A group of Coinbase customers had filed a class-action lawsuit against the crypto exchange and have now withheld their account information, as they do not want the case to move into arbitration.
The lawsuit relates to alleged failures in cybersecurity efforts of the Coinbase crypto exchange and customers are seeking compensation for having their accounts breached, which resulted in losses due to the unauthorized asset transfers.
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The plaintiff stated in the filing that they had had $6,000 of their crypto assets transferred from their account to an address that they were not familiar with, or had interacted with before.
The filing further said that Coinbase had permitted the hackers who had compromised the account to withdraw $1,000 via the user’s bank account.
The transaction had been reversed when the victim got in touch with the bank, but the account had been locked by Coinbase and it had been labeled as having a negative account balance.
The crypto company had, later on, retrieved the money that had been stolen from the plaintiff by the hackers.
The lawsuit was filed in the Northern District of Georgia and it has alleged that even though Coinbase claims otherwise, it does not protect the accounts of its users via standard practices.
Furthermore, the lawsuit also went on to claim that consumers are unreasonably and improperly stopped by Coinbase from accessing their funds as well as their accounts.
The lawsuit stated that Coinbase does not let users from accessing their accounts or funds for either an extended period of time or blocks them permanently.
The dispute resolution process of the crypto exchange was also criticized in the lawsuit, as it dictated that there are ‘cumbersome conditions’ that have to be fulfilled before they can reach arbitration.
It claimed that the promises made in the User Agreement pertaining to dispute resolution are not honored by the exchange.
While it is certainly cheaper to handle legal disputes via arbitration as opposed to federal courts, the standards of evidence can be quite different and the level of transparency is also reduced.
Coinbase in court
In recent months, Coinbase has made a great deal of effort to keep a number of cases related to its business out of federal courts, but they have not had much success.
The US Appeals Court had said earlier this month that customers of Coinbase that had sued the company due to its Dogecoin sweepstakes could not be forced into seeking private arbitration.
The incident was related to a promotion that the crypto exchange had introduced in June of last year, which had given users the opportunity of winning $1.2 million worth of Dogecoin.
Things have certainly not been going in favor of Coinbase for some time now. The bear market has already caused a lot of problems for the crypto exchange.
This week, the company’s stock dropped to an all-time low, as it reached $32.40 per share. This is a drop of about 90% from its all-time high price.