Hassan Maishera
Leading crypto exchange Coinbase is facing a securities class action for allegedly misleading investors prior to its listing on the stock exchange.
Coinbase and execs facing securities class action
A Coinbase shareholder has filed a securities action lawsuit against the company and some of its leading executives. According to the lawsuit, the shareholder accused Coinbase and its execs of misleading investors regarding its financial state and resilience as a crypto trading platform.
The securities class action was filed by law firm Scott + Scott in California Northern District Court, with Coinbase shareholder Donald Ramsey as a plaintiff. Ramsey is representing himself and the other investors who feel the same way about the cryptocurrency exchange.
Ramsey is suing Coinbase and its company execs for the financial information they presented in their filing with the US SEC, press releases, analysts’ reports, and other notable sources. He also listed CEO Brian Armstrong, CLO Paul Grewal as some of the defendants in the case.
The class action stated that the company and its executives made materially misleading statements when offering materials at the time of Coinbase’s listing on the NASDAQ stock exchange. “At the time of the Offering: (1) the Company required a sizeable cash injection; (2) the Company’s platform was susceptible to service-level disruptions, which were increasingly likely to occur as the Company scaled its services to a larger user base,” the lawsuit added.
The plaintiff pointed out that as soon as the discrepancies between self-presentation and reality came to public light, the company’s share price dropped massively. Coinbase became a publicly-listed company in April, with its share price racing to $429 on the opening day after starting at $381 per share. However, the price is down by roughly 50% since then, with COIN now trading at $226 per share.
The decline in Coinbase’s stock price coincided with the bearish trend in the cryptocurrency market. Bitcoin and other cryptocurrencies have lost nearly 50% of their value since reaching all-time highs.
