are discovered not to be securities.