Coinbase hit with another class action — this time over locked accounts
Two disgruntled Coinbase users have initiated a class action lawsuit to regain access to their digital assets after allowing the top US crypto exchange to lock their accounts as a precaution.
A Law360 report last week detailed the plight of Christian Kelly and Kenneth Thall, who’ve so far been unable to resolve the issue with Coinbase’s customer service department despite repeated attempts.
Both users previously agreed to Coinbase freezing their accounts after the Delaware-headquartered company detected illegitimate transactions.
- Coinbase locked Kelly out of his account on May 11.
- Kelly’s 4.3 ETH was worth $18,000 at the time, now $13,400.
- Thall has been unable to access his $8,000 in crypto since May 17.
In a legal complaint recently filed with a US district court in California, the pair say they incurred financial damages due to the platform’s lacklustre responses.
“[…] [P]laintiffs and class members have been damaged by the lack of access to their accounts, loss of funds, loss of cryptocurrency assets, [and] deprived of the use of their funds and accounts, preventing them from engaging in any authorized transactions,” reads the filing (via Law360).
Coinbase users waive right to class action
Kelly says they’d called what they thought was Coinbase’s customer support line in a bid to add a feature to their exchange account.
A person claiming to work for Coinbase then requested access to Kelly’s computer. Kelly soon received texts from Coinbase warning him of unauthorized withdrawal attempts.
The following week, Thall also allowed Coinbase to lock his account after the exchange notified them of suspicious transactions.
Interestingly, Coinbase’s user agreement forces its users to waive the right to a class-action lawsuit if the company’s customer relations agents can’t resolve the complaint.
Instead, users sign up to an “Arbitration Agreement.” The agreement requires a small claims court to deal with all legal complaints.
Kelly and Thall’s class action claims Coinbase was either understaffed or unable to follow its own arbitration procedures, which have ultimately stalled any attempts at resolution.
Not just those two
These experiences echo those detailed in a New York Times (NYT) article from March, which compiled stories of several Coinbase users inexplicably locked out of their accounts.
NYT’s report, titled Coinbase Users Say Crypto Start-Up Ignored Their Pleas for Help, also included details of a former Coinbase employee who’d lost around $100,000 in cryptocurrency in an apparent SIM-swap.
He sued the exchange in January.
Casper Sorensen, Coinbase’s vice president for customer experience, told the outlet the company had recently added 2,000 staff members to its customer support.
Sorensen also claimed that less than 0.004% of its users had experienced account takeovers.
In addition to Kelly and Thall’s suit, Coinbase and several execs are facing a class-action lawsuit from investors who’d bought in to its April NASDAQ listing.
[Read more: Coinbase hits back at rumors of insiders dumping all their stock]
Class members say that they were misled by the crypto exchange about its financial situation and susceptibility to service-level disruptions.
Coinbase stock fell nearly 40% in the weeks following its market debut.