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Coinbase sued for patent infringement on crypto transfer technology

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

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  • Lawsuit Says Multiple Coinbase Services Infringe Blockchain Patent, Seek $350 Million
  • Plaintiff Veritaseum Settles SEC Fees Regarding Its Cryptocurrency Token

(Reuters) – Cryptocurrency exchange Coinbase Global Inc is facing a patent lawsuit related to its digital trading technology, brought by a crypto firm whose offering of digital tokens led to a settlement with US securities regulators in 2019.

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

Veritaseum Capital accused several Coinbase services, including its blockchain transaction validation infrastructure, of infringing the patent. He asked the court for at least $350 million in damages.

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

Veritaseum formerly issued the VERI token. In 2019, Middleton and two of its Veritaseum entities paid the United States Securities and Exchange Commission more than $9.4 million, including a $1 million fine against Middleton himself, to settle the charges. of a “fraudulent scheme” to sell the token in 2017 and 2018.

The SEC had accused them of misleading investors about the demand for the tokens and manipulating their price, among other things. They agreed to the settlement without denying or admitting the underlying charges.

Middleton and Veritaseum argued in federal court in Brooklyn earlier in 2019 that they made no fraudulent misrepresentations, that the tokens were not securities, and that the trade in question was “in fact an effort by Mr. Middleton to Test New Online Cryptocurrency Exchange.”

Veritaseum’s website says it “builds blockchain-based peer-to-peer capital markets as software on a global scale.” Thursday’s lawsuit accuses Coinbase’s features, including its website, mobile app, and Coinbase Cloud, Pay, and Wallet services, of infringing on a patent covering a secure method of processing digital currency transactions.

Veritaseum Capital attorney Carl Brundidge of Brundidge Stanger said Friday that Coinbase was “uncooperative” when they attempted to settle out of court.

Middleton and Veritaseum separately sued T-Mobile in 2020, alleging that the telecommunications company’s security flaws led to hackers stealing $8.7 million in cryptocurrency from them. T-Mobile disputed the claims, and the case went to arbitration in August.

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

For Veritaseum: Carl Brundidge and David Moore of Brundidge & Stanger

For Coinbase: not available

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Our standards: The Thomson Reuters Trust Principles.

Blake Brittain

Thomson Reuters

Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Contact him at blake.brittain@thomsonreuters.com

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