Coinbase Sued for Patent Infringement on Crypto Transfer Technology

In this illustration taken on March 4, 2022, a representation of cryptocurrency is shown in front of the Coinbase logo. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) – Crypto exchange Coinbase Global Inc is facing a patent lawsuit related to its digital trading technology brought by a crypto firm that offered digital tokens that led to a 2019 settlement with U.S. securities regulators.

The lawsuit, filed Thursday in Delaware federal court by Veritaseum Capital LLC, claims Coinbase infringed a patent granted by the U.S. Patent and Trademark Office to Veritaseum founder Reggie Middleton last December.

Veritaseum Capital has accused Coinbase of infringing the patent on several of its services, including its blockchain infrastructure for verifying transactions. It asked the court to pay at least $350 million in damages.

Coinbase, one of the world’s largest cryptocurrency exchanges, did not immediately respond to a request for comment on Friday.

Veritaseum previously issued the token VERI. In 2019, Middleton and two of his Veritaseum entities paid the SEC more than $9.4 million, including a $1 million fine against Middleton himself, to settle charges for selling tokens in 2017 and 2018. Allegation of “fraudulent scheme”.

The SEC accused them of misleading investors about token demand and price manipulation. They agreed to a settlement without denying or admitting the underlying charges.

Middleton and Veritaseum argued in Brooklyn federal court in early 2019 that they did not make any fraudulent representations, that the tokens were not securities and that the transaction in question “was actually Mr. Middleton testing a new online cryptocurrency transaction” effort.”

Veritaseum’s website says it “builds blockchain-based peer-to-peer capital markets as software on a global scale.” Thursday’s lawsuit alleges that Coinbase’s functionality, including its website, mobile apps and Coinbase cloud, payments and wallet services, infringes filed a patent covering a secure method for processing digital currency transactions.

Carl Brundidge, a lawyer for Brundidge Stanger’s Veritaseum Capital, said Friday that Coinbase was “uncooperative” in its attempt to settle out of court.

Middleton and Veritaseum each sued T-Mobile in 2020, saying the telecommunications company’s security breach allowed hackers to steal $8.7 million in cryptocurrency from them. T-Mobile contested the claims, and the case went to arbitration in August.

The case is Veritaseum Capital LLC v. Coinbase Global Inc, U.S. District Court for the District of Delaware, No. 1:22-cv-01253.

Veritaseum: Carl Brundidge and David Moore of Brundidge & Stanger

For Coinbase: Not available

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