Coinbase (COIN) stock slumps as the firm sued for patent infringement

On September 22, blockchain-based fintech software company in New York, Varitaseum Capital LLC, filed a suit against the cryptocurrency exchange Coinbase (NASDAQ: COIN). 

According to the Delaware suit, Coinbase violated Veritaseum Capital 566 Patent. In essence, the patent represents Veritaseum’s cryptocurrency payment and transfer technology, allegedly used in Coinbase’s Pay, Cloud service, wallet, website, and app. 

Apparently, an out-of-court settlement was attempted, and with Coinbase unresponsive, the filed suit will target damages of $350 million. Factual allegation point 16. Claims: 

“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.”

Furthermore, Coinbase will be forced to stop using the patented technology in its services. 

COIN chart and analysis 

COIN shares dropped over 8% since September 22 as the markets digested the news; in addition, the world’s largest crypto, Bitcoin (BTC), has also seen drawdowns which could have affected price action in COIN. 

Over the last month, the shares have been trading in a wide range from $59.43 to $84.58, staying below all moving averages. Technical analysis shows a support line at $61.87 and a resistance zone from $71.81 to $74.29. 

TipRanks analysts rate the shares a ‘moderate buy,’ with the average price in the next 12 months reaching $96.50, 55.95% higher than the current trading price of $61.88. Equally important, out of 17 Wall Street analysts covering the firm, 8 have a buy rating, seven a hold, and two a sell rating.

This is not the first time Coinbase has been involved in a lawsuit. On August 31, numerous investors filed a class action lawsuit where allegedly the firm made false and misleading statements regarding its business, operations, and compliance policies.

Moreover, Coinbase has also been rocked by allegations of insider trading; therefore, investors looking to stay on the sidelines on this stock could be proved right after the lawsuits enter a more mature phase and more details become apparent on potential misconduct by Coinbase. 

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