Six individuals have filed a proposed class action against Coinbase, Inc. over its alleged practice of preventing cryptocurrency holders from accessing their accounts “for arbitrary reasons and arbitrary amounts of time.”
Per the 26-page suit, Coinbase’s conduct has blocked users from being able to “invest, spend, save, earn, and use,” or even withdraw, the cryptocurrencies stored in their digital wallets. Despite Coinbase’s assurances that customers’ assets will be kept “as safe as possible,” individuals who’ve been locked out of their accounts for as long as months at a time have found upon regaining access to their wallets that the value of their cryptocurrency has diminished, or that funds have been removed from their accounts entirely, the case alleges.
The lawsuit, filed in California federal court, claims Coinbase has failed to provide customers with “any explanation for where their cryptocurrency went or any remedy to retrieve it, causing significant loss.”
“Despite representing itself as a secure platform for exchanging cryptocurrency, Defendant’s actions have caused damage and continue to cause damage to Plaintiffs and the Putative Class,” the complaint charges.
Per the suit, Coinbase provides an online platform through which consumers can store their cryptocurrencies in a digital “wallet” or buy, sell, spend and trade the assets. Holding itself out as a regulated entity registered with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, Coinbase has represented to consumers that it employs “careful measures” to ensure that their funds are kept “as safe as possible,” the lawsuit relays.
Despite Coinbase’s representations, the company, the case alleges, frequently blocks users from accessing their accounts for up to months at a time for “arbitrary reasons,” even after a user has attempted to contact the company’s customer support numerous times and complied with identity verification requirements. Each of the six plaintiffs has reported getting locked out of their account for a different reason, including that their account was “being reviewed,” that they had entered an invalid username and password, that they needed to verify their identity, for inquiring about what appeared to be mistaken charges from Coinbase, and that their account was under manual review.
In each case, the individual remained locked out of their account even after complying with the defendant’s instructions and had no access to their funds for over a month, and in some cases for several months, the suit says.
Cryptocurrency is “widely considered to be volatile,” the lawsuit relays, and because the plaintiffs and other individuals were locked out of their accounts “for long periods of time,” they found upon gaining access to their funds that the value of their cryptocurrency had “dropped significantly” in the meantime, according to the suit. Per the case, users were damaged financially by being deprived of their ability to invest, spend, save, earn, use, sell or withdraw their funds.
Moreover, some users, the lawsuit alleges, found upon regaining access to their accounts that their cryptocurrency had “disappeared from their accounts” or that their accounts had been “erased in their entirety without explanation” from Coinbase.
The case claims Coinbase was unjustly enriched by retaining the use of customers’ funds, including by the accrual of interest on the amounts, and has caused the users “irreparable harm” by depriving them of their ability to withdraw or use their funds “in any way.”
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