San Francisco-based exchange Coinbase is being sued for $5 million by a customer, George Kattula. The customer alleges that Coinbase is failing to properly secure customers’ accounts and flouting federal securities laws, among other allegations.
The lawsuit which was filed last week and represents over 100 people, claims that the biggest cryptocurrency exchange in the U.S. locked users out of their accounts for extended periods of time which is harming them financially.
George Kattula, the plaintiff, also asserts in a lawsuit filed in the U.S. District Court for the Northern District of Georgia that Coinbase flagrantly disregards federal and state regulations by failing to disclose that the digital assets available on its platform are securities.
The lawsuit reads, “Contrary to its representations, Coinbase does not properly employ standard practices to keep consumers’ accounts secure. Additionally, Coinbase improperly and unreasonably locks out its consumers from accessing their accounts and funds, either for extended periods of time or permanently.”
The plaintiff further complained that the exchange crashed during times of market volatility making it difficult for the user to withdraw cash leaving his assets vulnerable to theft.
The lawsuit further reads, “Coinbase’s user growth has outpaced its ability to provide the account services and protections it promises to consumers.”
Disgruntled consumers have recently filed several lawsuits against the cryptocurrency exchange. The exchange requested an emergency intervention from the U.S. Supreme Court earlier this month to refer two recently filed claims to arbitration.
According to a Bloomberg article from late July, the SEC is also presently looking into the company for enabling American citizens to trade unregistered securities.