It comes as Coinbase's CEO Brian Armstrong indicates that the company is plotting big changes to how it makes money.
Coinbase is facing a new class action lawsuit that alleges the exchange "does not properly employ standard practices to keep consumers' accounts secure."
Plaintiff George Kattula has claimed the trading platform "improperly and unreasonably locks out its customers from accessing their accounts and funds, either for extended periods of time or permanently."
He goes on to allege that this can lead to "severe financial loss" for those affected — given how some cryptocurrencies have been known to fall by 40% in value in just 24 hours. The court filing adds:
"Making matters worse, Coinbase fails to timely respond to customer pleas for support and help, and also fails to preserve and safeguard customer assets as it promises."
Elsewhere, the document alleges Coinbase has failed to disclose that the cryptocurrencies on its platform are securities — an allegation that the exchange has dismissed in the past.
In the latest lawsuit to hit the exchange, the plaintiff is seeking damages for himself and those in a similar situation — alongside "significant improvements to Coinbase's data security systems and protocols."
Kattula argues that Coinbase has been struggling to keep up with user growth — and alleges that the company knew "it was woefully incapable, understaffed and overstretched."
The Plaintiff's Story
Setting out what happened to him, the plaintiff claims he opened up an account in January 2022 and bought $6,000 worth of cryptocurrency.
In April, he received an email requesting that he changed his password — but after he did this, the funds were drained from his account… and another $1,000 deposit from his bank was made.
While Coinbase did manage to recover almost all of the $1,000, it "refused to cover all the cryptocurrency that was stolen from the plaintiff's account," the court filing claims.
It's alleged that Coinbase admitted the unauthorized transactions were from an IP address that the plaintiff had never used before — one that was "located far away," and the document adds:
"Defendants could have easily identified and prevented losses from the unauthorized activity on plaintiff's account. There were several obvious red flags signaling to Coinbase suspicious activity and a risk of theft."
Kattula believes that millions of people could be in a similar situation to his own, and he estimates that Coinbase currently has 98 million users.
Armstrong Gives Interview
All of this came as Brian Armstrong gave an exclusive interview to CNBC, in which he revealed that Coinbase wants to make big changes to the way it generates revenue.
Trading fees are currently a crucial source of profitability for the exchange — but as a number of rival platforms slash costs, there are fears that this could hit Coinbase's bottom line.
Armstrong has revealed that the platform is now focusing on ramping up subscriptions — some of which will allow users to trade unlimited amounts of crypto for a flat monthly fee.
He's also expressed ambitions to look beyond the U.S. for growth — and conceded that Coinbase may have been a little too American-centric in the past.