On 22 September, A lawsuit was filed against Coinbase Global (COIN), a cryptocurrency exchange platform by Veritaseum Capital LLC, which claims it has infringed on a patent awarded to the company’s founder Reggie Middleton.
Veritaseum Token (VERI) Big Rally Despite Lawsuit
According to Veritaseum Capital, several services offered by Coinbase, including the blockchain infrastructure used for verifying transactions, violated the patent. As a result, the company is seeking damages of at least $350 million.
Among the features allegedly infringing the patent are Coinbase’s website, mobile app, Coinbase Cloud, Pay, and Wallet services.
According to the filing, Coinbase has been using Middleton’s technology to generate “substantial” revenue.
In just over three days after news of the lawsuit breaking, VERI’s price action rallied by over 75%, despite an unclear connection with the lawsuit.
In the past few days, VERI has gone from a low of $27 on the 24th to a high of $47.30 on the 27th. The stock is still holding onto most of its gains.
Meanwhile, Veritaseum previously issued the token VERI. Middleton paid the US Securities and Exchange Commission more than $9.4 million in 2019 to settle charges of a “fraudulent scheme” to sell the token in 2017 and 2018, including a $1 million penalty against Middleton himself.
They were accused by the SEC of misleading investors about token demand and manipulating their prices. Their settlement agreement avoided any admission or denial of the underlying allegations.
Coinbase Hasn’t Responded Yet
According to Carl Brundidge of Brundidge Stanger, Veritaseum Capital’s attorney, Coinbase was uncooperative when negotiating an out-of-court settlement.
In 2020, Middleton and Veritaseum separately sued T-Mobile, alleging that hackers stole $8.7 million in cryptocurrency from them due to T-Mobile’s security lapses. An arbitration hearing was scheduled for August after T-Mobile contested the claims.