Coinbase execs sued over disclosures as Armstrong privately meets Trump on crypto policy

Coinbase recently faced fines totaling hundreds of millions of dollars, as a shareholder filed a lawsuit against the business and its top officials, claiming CEO Brian Armstrong and a number of board members of deceiving customers and using insider information to cash out company stock.

The lawsuit was filed Tuesday in the U.S. District Court for the District of New Jersey by shareholder Kevin Meehan. It names Armstrong, co-founder Fred Ehrsam, and other directors and executives as defendants.

Because the complaint is brought on behalf of Coinbase and is structured as a derivative action, any money collected would go to the business rather than specific shareholders.

According to the complaint, between April 2021 and June 2023, Coinbase executives made false claims and violated their duties.

Custody claims and compliance failures

The lawsuit centers on Coinbase’s handling of customer funds. The company’s Retail User Agreement told users their assets held in hosted wallets were “custodial assets held by Coinbase for your benefit.”

But the lawsuit claims Coinbase never told customers that those same assets could become part of the company’s bankruptcy estate if the exchange failed, leaving ordinary users as general unsecured creditors with little protection.

Additionally, the lawsuit contests Coinbase’s statements on its token screening procedure. The review method, according to the business, “keeps securities off Coinbase’s platform.”

However, the lawsuit cites the Securities and Exchange Commission’s enforcement action from June 2023, which charged Coinbase with operating an unregistered securities exchange and listing unregistered tokens like Cardano and Solana.

After the agency underwent a change in direction under new leadership, the SEC eventually dismissed that case in 2025.

On the compliance side, the plaintiffs highlight a January 2023 settlement Coinbase reached with the New York State Department of Financial Services.

Regulators found “wide-ranging and long-standing failures” in the company’s anti-money laundering controls and fined it $50 million, with another $50 million required to be invested in fixing those compliance gaps.

And in May 2025, Coinbase and two executives faced a separate proposed class-action suit from an investor claiming the company’s stock dropped after disclosing a user data breach and hiding a violation of an agreement with the UK’s Financial Conduct Authority.

The complaint further claims that during the time of Coinbase’s direct listing on the stock market in 2021, certain officials sold Coinbase stock despite possessing confidential information.

This is similar to allegations in a different Delaware action that was granted permission to proceed by a court in January. In that instance, Armstrong and board member Marc Andreessen were accused of using insider information to liquidate shares close to the public offering, so avoiding losses of almost $1 billion.

The current suit is asking for damages tied to regulatory fines, legal bills, and harm to the company’s reputation, along with repayment of compensation and stock-sale proceeds from certain executives.

This case dropped just as Brian Armstrong had been meeting privately with Donald Trump to push for pro-crypto policies.

Armstrong meets Trump as stablecoin fight heats up

Armstrong was meeting privately with President Donald Trump at the White House, sources said.

Shortly after, Trump posted on Truth Social that banks “need to make a good deal with the Crypto Industry,” accusing them of threatening the GENIUS Act, the first federal law laying out rules for stablecoin issuers.

The dispute is over whether crypto exchanges should be allowed to pay annual percentage yields on stablecoins.

Banks say allowing such payments would pull deposits away from traditional accounts and weaken lending. Coinbase and other crypto firms say the proposed restrictions would harm competition.

Trump’s posts closely echoed Armstrong’s own public statements, including the line “Americans should earn more money on their money.”

JPMorgan Chase CEO Jamie Dimon pushed back, saying stablecoin yield programs should follow bank-style rules.

Neither Coinbase nor the White House commented on the private meeting.