Coinbase Faces New Class Suit Over Unauthorized Asset Transfers

A new class action suit has been filed against Coinbase in the Georgia federal court, alleging the company engages in unauthorized asset transfers, freezes funds, and locks consumers out of their accounts for extended periods of time, causing consumers to incur significant losses due to the volatility of cryptocurrency.

The proposed class action complaint by the investors holding Coinbase Wallet and account holders claim their accounts have been breached and incurred losses arising from the unauthorized transfer of assets. This includes the unauthorized transfer of non-registered “crypto securities” listed on the platform.

Coinbase asked customers to change passwords

George Kattula, the lead plaintiff says he changed his passcode as asked in an email from Coinbase, and later, close to $6,000 worth of cryptocurrency was withdrawn from his account and transferred to unknown parties. Efforts to have his account secured fell on the deaf ears of the exchange.

The suit claims that “Coinbase improperly and unreasonably locks out its consumers from accessing their accounts and funds, either for extended periods of time or permanently. Because of the extreme volatility of cryptocurrencies’ value with free falls of 40% within 24 hours not unheard of, the inability to access an account to sell, buy, or trade cryptocurrency leads to severe financial loss to account holders.”

Response time lacking

The suit further alleges that Coinbase failed to timely respond to customer pleas for support and help, fails to preserve and safeguard customer assets as it promises, and has allowed hackers to take off with $1,000 from his bank account.

“Although Coinbase reversed the unauthorized transfer of the $1,000, it froze his account and refused to cover all the cryptocurrency that was stolen,” Kattula claims in the suit.

Coinbase has come under immense fire and criticism by its investors for failing to prevent losses of unauthorized activities, and these have failed numerous actions in the courts. This has also prompted the exchange to seek the SEC’s input on security classification.

At the time of press, Coinbase had not responded to comment on the matter.