Legal trouble for Coinbase

Noemi B. Noemi B.
26 Sept 2022
2 min read
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Coinbase is accused of breaching a patent linked to its blockchain technology

Coinbase, one of the world's largest platforms for trading cryptocurrency, is being sued by Reggie Middleton, the founder of Veritaseum Capital LLC, which states that the crypto exchange utilized his patent, developed for safe digital transactions, in its mobile app, cloud service, pay system, wallet, and website.

The lawsuit, filed on Thursday 22nd in Delaware federal court, claims that Coinbase infringed a patent, known as ''patent 566'', awarded to Reggie Middleton by the U.S. Patent and Trademark Office last December. The law firm is seeking at least $350 million in damages.

Veritaseum stated that the compensation is reasonable, considering that Coinbase has gained substantial profits due to its violation and Veritaseum Capital “sustained damages as a direct and proximate result”

Veritaseum Capital's attorney Carl Brundidge of Brundidge Stanger declared on Friday that Coinbase was "uncooperative" when they tried to settle the matter outside of court. According to the law firm, Veritaseum had previously sent a letter to Coinbase in July notifying them about the presumed infringement.

 “Defendant had prior knowledge, should have known, or at least been willfully blind of the ‘566 Patent. Defendant has been on notice of the ‘566 Patent at least as early as July 3, 2022, if not earlier from other sources or parties.”

Veritaseum is not a saint either

Veritaseum, a blockchain-based fintech company, also experienced charges of operating a "fraudulent scheme"  by the Security and Exchange Commission (SEC). In 2019, the company had to pay more than $9.4 million over charges that involved the initial coin offering (ICO) for the company's VERI token.

The SEC had accused them of misleading investors about potential gains and manipulating the token’s price.

Middleton and Veritaseum filed in Brooklyn Federal Court claimed that they did not make any fraudulent statements and that the native tokens were not securities. They argued that the trading issue was "actually an effort by Mr. Middleton to test out a new online cryptocurrency exchange". However, the company had to pay one more million penalties for Middleton to settle scam charges against him. 

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Noemi B.
Noemi B.
About the Author

Crypto Educator, DeFi & Web 3 Content Writer

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