Coinbase, a leading cryptocurrency exchange platform that went public with an IPO earlier this year, is the subject of a lawsuit filed by Portnoy Law Firm.
The filing claims that Coinbase’s registration statement and documentation on its prospectus for the recent IPO were ‘misleading’ and as such resulted in significant damages to investors who supported $COIN as it debuted on Nasdaq earlier this year.
The lawsuit’s primary contention is detailed in this press statement from Portnoy Law Firm’s founding partner, Lesley F. Portnoy, Esq:
This means that Coinbase has either exaggerated or misrepresented its claims about its own financial health, in an effort to pitch the scalability of its platform as a selling point, in time with the launch. Coinbase’s valuation at the time of its IPO was projected at $100 billion, with a minimum valuation of $66.5 billion based on reference pricing from Nasdaq and Goldman Sachs.
According to Portnoy, Coinbase “undermined its representations in the Offering Materials” which were released on May 17 this year. The previous representation stated that the crypto firm’s existing cash and cash equivalents were sufficient through announcements “to raise capital in the form of a convertible bond sale.” The lawsuit then detailed a disclosure from Coinbase which revealed “technical problems experienced by users on its platform” that included delays due to claimed network congestion which made withdrawals and conversions on the Coinbase platform difficult. These difficulties were attributed as instances of misrepresentation, resulting to damages.
The lawsuit claims, further, that the significant damages incurred based on the alleged misrepresentation on the part of Coinbase. Portnoy Law says that these incidents of significant damage and loss would have been prevented if Coinbase provided transparent documentation on its registration statement and prospectus for its financial status, as well as the overall performance of its crypto exchange/trading platform.
The price of $COIN has, since its launch, continually dropped, shedding at least 42% of its initial value within a 90-day period. At press time, $COIN is trading at 244.36 (Nasdaq:COIN). The lawsuit has a deadline of September 20, 2021.