Coinbase Global Inc, a cryptocurrency exchange, is facing a patent litigation linked to its digital trading technology, initiated by a crypto business whose digital token issuance resulted in a settlement with US securities regulators in 2019.
Veritaseum Capital LLC filed the case in Delaware federal court on Thursday, alleging Coinbase infringed on U.S. Patent No. 11,196,566 granted to Veritaseum founder Reggie Middleton by the US Patent and Trademark Office last December.
Veritaseum Capital claimed that numerous Coinbase services, including its blockchain architecture for transaction validation, violated the patent. It requested at least $350 million in damages from the court.
Veritaseum previously launched the VERI token. Middleton and two of his Veritaseum firms paid the US Securities and Exchange Commission more than $9.4 million in 2019 to settle claims of a "fraudulent scheme" to sell the token in 2017 and 2018.
The SEC accused them of, among other things, deceiving investors about demand for the tokens and manipulating their price. They agreed to the settlement without denying or acknowledging the allegations.
Middleton and Veritaseum contended in a federal court in Brooklyn earlier this year that they made no false claims, that the tokens were not securities, and that the trade in question was "really an effort by Mr. Middleton to test out a new online cryptocurrency exchange."
According to its website, Veritaseum "creates blockchain-based, peer-to-peer capital markets as software on a worldwide scale." The lawsuit filed on Thursday claims Coinbase's website, mobile app, and Coinbase Cloud, Pay, and Wallet services of infringing on a patent covering a safe method of processing digital-currency transactions.
Veritaseum Capital's attorney, said Friday that Coinbase was "uncooperative" when they tried to settle out of court.
Middleton and Veritaseum filed separate lawsuits against T-Mobile in 2020, stating that the telecom company's security flaws let hackers to steal $8.7 million in cryptocurrencies from them. T-Mobile denied the charges, and the case was adjudicated in August.