Leading US cryptocurrency exchange Coinbase and several of its executives have been hit with a new lawsuit alleging they misled investors about the risk of bankruptcy.
The complaint, filed in federal court in New Jersey by Coinbase shareholder Wenduo Guo, alleges that the exchange and its management failed to disclose that customer assets could be considered part of Coinbase’s bankruptcy estate, making retail customers unsecured creditors. The lawsuit also notes that at least 2021 cryptocurrency exchanges went bankrupt before the company’s public listing in April 75, leaving customers unable to recover their digital assets.
Despite repeated statements to the contrary by the company’s management, Coinbase was no different from these exchanges in terms of the risk of losing digital assets in the event of bankruptcy, the lawsuit says..
Guo accused the exchange’s management of «risky trades» as the company engaged in its own trading to offset the decline in cryptocurrency prices in 2021. He also claimed that Coinbase CEO Brian Armstrong and other top executives sold millions of dollars in shares and used the funds for personal purposes.
The plaintiff is seeking a jury trial against Coinbase, damages, and changes to the company’s corporate governance structure to prevent similar violations in the future.