MONSEY, N.Y., July 26, 2022 (GLOBE NEWSWIRE) — The law firm of Wohl & Fruchter LLP is investigating whether Coinbase Global, Inc. (Nasdaq: COIN) (“Coinbase”) has violated federal securities laws. If you suffered losses as a result of recent drops in the price of COIN, and have questions about your legal rights, please contact us at the following link to discuss your options at no charge:
Alternatively, you may contact us by phone at 866-833-6245, or via email at [email protected].
Why is there an investigation?
On July 25, 2022, Bloomberg reported that Coinbase is facing an SEC probe into whether it improperly let Americans trade digital assets that should have been registered as securities. On the news, COIN opened for trading on July 26, 2022, down approximately 8.7% as of 9:45 AM EST.
Previously, on May 10, 2022, in its Form 10-Q for Q1 2022 released after the markets closed, Coinbase disclosed the following new bankruptcy-related risk factor: “[B]ecause custodially held crypto assets may be considered to be the property of a bankruptcy estate, in the event of a bankruptcy, the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings and such customers could be treated as our general unsecured creditors.”
Following this disclosure, COIN stock dropped 26.4% in trading on May 11, 2022, from a close of $72.99 on May 10, 2022, to a close of $53.72 on May 11, 2022.
In a subsequent tweet commenting on the disclosure, Coinbase CEO Brian Armstrong stated, “We should have updated our retail terms sooner, and we didn’t communicate proactively when this risk disclosure was added. My deepest apologies, and a good learning moment for us as we make future changes.”
On May 12, 2022, Professor Adam J. Levitin, a professor of law, at Georgetown University Law Center, published a draft of an article entitled “Not Your Keys, Not Your Coins: Unpriced Credit Risk in Cryptocurrency,” set to appear in the Texas Law Review, which opines that in the event a cryptocurrency exchange files for bankruptcy, bankruptcy courts are likely to deem custodial holdings of cryptocurrencies to be property of the bankrupt exchange, rather than the property of its customers. Professor Levitin further explains that credit risk can arise not just from actively transacting in cryptocurrency, but also from passive holding of cryptocurrency,” and suggests that many retail cryptocurrency investors are unlikely to appreciate this risk.
About Wohl & Fruchter
Wohl & Fruchter LLP, with offices in New York City and Monsey, has for over a decade been representing investors in litigation arising from fraud and other corporate misconduct, and recovered hundreds of millions of dollars in damages for investors. Please visit our website, www.wohlfruchter.com, to learn more about our Firm, or contact one of our partners.