TechFlow news, on February 19, according to Cointelegraph, Coinbase shareholder Wenduo Guo filed a lawsuit on February 18 in a New Jersey federal court, accusing the cryptocurrency exchange and its executives of violating securities laws by allegedly concealing from investors information related to bankruptcy risks.
The lawsuit alleges that Coinbase and its management failed to disclose the risk that user assets could be deemed part of bankruptcy estates, which would render retail users unsecured creditors. The complaint also notes that prior to the company's April 2021 IPO, at least 75 cryptocurrency exchanges had collapsed, resulting in users losing access to their digital assets.
In addition, the lawsuit claims that Coinbase did not disclose engaging in proprietary trading to hedge against declines in cryptocurrency prices. Defendants include CEO Brian Armstrong and several other executives and board members. The plaintiff is seeking a jury trial, along with damages and corporate governance reforms.
