- Coinbase top executives expect lawsuit from stakeholders
- The lawsuit claims they misled investors and violated securities laws
- Stakeholders require management restructuring and compensation of losses
Coinbase stakeholder Wenduo Guo has filed a lawsuit against top executives, which lists multiple violations as misled investors regarding bankruptcy risk, proprietary trading, and violated securities laws. Stakeholders demand restructuring of the company’s management as well as compensation for losses.
More About the Lawsuit from Wenduo Guo
So, the lawsuit filed in a New Jersey federal court on Feb. 18 by Coinbase stakeholder Wenduo Guo alleges multiple violations by top executives.
More specifically, it alleges that Coinbase’s top executives failed to disclose that customer assets could be considered part of Coinbase’s bankruptcy estate, making retail customers unsecured creditors. Moreover, top executives were engaged in a risky practice involving trading assets using the Company’s money to compensate for declining crypto prices.
“Despite repeated statements by Company management to the contrary, Coinbase was no different with respect to the risk of digital asset loss in the event of bankruptcy.”
The lawsuit alleges Coinbase top executives, such as CEO Brian Armstrong and others, sold millions in stock and made hundreds of millions in personal profits.
Also, it pointed to the SEC’s June 2023 lawsuit alleging that Coinbase listed unregistered securities and failed to register with the agency, which has led to substantial losses, regulatory penalties, lawsuits, and reputational damage.
Wenduo Guo’s lawsuit demands an investigation, restructuring of the company’s management, and reimbursement of losses and costs to investors.
Conclusion
It is too early to make definitive statements and this is likely to be another big investigation that will have to be revisited many times.
However, these are very serious allegations against top executives and it may shake Coinbase’s position. Be aware and stay tuned for updates on the rapidly reshaping regulatory and crypto landscape.
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