Coinbase Faces Wave of Lawsuits and Security Crisis Amid Global Crypto Industry Shakeup

Coinbase is facing a series of legal challenges after a user data breach was announced in mid-May, sparking deep concerns among the investment community and hitting its stock price. Investors and shareholders have been quick to react, while analysts warn of a wave of cyberattacks plaguing the crypto industry by 2025.

Class Action Opens in Pennsylvania Against Coinbase and Senior Executives
On May 22, investor Brady Nessler filed a class action lawsuit in Pennsylvania federal court against Coinbase and two senior executives, alleging the company breached its confidentiality obligations and cooperation agreement with the UK Financial Conduct Authority (FCA). The lawsuit claims that shareholders suffered financial losses as a result of the breach of users' personal data.

Coinbase previously disclosed that the May 15 cyberattack could have cost up to $400 million after the attackers demanded a $20 million ransom. The report said sensitive data — including names, addresses, emails, ID photos, and partial Social Security numbers — was stolen after hackers bribed customer support staff to gain access to internal systems.

COIN shares fell 7.2% to $244 on the day the breach was announced, though they recovered to $266 the following day, posting a 9% gain.

Facing a wave of security-related lawsuits and class-action lawsuits
According to Top Class Actions, at least six other lawsuits were filed within 48 hours of the breach being announced, mostly accusing Coinbase of failing to adequately protect data. ClassAction.org also confirmed that law firms are actively gathering affected users to conduct mass arbitrations.

A separate lawsuit filed in Illinois on May 13 accuses Coinbase of violating the Biometric Data Privacy Act (BIPA) by failing to inform users about the collection and storage of biometric data during identity verification.

Cryptocurrency Security – A Fatal Flaw in 2025
Coinbase is not the only victim in the wave of cyberattacks sweeping the global blockchain industry. According to Analytics Insight, the total loss from cryptocurrency hacks in 2024 reached $2.2 billion, up 21% from the previous year. Experts from Forward Security warn that hackers are increasingly leveraging social engineering to exploit vulnerabilities in centralized exchanges.

Notably, Phemex also lost $85 million in a hot wallet breach in January 2025. Coinbase has since terminated the employees involved in the breach and refused to pay the ransom, while offering a reward for any information leading to the arrest of the perpetrators.

Recovery Momentum Driven by Regulatory Support and Market Growth
Despite facing security issues, market analysts remain bullish on Coinbase’s prospects. After the SEC dismissed its lawsuit against Coinbase in February 2025, the company’s regulatory environment has become more stable, helping to ease pressure on the stock.

Coinbase’s stock price could range from $262 to $346 this year, driven by institutional inflows, according to CoinCodex. Currently, Coinbase still accounts for about 66% of the cryptocurrency trading market in the US, with nearly 10 million active users.

The resounding success of Bitcoin ETFs, mentioned in Coinbase's official blog, has also contributed to the wider adoption of cryptocurrencies among institutional investors.

Implications for the global cryptocurrency industry
The Coinbase security incident raises serious questions about data protection amid the growing global adoption of cryptocurrencies. Research from Security.org shows that 14% of non-cryptocurrency holders intend to enter the market by 2025, but 63% of Americans are still concerned about the safety of investing in digital assets.

To meet these challenges, trading platforms are rapidly adopting advanced security measures such as multi-factor authentication (MFA), cold storage, and AI monitoring systems. According to CyberPanel, two-factor authentication can prevent up to 99.9% of automated attacks.

However, exchanges are still under intense scrutiny. Binance was recently investigated by French authorities for alleged money laundering – highlighting the importance of global regulatory compliance and heightened security standards.

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