Coinbase (COIN) is in legal hot water after revealing that insider bribery led to a massive customer data breach. At least six lawsuits were filed between May 15 and May 16, accusing the crypto exchange of failing to protect sensitive user information and bungling its response to the attack.
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In a federal lawsuit filed in New York, plaintiff Paul Bender claimed Coinbase “failed to implement and maintain reasonable security safeguards,” leaving millions of users exposed to identity theft and financial fraud. The attackers bribed Coinbase support agents to leak names, emails, phone numbers, account balances, and even passport and Social Security number fragments.
“Users were not promptly or fully informed of the compromise,” Bender’s legal team argued, adding that Coinbase offered little in the way of identity protection or guidance.
Coinbase Faces Legal Fallout across U.S. Courts
Multiple lawsuits followed, with some adding claims of unjust enrichment—arguing Coinbase didn’t spend enough on cybersecurity while profiting from user data. A California suit demanded that Coinbase purge all sensitive data and hire outside auditors to test its security systems.
In a blog post, Coinbase confirmed the breach, stating it refused to pay the $20 million ransom. The company also expects to reimburse users who fell for phishing scams related to the leaked info, estimating costs between $180 million and $400 million.
COIN Stock Rebounds Despite the Legal Storm
Shares of Coinbase initially dropped 7% to $244 after news of the breach and a separate SEC probe into its 2021 user metrics. But the stock then flipped direction, closing up 9% at $266.46 on May 16. That rebound signals investors may be looking past the lawsuits—at least for now.
Is Coinbase a Good Stock to Buy?
Even with lawsuits flying, Wall Street hasn’t hit the eject button on Coinbase just yet. On TipRanks, the stock holds a Moderate Buy rating based on 22 analyst reviews in the past three months. The split is dead even—11 Buys and 11 Holds—with zero Sells in the mix.
The average 12-month COIN price target sits at $261.50, just under the recent close of $266.46, implying a modest 1.86% downside.
