Coinbase changed lawsuit rules a day before disclosing data breach, report
Coinbase has reportedly limited the number of class action lawsuits that can be brought against it, just one day after disclosing a major data breach that is now under investigation by the US government.
As detailed by crypto journalist Molly White, the new agreement, announced on April 12, stipulates that as of May 15, no state other than New York can hold jurisdiction over a lawsuit unless the case involves arbitration, a.k.a. resolution outside of court.
It also waives the rights of the user — and Coinbase itself — to a jury trial and prevents users from participating in, or initiating, a class action lawsuit against the firm.
The timings of these changes and their announcement are curious, given that the exchange publicly disclosed on May 14 that cybercriminals had bribed rogue customer support agents to steal customer data and tried to blackmail it for $20 million in bitcoin.
It would, of course, have known at the time of this disclosure that the class action lawsuit limitations were about to be enacted.
Not only that, there’s also a chance that it knew of the leak before April 12, with a K-8 filing from May 15 admitting that the company detected a breach “in the previous months.”
Read more: Coinbase says staff leaked customer data, refuses to pay $20M ransom
Coinbase has already received multiple lawsuits from various litigants accusing the firm of failing to protect their user information. However, these were filed after May 15, and not all of them were filed in New York.
White also reports that Coinbase took down, without notifying users, a lengthy appendix included in the April 12 announcement that detailed the legal avenues a user can take to file a dispute.
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Bloomberg reports that the US Justice Department’s criminal division is now investigating the circumstances that led to the breach.
Coinbase’s Chief Legal Officer, Paul Grewal, clarified on X that Coinbase “told the authorities about the incident. We are not the subject of the investigation into the incident. Just sayin’ — if facts matter.”
Protos has reached out to Coinbase for comment and will update if we hear back.
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