Coinbase Sued by Veritaseum for $350 Million Over Alleged Crypto Payment Transfer Patent Violation

Coinbase has found itself in legal trouble after blockchain-based software firm Veritaseum Capital filed a lawsuit in the US District Court in Delaware. Alleging that Coinbase has infringed on one of its patents, Veritaseum has asked for $350 million (roughly Rs. 2,850 crore) in damages. The patent in question is around “novel devices, systems, and methods that enable involved parties to enforce value transfer agreements with little or no trust in each other”. In its lawsuit, Veritaseum has claimed that Coinbase has used this technology for many of its blockchain infrastructure services.

Veritaseum Capital has hired US law firm Brundidge & Stanger for the lawsuit against the crypto exchange. The filing states that Coinbase infringed on its cryptocurrency payment transfer technology under US Patent No. 11,196,566, also known as the ‘566 Patent'.

“Defendant's infringing activities include but are not limited to its website, Coinbase Android mobile wallet, iOS mobile wallet, its Coinbase Cloud, Coinbase Commerce APIs, Query and Transact, Participate, Delegate and Validator software, Coinbase Pay, Coinbase Wallet and Coinbase Operated Public Validators,” the lawsuit states.

Veritaseum has claimed that it had been trying to reach out to Coinbase bringing this alleged patent violation to its notice, before filing the lawsuit.

“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,” CoinTelegraph quoted the attorneys handling the case as saying.

The said patent had been awarded to Vertiaseum founder Reginald 'Reggie' Middleton by the US Patent and Trademark Office on December 7, 2021.

While Coinbase is yet to issue a statement on the development, Vertiaseum has requested a trial by jury in the case.

Coinbase, in recent month, has found itself facing increased legal scrutiny in more than one case.

The company is facing a probe by the US Securities and Exchange Commission (SEC) over its yield and staking products, according to its quarterly filing. The SEC is investigating yield and staking products of the crypto exchange.

The price of Coinbase shares had plummeted by 21 percent after the SEC opened its investigation on the exchange.

In August, the company was sued for ‘improperly and unreasonably' locking users out of their accounts, especially amid days of market volatility.