Coinbase hit with 2 new lawsuits amid SEC probe

Coinbase is facing increased scrutiny from regulators and has become the target of multiple lawsuits. The San Francisco-based cryptocurrency exchange, which is currently under investigation by the United States Securities and Exchange Commission (SEC), is now facing two additional legal claims from two law firms.

On Thursday, New York-based law firm Bragar Eagel & Squire announced that it will sue Coinbase for making deceptive claims about its business practices. Pomerantz LLP has also filed a claim against the exchange, alleging that it is entitled to compensation for any losses incurred as a result of the defendant's violation of federal securities laws. This lawsuit was brought to recover damages for the plaintiffs. In both complaints, the plaintiffs allege that company made fraudulent and deceptive statements regarding the its business, operations and compliance efforts between April 14, 2021 and July 26, 2022. According to the complaints, Coinbase neglected to disclose that customer cryptocurrencies were held in escrow at the company, making them part of a bankruptcy estate subject to insolvency proceedings in which customers would be treated as general unsecured creditors of the company. Coinbase also reportedly refused to disclose that it allowed US citizens - despite its knowledge and indifference - to trade digital assets that require SEC registration as securities. Thus, the lawsuits allege that Coinbase's public statements were, at all times, materially false and deceptive as a result of prior actions. Coinbase has been involved in various lawsuits and controversial situations in the past. The two new lawsuits come as Coinbase is being investigated by the SEC for allegedly trading unregistered securities. Ishan Wahi, a former global product manager at Coinbase, is accused of insider trading in a separate case. But earlier this month, Wahi pleaded not guilty to two separate fraud conspiracy charges in a federal court in Manhattan.