A new class-action lawsuit having to do with securities has now been filed by Scott + Scott Attorneys at Law LLP against the popular crypto exchange, Coinbase. The lawsuit dictates that the exchange has been making misleading and false statements regarding its IPO (initial public offering). The globally recognized law firm filed the lawsuit this past Thursday in California’s Northern District Court on behalf of Donald Ramsey, a Coinbase investor. Ramsey had been named as the official plaintiff beside various other investors.
This is not the first time that Coinbase has been charged with something like this either, as the exchange was said to have made misleading statements about a recent Dogecoin (DOGE) sweepstake advertisement campaign, wherein it was widely believed that crucial information about entering the sweepstakes through an alternative method had allegedly been purposefully keeping hidden.
‘Materially misleading statements’
Donald has suggested via a complaint that the exchange had intentionally generated ‘materially misleading statements’ as far as offering materials went during the IPO. He believes that Coinbase had neglected to state that a ‘substantial cash injection’ would be required and that the exchange also did not mention that disruptions at a service level were possible, which have also been increasing in frequency as of late. These disruptions, Coinbase added, would become more commonplace as the exchange’s services are scaled in order to cater to an ever-growing user base.
Furthermore, Donald had claimed that there were several positive statements and opinions being expressed regarding Coinbase in the lead-up to the initial public offering. However, these were (allegedly) misleading and tended to lack any kind of reasonable justification or basis.
Coinbase suffers
Although it is true that the exchange is regularly receiving new users, this does not change the fact that many investors feel a bit betrayed by the company’s recent actions and apparent deception. In fact, when the ‘cash injection’ requirement and the scaling restrictions and limitations became common knowledge, Coinbase’s stock value had decreased by almost 10% over the course of two trading sessions.
Additionally, following the occurrence of the abovementioned lawsuit by Ramsey, COIN had dipped by a whopping 45% to reach $208 per share. Donald had also stated that around the middle of May, any momentum that the exchange might have been steadily building was abruptly ended. Continued problems of network congestion did not help matters either.