| CASE CAPTION
||In re Coinbase Global, Inc., Securities Litigation
||United States District Court for the District of New Jersey
| CASE NUMBER
||Honorable Brian R. Martinotti
||Coinbase Global, Inc., Brian Armstrong, Emilie Choi, and Alesia Haas (collectively, “Defendants”)
| CLASS PERIOD
||April 14, 2021 through September 21, 2022, inclusive
This securities fraud class action arises out of Defendants’ representations and omissions made in connection with Coinbase going public in April 2021 (the “Direct Listing”). The Direct Listing generated tremendous excitement because Coinbase was the first cryptocurrency exchange to become publicly-traded in the United States. As alleged, Coinbase’s financial success hinged almost entirely on its ability to increase and maintain its customers base, particularly its retail users, which in turn drove transaction fee revenue. Transaction fee revenue accounted for nearly all of the Company’s revenues.
Unbeknownst to investors, however, during the run up to the Direct Listing and all relevant times thereafter, Defendants failed to disclose at all relevant times numerous material facts and risks to investors, all of which imperiled Coinbase’s financial success. First, Defendants failed to disclose the material risks arising from Coinbase’s inability to safeguard custodial assets in the event of bankruptcy. That is, that in the event Coinbase went bankrupt, Coinbase customers could lose some or all of their assets stored with the Company. Indeed, Coinbase would later admit on May 10, 2022, that the Company’s inability to protect its customers’ crypto assets from loss in the event of bankruptcy made it likely that customers would find the Company’s custodial services more risky and less attractive, which could result in a discontinuation or reduction in use of the Coinbase platform.
As Plaintiffs also allege, Defendants made repeated representations throughout the Class Period that Coinbase did not engage in proprietary trading. Then on September 22, 2022, the Wall Street Journal reported that Coinbase had formed a unit specifically to engage in proprietary trading and, despite its public statements, had invested $100 million in proprietary trades. As alleged, after both the May 10 and September 22, 2022 revelations, Coinbase’s stock price dropped in response, causing significant losses and damages to Coinbase’s investors.
On March 22, 2023, Plaintiffs filed a Consolidated Class Action Complaint on behalf of a putative class of investors alleging that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Defendants’ motion to dismiss is scheduled to be filed in April 2023.