Lawsuit Against Coinbase for $500K in Stolen Cryptocurrency

January 18, 2022 (HOUSTON, TX)  The Cobos Law Firm today filed an arbitration action against Coinbase, Inc. for $500,000 for fraud by misrepresenting the security features of their online crypto wallet and for negligence for failing to protect users from known scammers. The arbitration petition included other allegations as well, including violations of federal regulatory law. The lawsuit alleges that Coinbase turned a blind eye to the systemic breaches of security on its exchange, that Coinbase facilitated a connection between the victim and a scammer known to the exchange, and that Coinbase allowed the scammer to access and transfer cryptocurrency from the victim’s wallet—even after being informed of the security risk.

Coinbase advertises its wallet as the “easiest and most secure crypto wallet.” Coinbase’s claim will be put to the test in this legal action, which also includes allegations of misrepresentation under the Texas Deceptive Trade Practices Act.

This Arbitration follows in the footsteps of other legal actions against Coinbase, which have erroneously been filed Federal and State Courts, despite an arbitration agreement between Coinbase and its users. This arbitration provision that a user signs before obtaining a Coinbase wallet requires that a user must first attempt to resolve their claims through a formal complaint process before initiating legal action.

Cobos Law Firm founder Andrew Cobos stressed the importance for law firms involved in Cryptocurrency cases to understand the blockchain technology, stating that “lawyers cannot effectively advocate for their clients if they don’t first understand the revolutionary aspects of the blockchain, which will transform commerce.”

Cobos’ comments come on the heels of missteps by other, more traditional lawyers, who have undertaken Cryptocurrency cases without understanding the applications of the blockchain. Cobos even points to one defense lawyer, who called a Cryptocurrency scam a “conspiracy theory,” only to be later proven wrong.

[This article will continue to be updated as the case progresses.]

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