Coinbase faces a class action lawsuit for securities fraud. It was filed by the lawfirm Scott + Scott, in the Californian Distric Court. Donald Ramsey, a shareholder in Coinbase, is named plaintiff. Rasmey is lso reported to encourage other shareholders in the legal battle against the crypto exchange.
The US-based exchange went public on Nasdaq with a listing of 1144 850 169 shares of A common class stock. As a result is was overhyped by the public, and attracted a huge interest in retail investors.
The lawsuit explains the problem:
“According to the complaint, the registration statement and prospectus used to effectuate the company’s offering were false and misleading…At the time of the Offering: (1) the Company required a sizeable cash injection; (2) the Company’s platform was susceptible to service-level disruptions, which were increasingly likely to occur as the Company scaled its services to a larger user base,”
These allegations are connected to the firm raising $1.25 billion with a bond offering this May. The bond preparation operations plus a plethora of technical issues resulted in a crash of price in stocks. Coinbase’s shares crashed by about 10%, currently valued at $225 a piece.
The court complaint names CEO Brian Armstrong and Chief Legal Officer Pau Grewal as culprits. Moreover, the complaint also includes a number of venture capitals that had supported Coinbase.